FATF Status

Mexico is not currently on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Mexico was undertaken by the Financial Action Task Force (FATF) in 2023. According to that Evaluation, Mexico was deemed Compliant for 10 and Largely Compliant for 24 of the FATF 40 Recommendations. ​It remains Highly effective for 0 and Substantially Effective for 4 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Mexico is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Illicit actors launder billions of dollars of drug trafficking proceeds through the Mexican financial system annually.  Corruption, bulk cash smuggling, kidnapping, extortion, fuel theft, intellectual property rights violations, fraud, human smuggling, trafficking in persons, and firearms trafficking serve as sources of additional funds laundered through Mexico.  Mexican authorities have had some success investigating and blocking accounts of suspected money launderers and other illicit actors but have shown limited progress in successfully prosecuting money laundering (ML) and other financial crimes.  Two 2017 Mexican Supreme Court rulings continue to complicate Mexico’s ability to counter illicit financial activities.    

To increase the number of financial crime convictions, the government needs to combat corruption, improve investigative and prosecutorial capacity at the federal and state level, and enhance inter-institutional cooperation.  Civil asset forfeiture legislation signed into law in 2019 promised to strengthen the authorities’ ability to use asset forfeiture as a tool to combat organized crime, but the Mexican Supreme Court struck down key elements of the law in June 2021, which will hinder the Mexican Prosecutor General’s Office’s (FGR) ability to obtain forfeiture orders under the law.

Under the U.S.-Mexico Bicentennial Framework for Security, Public Health, and Safe Communities, the United States and Mexico will deepen their partnership to counter money laundering through support for the investigation and prosecution of corrupt officials and other transnational criminals.  

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          31

World Governance Indicator – Control of Corruption             17

Corruption is a significant risk for companies operating in Mexico. Bribery is widespread in the country's judiciary and police, and business registration processes, including getting construction permits and licenses, are negatively influenced by corruption. Organized crime continues to be a very problematic factor for business, imposing large costs on companies. Collusion between the police, judges and criminal groups is extensive, leading to widespread crime, theft, impunity and weak law enforcement. The petroleum industry is dominated by the state-owned oil company Pemex, which has been the subject of several high-profile corruption cases. Gifts and hospitality are not forbidden by law and may be permissible, depending on intent. Attempted bribery, extortion, abuse of office, bribery of foreign public officials and facilitation are criminalized under Mexico's Federal Penal Code (Código Penal Federal, in Spanish). However, Mexico's anti-corruption laws are almost never enforced, and public officials are rarely held liable for illegal acts. For further information - GAN Integrity Business Anti-Corruption Portal

In 2022, Mexico was the United States’ second largest trading partner in goods and services. Bilateral trade grew 618 percent from 1994-2022, and Mexico is the United States’ second largest export market. It remains one of our most important investment partners. The United States is Mexico’s top source of foreign direct investment (FDI) with a stock of USD 207 billion (2021 per the International Monetary Fund’s Coordinated Direct Investment Survey, table 3).

The Mexican economy averaged 2.1 percent growth in Gross Domestic Product (GDP) from 1994 to 2022 and recovered to pre-pandemic levels in 2022, growing 3.1 percent. Exports to the United States grew 16.9 percent thanks to the U.S. economic recovery. Still, high inflation–mainly in food prices–and tighter monetary policy could affect Mexico’s purchasing power in 2023. Inflation surpassed the Central Bank of Mexico’s (Banxico) confidence interval of 3 percent ± 1 starting March 2021 and reached 5.8 percent as of May 2023. In addition, any potential deceleration of the U.S. economy could affect demand for Mexican exports. Mexico’s conservative fiscal policy resulted in a primary deficit of 0.5 percent of GDP in 2022, and the public debt decreased to 49.4 percent from 50.8 percent of GDP in 2021. Banxico committed to upholding the central bank’s independence.

The United States-Mexico-Canada Agreement (USMCA) entered into force July 1, 2020, with Mexico enacting legislation to implement it. The Government of Mexico has not issued implementing regulations in several areas, complicating the operating environment for the telecommunications, financial services, and energy sectors. The Government of Mexico considers the USMCA to be a driver of recovery from the COVID-19 economic crisis given its potential to attract more foreign direct investment to Mexico.

Investors report the lack of a robust fiscal response to the COVID-19 crisis, regulatory unpredictability, a state-driven economic policy, and the shaky financial health of the state oil company PEMEX have contributed to ongoing uncertainties. The three major ratings agencies (Fitch, Moody’s, and Standard & Poor’s) maintained lower-medium investment grade ratings on Mexican sovereign debt. In July 2022, Standard & Poor’s upgraded the outlook from negative to stable but maintained its BBB sovereign rating for Mexico. Moody’s downgraded Mexico in July 2022 to Baa2 with a stable outlook. Fitch reaffirmed its BBB- sovereign rating in November 2022. Moody’s downgraded credit ratings for PEMEX debt from non-investment grade speculative (Ba3) in July 2021 to highly speculative in January 2023 (B1). Fitch reaffirmed its non-investment grade speculative rating (BB-) for PEMEX, while S&P maintained a lower medium investment grade rating (BBB) citing the likelihood of extraordinary government support should the company suffer financial distress.

Uncertainty about contract enforcement, insecurity, informality, and corruption continue to hinder sustained Mexican economic growth. Efforts to reverse the following reforms further increase uncertainty: (1) 2013 energy reforms, including the March 2021 changes to the electricity law (found to not violate the constitution by the supreme court on April 7, 2022, but still subject to injunctions in lower courts); (2) the May 2021 changes to the hydrocarbon law (also enjoined by Mexican courts), and; (3) the September 2021 constitutional amendment proposal prioritizing generation from the state-owned electric utility CFE. These factors raise the cost of doing business in Mexico.

Country Links​

Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros

Comisión Nacional Bancaria y de Valores

Bank of Mexico