In an effort to protect Mexico’s financial system, the Anti-Money Laundering Law was created. The goal of this law is to offer a healthy economy, which is attractive for investors. At the same time, this law intends to identify and provide clear guidance of any “vulnerable activity”. In other words, any unknown transactions acting as facilitators for money laundering activities.
Mexico identified the main areas where money was being washed, and then the Ministry of Finances created a Federal Law aimed to prevent and identify operations with sources from illegal origin.
As we can expect, some of the suspected transactions involving money laundering include the purchasing of a home, vehicles, business, companies, among other proceedings. And, it also involves the construction, development or brokerage services involving Real Estate Property. Therefore, intermediaries involved in the buy or sell of a property, have to issue reports and notifications of new transactions to the Unit of Financial Intelligence.
When purchasing a property in Mexico, you should be aware of some extra steps that the notary public will take at the time of the closing, in order to fulfill the requirements of the anti-money laundering law.
Foreigners interested in buying a property in Mexico have to present these documents to start with the purchasing process:
- Immigration form (a paper you get at the airport)
- UIF form (signed by every individual involved in the transaction)
- ID- Passport
- Proof of address (DL is ok)
When purchasing through Fideicomiso (Bank trust) you will need to provide the next documents:
- Bank KYC
- Immigration form
Some Mexican developers ask for social security number or Canadian Tax ID. However, no Tax ID or number is required, nor any marriage license or birth certificate. It’s not Mexico’s responsibility to report to the tax authorities in the US or Canada.
Third Party Participation
Unlike the US, where purchasing a property only requires proving where the money comes from, Mexico has different methods. To avoid money laundering or any illegal activity, if money comes from a third party it has to be from a direct relationship.
Basically, the third party has to be a close relative, i.e. mother-daughter, daughter-mom. The key is tracking the money. In case it isn’t coming directly from the customer in question, then all documents from the third party are necessary.
The sanction that could apply to whom disrupts the laws are:
Criminal Liability: Imprisonment from two up to eight years and a monetary sanction of $2,000 MDW (US $10,273) shall be imposed to anyone who deliberately:
- Submits false or completely illegible information, documentation, data or images to the party carrying out the Suspect Transaction to be submitted in their reports, or
- Modifies or alters information documentation, data or images destined to be incorporated to the reports or incorporated in filed reports.
For more information about the Legal Basics, you can read our latest post here.
Remember, the information we provide might result very helpful. However, it’s always necessary the guidance and education from a specialized agent. At Top Mexico Real Estate we can help you and provide you all the information about the process of Mexico real estate. We will answer all your questions and we’ll be happy to help you.
At Top Mexico Real Estate… We make it happen!