ANTI-MONEY LAUNDERING. Loans between Companies within the same Business Group March 11, 2021
Last January 18th, 2021, the General Criteria issued by the Financial Intelligence Unit of the Ministry of Finance and Public Credit regarding anti-money laundering was updated, particularly the related to centralized treasury operations and/or loans granted between Companies of the same Business Group.
The Criterion basically states that in accordance to article 17, section IV of the Federal Law on Prevention and Identification of Operations from Illicit Sources (AML Law) the granting of credits or loans between Companies of the same Business Group will be considered as Vulnerable Activities (VA) subject to comply with the obligations established in the AML Law, with the exception of filing Notices, as long as the total amount of the operation has been provided through Financial System Institutions and the Companies comprise a Business Group in terms of article 3, section X, of the General Rules.
Nevertheless, the aforementioned Criterion has raised doubts and concerns regarding when such operations are effectively considered VA; that is, as of the date when it was updated or since before.
The article 17, section IV of the AML Law establishes that the habitual or professional granting of guarantee operations or the granting of loans or credits, that may include or not a warranty, by means of entities different from the Financial Entities are considered VA, and when the act or operation is equal or superior to a certain amount a Notice must be submitted.
However, on July 25th, 2014, the addition of the article 27 Bis of the General Rules entered into force, which states in its section I, subsection a), that regarding to the provisions set forth in the article 17, section IV of the AML Law, the corresponding Notices are not subject to filing when Companies that are part of a Business Group executed operations granting loans or credits exclusively with other Companies of the same Business Group. The above, as long as the total amount of the operation would have been provided through Financial System Institutions.
Therefore, it is important to clarify that the centralized treasury operations and/or loans granted between Companies of the same Business Group are considered VA with the exemption of submitting Notices, as of the date in which the referred article 27 Bis, section I, subsection a) of the General Rules entered into force, this is, since July 25th, 2014, and not from January 18th, 2021, date in which the aforementioned Criterion was updated.
Companies of the same Business Group that effectively executed the aforementioned operations must verify the fulfillment of the obligations set forth in the AML Law, including, among others: (i) registry upon the Tax Administration Service; (ii) submission of the monthly reports or “zero” notices; (iii) obtain information and documentation of the clients, users and/or beneficial owners and identify and classify the risk level; (iv) integrate the identification records; (v) to have guidelines, internal policies and procedures; etc.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, March 11, 2021