Flash | Amendment to the LFPIORPI

Regarding the initiative to amend and add various provisions to the Federal Law for the Prevention and Identification of Operations with Illicit Resources (LFPIORPI), as well as Articles 11 bis and 400 bis of the Federal Penal Code, presented in the Senate of the Honorable Congress of the Union of Mexico on October 28, 2024, it is relevant to mention that on January 29 and 30, 2025, an open parliament was held entitled "Analysis and Discussion of Legislative Reforms to Combat Money Laundering and Terrorist Financing," through which the discussion of the corresponding proposals was opened to members of civil society, academia, and the private sector.

As a result of this dialogue, the following points were modified and added to the original bill presented to the Senate:

I. Terrorist Financing (TF)

The need to implement a TF prevention regime specifically applicable to non-profit associations and societies, whose primary purpose is to receive donations or allocate funds for charitable, religious, cultural, educational, social, or any philanthropic acts, is maintained.

In this regard, the possibility of collecting information contemplated in Article 45 of the LFPIORPI is extended to the matter of TF.

In parallel, on January 20, 2025, the U.S. government issued Executive Order 14157, which establishes a process to designate groups dedicated to drug trafficking as foreign terrorist organizations and as specially designated global terrorists. This is part of an effort to disrupt their financial sources and restrict their access to the U.S. financial system.

Because the sanctions can be extensive not only to entities designated as terrorist organizations but also to entities that have links with such organizations, the risk is increased for companies to inadvertently be connected to these organizations and, therefore, be sanctioned by the Office of Foreign Assets Control (OFAC). This is in addition to the implications they may have in terms of money laundering prevention, in accordance with applicable Mexican legislation.

II. Powers of the SHCP

The Secretariat of Finance and Public Credit (SHCP) is empowered to interpret, in the administrative sphere, the LFPIORPI, its regulations, and general rules, as well as to coordinate its functions with those of the Secretariat of Security and Citizen Protection and the National Guard, to fulfill the purposes of the LFPIORPI.

Additionally, an Article 22 bis is added to establish that the supervision, verification, and monitoring of compliance with the obligations applicable to those who carry out vulnerable activities under Article 17 of the LFPIORPI will be carried out by the SHCP, through the Tax Administration Service (SAT).

III. Voluntary Compliance

Regarding the abstention from infringement due to voluntary compliance, enshrined in Article 55 of the LFPIORPI, it is added that once the obligated subject has exercised the benefit, the amount of fines corresponding to the infractions that are spontaneously regularized will be reduced by up to 50%, and prior to the initiation of verification powers, provided that the committed fault is expressly acknowledged before the authority, within the initial period of the sanctioning procedure.

IV. Other Obligations

The following obligations are added for individuals who carry out vulnerable activities: The documentation that supports vulnerable activities (excluding the provision of foreign trade services as an agent or customs attorney) must be kept physically or electronically, at the registered address, for at least ten years, counted from the date of the vulnerable activity in question. To carry out registration and updates, those who carry out vulnerable activities must send information, documentation, data, and images through electronic means and in the official format determined and published in the DOF. Furthermore, the initiative in question makes various references to the issuance of general rules to verify compliance with the new obligations.

VI. Additions or Modifications to the List of Vulnerable Activities

The vulnerable activity related to the receipt of resources intended to carry out a real estate development is added, defining as such the project for the construction of buildings or subdivision of lots, intended for sale or rent. A threshold of 645 UMA per operation is included to identify those vulnerable activities that constitute instruments of monetary value storage, whether by issuance, marketing, or crediting of resources.

VII. Crimes and Penalties

Regarding the crimes regulated by the current law, the "intentional" conduct of subjects who commit criminal offenses is eliminated.

Additionally, the following crime scenarios are added to Chapter VIII, Article 62 of the LFPIORPI: Anyone who modifies or alters information, documentation, data, or images intended to be incorporated into notices or responses to information requests made by the SHCP. Anyone who incorporates into notices or responses to requests made by the SHCP, information, documentation, data, or images that are illegible and prevent effective knowledge of their content. Furthermore, the possibility of reducing the penalties of the aforementioned article by up to half is included when there is a correctable error and it is corrected spontaneously before the authority becomes aware of the crime.

As always, the Tax and Legal staff of KPMG Mexico, through the Legal Services Practice, especially the Corporate Legal area, are in the best disposition to work jointly with you to support you in analyzing the possible implications that would arise from the entry into force of this reform.