On July 18, 2013, the Federal Law for the Prevention and Identification of Operations with Illicit Resources (the "Anti-Money Laundering Act") went into effect, the same which was issued by the Mexican Congress for the purpose of serving as an information hub in the government's fight against money laundering. Similarly, (i) on August 16, 2013, the Regulations to the Anti-Money Laundering Act (the "Regulations") were published; (ii) on August 23, 2013, the General Rules (the "General Rules") were published; and (iii) on August 30, 2013, the formats for registration and notification in terms of the Anti-Money Laundering Act were published (the "Formats").The Anti-Money Laundering Act contains a list of at-risk activities and requires those who conduct such activities to file certain notices with the Mexican Department of Finance and Public Credit (Secretaría de Hacienda y Crédito Público). Unfortunately, the Anti-Money Laundering Act and the rules deriving from such contain various inconsistencies resulting from drafting issues. These inconsistencies are generating confusion and include issues such as whether the purchase and sale of real property is considered an at-risk activity, as well as who is required to present the corresponding notice as to such transactions.In this regard, it is important to note that while various activities in the real estate sector are considered at-risk activities subject to the law's required notice, the Anti-Money Laundering Act does not establish an obligation on the seller and/or buyer of real property to give notice as to such given that activities considered to be at-risk and subject to presentation of the respective notices are the following:(i) Real estate brokerage in the purchase and sale of real property, with the real estate broker being required to give notice when the price of the transaction is for an amount equal to or greater than 8,025 times the Minimum Salary in Effect in the Federal District (Salario Mínimo Vigente en el Distrito Federal ["SMVDF"]), meaning MX$519,699.00;(ii) The rendering of professional independent services, without the existence of an employment relationship, when a service provider, on behalf of and in representation of his client, carries out a financial transaction related to the purchase and sale of real property or a related trust;(iii) The participation of a notary public in the purchase and sale of real property, the same who must give notice when the value of the transaction or the property is greater than 16,000 times the SMVDFD, meaning MX$1,036,160.00; and(iv) The participation of a notary public in the formation of a trust transferring ownership of real property, the same who must give notice when the value of the transaction is greater than 8,025 times the SMVDFD, meaning MX$519,699.00.It is important to note that the Anti-Money Laundering Act prohibits the payment and receipt of all or part of the purchase price for real property in cash when the value of the transaction is greater than 8,025 times the SMVDFD, meaning MX$519,699.00. As a result, it is necessary to provide the notary public who supervises the closing of the transaction with detailed information regarding the form of payment of the purchase price, date, legal currency and respective amounts, without there being an obligation upon notaries public to include such references in the actual notarial instrument or deed. Therefore, the notary public's certification that he or she has received the corresponding information is deemed to be sufficient.
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Real Estate Law - The Purchase and Sale of Real Property and the Anti-Money Laundering Act
September 11, 2013