Mexico falls short on prosecuting money laundering

Although Mexican authorities generally have “a good understanding of money laundering and terrorist financing risks, this financial intelligence does not often lead to investigations”
Photo: Money laundering – Photo: Ricardo Castelan/Cuartoscuro.com
03/01/2018
18:36
Newsroom & Agencies
Mexico City
Reuters
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On Wednesday, the Financial Action Task Force (FATF) disclosed that Mexico is failing to root out money laundering because it uses a reactive case-by-case investigation approach and law enforcement agencies suffer from corruption.

Money laundering “is not investigated and prosecuted in a proactive and systematic fashion. Consequently, the number of prosecutions and convictions for money laundering are very low. Significant shortcomings were found in the way in which money-laundering cases are investigated,” said the report by the FATF.

Mexico’s Finance Ministry and the Attorney General’s Office promised in a joint statement to improve efforts. “The authorities commit to strengthening the areas of opportunity detected, but above all to continue safeguarding the national financial system and supervising vulnerable activities,” they said. According to them, the report recognizes significant improvements compared to 2008, the year in which the last evaluation to the country was made.

Yet, Mexico is making little headway in seizing illicit cash, according to the government’s own estimates.

Mexico seized just USD$32.5 million in 2016. That represents less than 0.1% of the USD$58.5 billion of illicit revenues the government estimates are generated by organized crime annually.

Although the FATF said Mexican authorities generally have “a good understanding of money laundering and terrorist financing risks, this financial intelligence does not often lead to investigations of money laundering, underlying crimes, and terrorist financing.”

Mexico is the top source of illegal drugs to the United States and both countries’ authorities have been criticized by civil society groups for leaving drug gang finances largely intact.

“The level of corruption affecting law enforcement agencies, in particular at the state level, undermines their capacity to investigate and prosecute serious offenses,” said the report.

In the report, Mexico is urged to prioritize investigations on money laundering, on the confiscation of illicit goods, as well as the distribution of resources and to supervise vulnerable non-financial activities.

In addition, there must be greater training for the authorities and access to information of the final beneficiaries of assets and companies should be mandatory.

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