Oscar Conde Medina participates in the IR Global Guide – Getting to know the UBO & selecting the right advisor

Foreward by Andrew Chilvers

When the 5th Anti-Money Laundering Directive was introduced into law by the UK and EU in January 2020, for many professionals it was a much needed addition to legislation that would significantly help business transparency and combat money laundering. In essence, it was good for business and for public and professional confidence.

All jurisdictions signing up to the 5th Directive will build and maintain UBO registries that will be publicly available at any time. UBO registries will also be set up for bank accounts and trusts, although these latter two will not be publicly available but be accessed by the relevant authority such as financial intelligence units and legal advisors looking into money laundering. Investigative journalists who can show a legitimate interest in the case can also have access, which is vital if another Panama Papers (see below) is to be uncovered. Across the UK and EU national UBO registers will be set to connect through a central European platform by April 2021.

Please provide a brief overview of the UBO Register in your jurisdiction and its history?

Even though there is no publicly accessible UBO register, UBO-related information must be identified, documented, and available in case authorities require it. The legal basis for these types of regulations, which were initially implemented within the financial sector, derived from a constitutional reform passed on 2014. This acknowledged access to information as a fundamental right, considered essential for a democratic system of government. This reform included and modified several dispositions to article 6 of the Constitution regarding transparency matters, including the obligation to disclose information regarding political parties, unions, trusts, and public funds, and set the basis for the publication and reform several legal dispositions, including the Federal Law for the Prevention and Identification of Illegal Resources, General Law of Transparency and Access to Public Information, National Anti-corruption System, Federal Criminal Code, General Law of Administrative Responsibilities, and General Law of the National Anti-corruption System, among others.

Along with the implementation of these legal dispositions, Know your Customer (“KYC”) and UBO-related obligations were imposed for certain economic activities.

On that same note, the Financial Intelligence Unit (“UIF”) was created to regulate the application of this set of rules, which contemplates around 13 main obligations, from registering vulnerable activities, to reporting suspicious operations. On that same note, in 2018 the General Law for Commercial Companies was reformed and the obligation of Mexican Corporations and Limited Liability Companies to notify the updated ownership structure of the company was included.

More recently, in 2020, rendering services related to the purchase of crypto currencies was incorporated as a vulnerable activity.

How can your firm ensure your clients are fully compliant with the new / existing requirements?

We start with an assessment of the status of the client with regards to the 13 main obligations derived from the applicable regulations, followed by a process of remedy, for the cases in which there is a gap between the obligation and its compliance. Finally, if necessary we offer legal defense regarding the applicable sanctions.

What changes can we expect to see emerging, are any new proposals expected?

It is expected for the UIF to have more supervision and monitoring not only over UBOs themselves but also over the parties and counterparts involved in a specific operation.

What other information might be relevant?

In addition to the applicable fines, which may go up to MXN $5’674,200.00 (approximately USD $282,627.00) or 10% of the value of the operation, it is not only feasible but also common for non-compliance with the applicable dispositions to result in criminal actions against the obliged parties. On that note, it is important to consider that money laundering-related offenses are considered serious crimes and do not admit bail.

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Contributing Advisors