The Anti-Money Laundering

By: Cheryl MIller, Broker, Baja Realty and investment

The Anti-Money Laundering Law that changed and has been in effect since September 2013, has literally no effect on your ability to purchase or sell real estate in Mexico or the Baja, EXCEPT, if you are involved in the activities cited as being "vulnerable" and/or if you want to pay or be paid in cash.

The largest affect you will suffer is from the standpoint that you will be required to fill out a "Know Your Client Form" multiple times. A redundancy that, unfortunately, cannot be avoided.  Your Escrow Agent will ask for this information, Your Realtor, the Notario Publico, and if you have a trust, so will the Trust Bank.

Information that is requested included your name and address (here and in your country of residence), your Social Security Number, your passport number, dates in effect, place of birth, date of birth and your occupation. If you are Mexican involved in the transaction, they ask further for your Population Number and your Tax ID number.  And two forms of official identification. All of the parties requesting and receiving this information, by law, need to hold on to the physical and electronic file for a minimum of 10 years. They all are required to report any transaction over $519,000 pesos (about $26,000 USD at today’s exchange rate) and the persons involved on a monthly basis.

Trust me, as realtors, none of us asked for or wanted this added task. It causes us a great deal of work and threat of penalties. However, the law states that anyone involved in the types of transactions cited in the law, of which, real estate is listed, MUST report all transactions to the government by the 17th of each month with the transactions that occurred in the period between the 18 of the past month and the 17th of the present month.   The fines are enormous up to $4 million pesos.  So, don't be annoyed by this redundancy, it is necessary; and none of the required reporting parties are willing to pay this fine for you.  Failure to complete this forms for any of these parties, can cause the demise of the transaction.

Why the repetition?  I have been told, that due to past "Illegal" reporting of values in escrituras by many Notarios throughout the country, the Federal Procurduria (Federal Attorney General's Office) decided that redundancy was a way to ensure that the correct information was being reported.

For Mexico, compliance with the Ley de Lavado de Dinero allows Mexico to be incompliance with United Nations mandates, but also helps them to identify money laundering, tax evasion and criminal activities.  58 countries have lined up and agreed to Money Laundering Laws. Mexico is one of them.

If you are American, please be advised that Mexico’s IRS, the Hacienda and the US IRS have been working for many years under a treaty. They share information regarding income made in Mexico. Income made from real estate, bank accounts, rentals and other sources.  So, both countries are sharing info and working to avoid tax evasion on both sides of the border. And over 58 countries through the UN are participating in the global Money Laundering Treaty with their own laws in force.

So, just take a deep breath, and don’t get annoyed at the number of forms you are being required to fill out with the same information. It is now just part of the process of buying or selling real estate in Mexico now!

Cheryl Miller, Broker of Baja Realty and Investment, CIPS, ABR, NAR. www.forsaleinbaja.com, info@forsaleinabaj.com, 011-521-624-122-2690.