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27 September 20226 minute read

Anticorruption and AML in Mexico: Trends and developments

The fight against corruption and the fight against new forms of money laundering (AML) are issues that should occupy a central place in the public policy agenda of any country. These endeavors are deeply connected.  For a government to have better results in tackling these problems, it must put in place a broad-based system to investigate and prosecute such misconduct, most notably with a great degree of coordination among all the agencies in charge.

First, in the fight against corruption, it is essential that the different authorities exercise their powers across the board, share information, investigate the conduct of possible offenders (individuals and public servants), and impose sanctions. All of this needs to take place while respecting the constitutional principles of presumption of innocence and the obligation of an accuser to prove guilt beyond reasonable doubt.

In Mexico, unfortunately, concerns still arise. For example, the Secretariat of Public Function (Secretaría de la Función Pública, SFP), the agency which centralizes the fight against corruption, is apparently not as effective as it should be in its collaboration with other agencies.[1]

Regarding AML, Mexico’s efforts of prevention and enforcement are led by the Ministry of Finance (Secretaría de Hacienda) through its Financial Intelligence Unit (UIF), whose constitutional mandate is to apply the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (the AML Law).[2] However, large-scale investigations in this administration have been few, coupled with little transparency[3] and lack of coordination with the agencies involved.

Another relevant enforcement agency is the Federal Attorney General (Fiscalía General de la República or FGR) which is in charge of criminal enforcement with a constitutional mandate to investigate and prosecute white collar crimes and money laundering. Its ambit includes not only investigating and prosecuting such crimes, but, in some cases, seizure of the resources involved in such operations.

Also of note is that one of the main mottos of the current administration of President Andrés Manuel López Obrador is the fight against corruption.

A recent high-profile white collar and money laundering case that illustrates some of the problems Mexico faces is the prosecution of Emilio Lozoya Austin, former CEO of Pemex (Mexico´s national oil and gas producer) during President Peña Nieto’s administration. He was accused of facilitating PEMEX public contracts and other illicit activities with public providers in exchange for several bribes which he later tried to launder through the financial system.

Lozoya Austin is currently in prison awaiting trial on charges including money laundering of improper payments received from PEMEX providers, which is a felony under the National Penal Code.[4] He has already been declared ineligible to hold a public position for ten years. This case has generated considerable concern: it has been highly politicized, and many have expressed frustration about the slow pace of the prosecution and even the ineffectiveness of the entire investigation.

Also now in the spotlight in Mexico is the UIF’s investigation of former president Enrique Peña Nieto and members of his inner circle. The investigation supposedly has taken more than two years. Many predict it will result in a formal complaint to the FGR calling for it to bring criminal charges against the former president.[5]  As in the Lozoya Austin case, this investigation has been used as political tool and foreseeably will be a factor in the coming 2023 state elections and the 2024 presidential election.

Both investigations have featured public confrontations between the heads of FGR and UIF, as well as an apparent lack of full cooperation between these two agencies.

In sum, government efforts to combat corruption and money laundering in Mexico have been fragmented and are widely perceived as isolated, even short-term efforts by the agencies responsible for pursuing them. During the entire four-year administration of President Obrador, fewer than five high-profile cases have been initiated against public functionaries of past administrations. The case of Mr. Lozoya is currently on hold. And when such cases become political weapons, their effectiveness as a deterrent comes into question.

Of note is that the current Administration has centralized and politicized all government efforts in combating corruption, which de facto means that the system to combat corruption and money laundering simply does not work.

Another possibility here may be that the heads of the UIF, FGR and the SFP may have no real interest in coordinating with each other. Each is seeking to fulfill the presidential agenda in isolation, without functional cooperation between agencies.

Also, the participation of civil society in the fight against corruption has been set aside, which, together with a lack of transparency, means that the fight against corruption and money laundering derived from acts of corruption responds to a political agenda, rather than being a professional and coordinated effort with more likelihood to bear fruit in the long term.

In conclusion, in a government’s fight against corruption and money laundering, it is essential that all the agencies involved assume their roles in a coordinated manner and employ all available resources within their reach, with transparency and citizen participation and without political considerations. This is how to achieve an effective and transparent result.

Learn more about the fight against AML and corruption in Mexico by contacting either of the authors.

[1] For example, the Federal Supreme Audit, and constitutional autonomous organs.

[2] Another agency dependent of the Secretariat of Finance is the National Banking Commission, which oversees the procurement of financial entities of the AML policies.

[3] The transparency is regarding the number of investigations per year, and the effective results of that investigations, as well, the involvement of the civil society through the counsel to Anti-Corruption National System.

[4] Pursuant to article 400 Bis of National Penal Code.