Reform to the Federal Law for the Prevention and Identi

Purpose of the Reform

The reform aims to strengthen the legal framework for preventing transactions involving illicit proceeds in the vulnerable activities sector, seeking to:

1. Improve the effectiveness of combating economic and transnational crime, as well as money laundering and terrorist financing crimes.
2. Address the recommendations from the Financial Action Task Force (FATF) included in the 2018 Mutual Evaluation Report.
3. Prepare the country for the upcoming FATF evaluation (Fifth Round of Mutual Evaluations in 2025).

Key Amendments to the Anti-Money Laundering Law

A. Expansion of the Law’s Purpose: The law now includes the prevention of illicit proceeds in the financing of criminal activities, and the prosecution of ML-related crimes and the financial structures of criminal organizations.

B. Beneficial Owner:

a. Regulatory Adjustments:

1. Establishes that the beneficial owner is exclusively a natural person.
2. Introduces “Effective Control” as a criterion for identification.
3. Lowers the ownership threshold from 50% to 25% to consider a partner/shareholder as a beneficial owner.
4. Aligns the term “beneficial owner” with the concepts of “ultimate beneficiary” and “real owner.”

b. New Obligations:

• Companies must identify and register their beneficial owner on the system of the Ministry of Economy and keep the supporting documentation.
• Share transfers must be reported to the Ministry of Economy to identify new shareholders.
• The Ministry of Finance (SHCP) will encourage state authorities to require civil associations and companies to identify their beneficial owner.

C.Business Relationship: New definition includes exceptions and specific vulnerable activities where a business relationship is not considered to exist, refining applicable obligations to parties.

D. Politically Exposed Persons (PEPs): Incorporates the definition of PEPs and obligates vulnerable activity entities to identify and monitor operations involving these individuals.

E. Powers of the Ministry of Finance [Secretaría de Hacienda y Crédito Público]::

1. Interpret the Anti-Money Laundering Law, its rules and regulations in administrative matters.
2. Set requirements for registering obligated parties on the AML Portal.
3. Coordinate with the Ministry of Security and the National Guard.
4. Promote coordination with State Entities for asset-related crime information sharing.

F. New Vulnerable Activity: Receiving funds for real estate development for sale or lease.

G. New Obligated Parties:

1. Public and private facilitators under the General Law on Alternative Dispute Resolution Mechanisms (notaries, mediators, etc.).
2. Entities operating via trusts or other legal structures.
3. Custom agencies and individuals/entities promoting foreign trade without a customs broker.

H. Changes to Notaries’ Obligations:

1. 1. Lowers the threshold for reporting real estate transactions from 16,000 to 8,000 UMA.
   2. Eliminates value thresholds for:
      1. Incorporation of legal entities.
      2. Capital changes in legal entities.
      3. Mergers or demergers.
      4. Share transfers.
   3. Lowers trust-related thresholds from 8,025 to 4,000 UMA.

I. Virtual Asset Exchange: Expands scope to include foreign platforms targeting Mexican citizens.

Reporting required:
a. For transactions equal to or greater than 210 UMA.
b. For services charging 4 UMA or more.

J. New Obligations: The reform incorporates various obligations that were previously established in the rules and regulations, and adds new provisions, including:

1. Risk-based approach implementation.
2. Annual training and internal audits.
3. Know Your Customer (KYC) protocols.
4. Collecting beneficial ownership data for legal entities or trusts.
5. Information conservation extended to 10 years.
6. Mandatory “no-operation” reports.
7. Automated systems.
8. Annual audits.

K. UMA as Reference: Replaces minimum wage references with UMA (Unit of Measurement and Update).

L. AML Compliance representative:

1. Must receive annual AML training.
2. Identity protection measures to reinforce safety and independence.

M.  Cash Use Restrictions: Limits use of cash to fulfill obligations via financial institutions.

N. Verification Visits: Now governed by the Anti-Money Laundering Law and its regulations, with supplementary application of the Federal Administrative Procedure Law.

O. Sanctions: 

1. Late submission penalties: 2,000–10,000 UMA (~$226,280 to $1,131,400 MXN in 2025).
2. Permit/license revocation for gambling, armored transport, and vehicle shielding businesses.

P. Voluntary Compliance: Benefit expanded to all violations, not just the first violation.

a. May only be used once per person/entity.
b. Repeat offenses are not exempt but may get a fine reduction of up to 50%.

Q. Criminal Liability: ML crimes can now be committed by negligence or recklessness—not just intent.

Federal Criminal Code

Article 400 BIS (third paragraph) amended to recognize the SHCP as a victim/offended party in ML crimes involving financial institutions.

Transitory Provisions:

1. Effective Date: July 17, 2025.
2. Rules and Regulations modifications: The SHCP with SAT input must modify the general rules and regulations within 12 months.
3. Training and Audit Cycle: Annual period runs from January 1 to December 31, 2026.
4. New Obligations Effective Dates: Risk-based approach and audit timelines will be defined in the new regulations.
5. Measures for non-profit Associations and Organizations : During the first six months after the entry into force of the new rules and regulations, the Financial Intelligence Unit (UIF) and the Tax Administration Service (SAT) will implement:

• Training and guidance for compliance.
• Simplified, risk-based measures to protect civic space and freedom of association.

Sincerly,

Kreston BSG México - Legal Department

For more information, please contact us at contacto@krestonbsg.com.mx or by phone: +52 (222) 893 76 10

Authors: Francisco Téllez, Project Manager of the Legal area, certified by the UIF; and Luis Avila, Legal Partner at Puebla office.

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