Editor’s Note
This article outlines key changes introduced by Article 17 of Mexico’s financial reform, which expands and clarifies the catalogue of Vulnerable Activities requiring identification and, in some cases, mandatory notice to the Ministry of Finance (SHCP). The update adjusts specific activities and monetary thresholds, impacting sectors from vehicle sales to armored transport and foreign trade.
Article 17 defines which Vulnerable Activities must be identified and in which cases a notice must be filed before the Ministry of Finance and Public Credit (SHCP). The reform expands and clarifies that catalogue, while also adjusting certain activities and thresholds (e.g., vehicles, armored services, transfer or custody of valuables, donations, and foreign trade of sensitive goods). Key changes include:
Cards and Value Instruments (outside the financial system).
Fraction II applies to individuals or legal entities, acting habitually or professionally, that issue or commercialize, outside the financial system, any of the following products: service or credit cards, prepaid cards, and stored-value instruments (e.g., electronic purses or branded gift cards). Financial institutions are not governed by this provision.
Real Estate and Development.
Fraction V now covers, for those acting habitually or professionally, not only intermediation but also the construction or development of real estate where a purchase or sale is involved. Each transaction must be reported to the SHCP when the amount equals or exceeds 8,025 times the daily value of the Unit of Measurement and Update (UMA). Fraction V Bis is added to cover the receipt of funds allocated to a Real Estate Development intended for sale or lease; here, the threshold is evaluated per receipt of funds (e.g., advance, contribution, or partial payment), with reporting also required from 8,025 UMAs.
Precious Metals, Precious Stones, Jewelry, and Watches.
Fraction VI provides that those who commercialize or intermediate, habitually or professionally, the purchase or sale of such goods must identify the client when the value equals or exceeds 805 UMAs, and must report to the SHCP when the amount equals or exceeds 1,605 UMAs. Exception: this does not apply when the Bank of Mexico intervenes.
Works of Art.
Fraction VII establishes that the auction or commercialization, habitually or professionally, of works of art requires client identification when the value equals or exceeds 2,410 UMAs. These activities must also be reported to the SHCP when the amount equals or exceeds 4,815 UMAs.
Ultimate Beneficial Owner (specific chapter).
The definition is aligned with “beneficial owner” and “real owner.” Corporations must identify and retain such information and file a notice in the electronic system of the Ministry of Economy when recording in their corporate books the transfer of ownership or the creation of rights over shares or equity interests; additionally, they must register the person or group exercising effective control.
Compliance Obligations (Article 18).
Directly identify and verify clients/users with official documents; for legal entities/trusts, identify the ultimate beneficial owner; for individuals, declare whether one exists and document it. Maintain supporting information for 10 years (interrupted if legal remedies are pursued); register and update information on the Portal; submit Notices/Reports in official formats and file notice within 24 hours in case of suspicion, even if the transaction is not completed; risk-based evaluation; annual training and personnel selection; annual audit (internal or independent external if high risk).
Restrictions on Cash Payments (Article 32).
Prohibits fulfilling, liquidating, or accepting payments in cash (domestic or foreign currency) or with precious metals, even through a financial institution, when transactions reach the UMA thresholds and involve: the creation or transfer of real rights over real estate; transfer of ownership or real rights over vehicles (air, sea, or land); transfer of ownership of watches, jewelry, precious metals and stones, or works of art; acquisition of tickets, prize payments, and transactions linked to gambling, contests, or raffles; vehicle or real estate armoring services; transfer or creation of rights over shares or equity interests; creation of rights of use or enjoyment (leases) with respect to the foregoing goods; as well as payment consignments linked to any of these acts (new under the reform). Moreover, the SHCP may extend this prohibition to fungible goods by issuing general rules.
Protection of the Compliance Officer’s Identity (Article 41 Bis).
If judicial or administrative authorities request the appearance of the compliance officer (financial entity) or the designated compliance representative (engaged in Vulnerable Activities) for proceedings related to their functions or information derived from the Law, such proceedings may be carried out by legal representatives or attorneys of the obliged party, in order to protect the officer’s identity.
Temporary Suspension of Transactions (Article 54 Bis).