Mexico: Anti-Money Laundering Notice

Identification before a mandate opens

Before the first transaction, the Mexico entity identifies the client, every natural person who owns or controls 10 per cent or more of it through any chain of holdings, and every person authorised to give instructions. An individual is recorded by full legal name, date of birth, nationality, residential address and each country of tax residence, and each of those is verified from an independent source rather than from the client alone. A company, fund or partnership is recorded by its constitutional documents, its directors or its general partner, and by an ownership chain traced to natural persons or to a listed issuer. The completed file is approved by two officers, one of whom sits outside the desk that introduced the relationship, and a file rated high risk is approved again by the Latin America regional compliance officer.

Evidence for the source of wealth and the source of funds

The firm asks two questions and requires an answer to both. Source of wealth explains how the client came to hold what it holds: a business sold, an estate inherited, distributions from an operating group, a career of professional income. Source of funds explains how this particular subscription, deposit or facility is being paid. Each answer is corroborated in writing, by sale agreements, audited accounts, filed returns, trust deeds or distribution notices, and never by description alone. Cash is not accepted anywhere in the network. Where an account of the wealth cannot be evidenced, the relationship does not open, and the reason is recorded on the refusal log kept in Mexico City.

The provisions that apply locally

The group standard applies identically in all 28 domiciles. Each jurisdiction then adds what its own regime requires of IGUAKO Capital México, S. de R.L. de C.V., of the officers appointed to it and of the reports it has to make.

Mexico treats a number of commercial activities as vulnerable and obliges the person carrying them on to identify the counterparty, keep the file and notify the authorities above set thresholds. The company applies that regime to every equity subscription, shareholder loan and supplier arrangement it enters, whether or not the particular activity falls inside the statutory list. Counterparties are screened against domestic exposure, which in a market where public health procurement is a large buyer means checking the connections of directors and shareholders to procurement bodies at federal and state level. No cash is accepted in any amount, by any entity in the country, for any purpose. Files are retained for the longer of the local period and the group standard of five years.

Monitoring output, screening results and internal reports arising on Mexico files are held on the group register maintained by the Group Head of Financial Crime, who reports volumes, ageing and outcomes to the Compliance & Conduct Committee each quarter.

Monitoring, internal reporting and records

Every account in the network is monitored automatically each business day against the behaviour the file predicts, and an exception is worked rather than noted. A rating of low, medium or high risk is set at acceptance and drives the refresh cycle, which runs at 12, 24 or 36 months and is tracked centrally. A relationship that falls overdue for refresh is restricted rather than allowed to drift. Any member of staff who forms a suspicion reports it internally the same day, and the money laundering reporting officer appointed for the Mexico entity decides whether it goes to the authority that receives such reports locally. The client is not told that a report has been made. Records are kept for seven years after the relationship ends.

The firm would rather decline capital than take capital it cannot explain, and it declines several approaches each year on that ground alone. The decision belongs to compliance and not to the desk that would earn the fee. It is recorded with its reasons, so that the same name is recognised if it returns through another door.