Obligations your business must comply with if you perform vulnerable activities

Does your business performs vulnerable activities? Then you have to fulfill certain Mexican Law requirements.

 

According to the Federal Law for the Prevention and Investigation of Operations with Resources of Illicit Origin, there are some activities that are more likely to be used to launder money. These are known as vulnerable activities, and if a business executes them on a regular basis or professionally, it must comply with some Law obligations.

If your company practices vulnerable activities (check here the list to find out) this is what you have to do:

 

Registry

Individuals or companies that perform vulnerable activities have to register in SAT (Tributary Authority in Mexico).

 

Identify clients

It’s vital that they also identify their clients in those cases where the amount established by the authority is exceeded. It’s necessary to present official documentation, as well as personal information of the beneficial owner, such as its ID.

It should be mentioned, that when a contractual enforcment has been initiated, the authority may ask for information regarding the client’s occupation and collate it with its RFC (taxpayer registry).

 

Notices and reports

The business has to present notices and reports to the Financial Intelligence Unit when the amount established is exceeded. These notices have to include the basic information from both parts, as well as the description of the activity.

 

Information and documentation custody

It’s important that the business holds on to all the relevant information and documents that support the performance of the activities for at least 5 years since the date in which the vulnerable activity started.

In VLH we have qualified consultants that can guide you through everything related to Launder Money Prevention. We also do audits and provide training in this matter. Contact us, we can help you with any doubt you may have.

Which are the activities that the Mexican Law considers vulnerable?

Discover if your business performs vulnerable activities, as considered by the Federal Law for the Prevention and Investigation of Operations with Resources of Illicit Origin.

 

In accordance to the Federal Law for the Prevention and Investigation of Operations with Resources of Illicit Origin (LFPIORPI), there are some businesses in Mexico that are considered to be more susceptible for being used to launder money.

These activities are called vulnerable activities, and those companies that do them must comply with certain law requirements in order to operate in the Mexican market.

It should be mentioned that if you execute one or more of these activities eventually, you are not obligated to anything outside the conventional Mexican Legislation. This is because the LFPIORPI only applies to those who perform vulnerable activities professionally.

Without further ado, here is the list of the activities that the Law considers vulnerable:

 

Gambling, contests, or raffles.

Issuance or commercialization of service, credit, or pre-paid cards that constitute monetary value storage instruments.

Issuance of traveler’s checks different from Financial Institutions.

Mutual or guarantee operations, granting loans or credits, with or without guarantees other than Financial Entities.

Construction, development, or intermediation of properties.

Merchandising or intermediation of precious metals, precious stones, jewelry, or watches.

Auction or commercialization of works of art.

Merchandising or distributing air, sea, or land vehicles; new or used.

Shielding land vehicles or properties; new or used.

Transfer services or custody of money.

Proving professional services.

Providing public / legal services.

Receiving donations from associations and non-profit societies.

Providing foreign trade services as agent or customs agent.

Constitution of rights of use or enjoyment of real estate (monthly value).

Exchange of virtual assets from subjects different that financial entities.

If you perform one of these activities professionally and you’re thinking of establishing your business in Mexico, it’s important that you know that you must comply with certain obligations before the LFPIORPI. On another article, we will explain these requirements. So stay tuned to our social media and subscribe to our newsletter to get notified.

In the meantime, you can contact us to ask for advice on vulnerable activities in Mexico. Our specialists in Laundered Money Prevention will help you answer any doubt.