Written By: Jorge Ojeda
Cacheaux Cavazos & Newton
San Pedro Garza García, Mexico
On July 18, 2013, the Federal Law for the Prevention and Identification of Transactions Conducted with Illicit Funds (known by its Spanish acronym “LFPIORPI”), went into effect, the same which was issued for the purpose of serving as a vehicle enabling authorities to centralize information in the fight against money laundering. The law establishes activities which are susceptible to illicit fund transactions and guidelines which companies should follow in order to maintain an identification file for their clients and cases in which notice should be given to the Mexican Department of Treasury and Public Credit (“SHCP”). The LFPIORPI lists the leasing and subleasing of real property among the susceptible activities, therefore, landlords and tenants should comply with the obligations to correctly identify all of the parties that participate in a transaction, and prepare a physical or digital file which contains, in accordance with LFPIORPI, and our review, the following information:
It is important to mention that the LFPIORPI establishes the obligation to notify the SHCP when monthly rent exceeds 3,210 times the minimum salary in effect for the Federal District (approximately Mx$207,000 Mexican Pesos or $16,500 U.S. Dollars). With respect to such, the LFPIORPI excludes the obligation to maintain the secrecy of this information pursuant to professional and banking confidentiality, attorney-client privilege, and confidentiality agreements, etc. The LFPIORPI establishes several penalties in the event of not possessing the identification file, not providing such to the SHCP or not presenting the corresponding notices. Depending on the type of violation, such penalties range from approximately Mx$13,000.00 Mexican Pesos ($1,000.00 U.S. Dollars) to Mx$4,855,000 Mexican Pesos ($388,000 U.S. Dollars), and in certain serious cases, may constitute a criminal felony charge punishable by imprisonment. It is important to mention that publication of the Regulations to the LFPIORPI remains pending, which should serve to clarify various aspects of how to comply with the new law. Based on the above and other characteristics established in the LFPIORPI, it is of utmost importance to obtain advice on the new law and prepare manuals and internal controls to identify potentially susceptible transactions, prepare the corresponding files and present required notices.