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Money Laundering and the Real Estate Industry in Mexico

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Money laundering and the real estate industry in Mexico is a topic of great interest to the Mexican government as drug cartels and crime syndicates look for ways to funnel their cash into legitimate businesses and property.

Anti-money laundering laws were passed in Mexico in 2013, and there are many sections to it. In Mexico, once a law passes, departments such as SAT (Hacienda, the Mexican IRS), notaries and congressmen formulate procedures on how to enforce a particular part of the law.

It can take up to six months for a procedure to be created. For example, in 2013 the SAT website did not work for over six months, so there was a long delay being able to file or to even learn what information was required. Unfortunately, there is not a strong government effort to inform and train the real estate industry, so it takes time to find out what we are supposed to do.

Real estate is not a regulated industry in Mexico at this time. Education is offered by private schools and organizations like AMPI, which strive to raise the level of professionalism and transparency.

Since the anti-money laundering legislation was passed in 2013, real estate agents now are required to report sold transactions to Hacienda after a sale. Here are the reporting guidelines and information:

  • Buyer agents and seller agents paid directly have to report to SAT by the 17th of the month following the closing.
  • There is a format on the SAT website to use for entering data on the seller, buyer and the closing.
  • Each reporting agent has to include more information about the party they represented, and basic details of the other party.
  • The notary has to fill out a form, also, as a summary of the transaction.
  • This information is not to be released to the public, but is a report for the government to learn sale details.
  • Your personal information as a buyer or seller is reported to the Mexican IRS with details of your purchase price and source of funds.
  • Seller information reported includes original purchase price and new sales price.
  • The location, date of the transaction and the name of the notary formalizing the transaction is noted.
  • The government is looking for cases of laundered money used to support illegal activities or fund terrorists.
  • The reports also help the government determine what tax has been paid.
  • The agent reports and the notary report are reviewed to find inconsistencies in what each party is reporting as the truth.
  • There are high fines for failure to report as well as jail time in some cases.

This article is based upon legal opinions, current practices and my personal experiences. I recommend that each potential buyer or seller conduct his/her own due diligence and review.

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Harriet Murray
Also from Puerto Vallarta, Harriet Murray's Viewpoint Blog provides expert advice on buying and selling homes in Mexico. Harriet has owned Cochran Real Estate in PV since 1997. She is a Certified International Property Specialist (CIPS), President of AMPI Vallarta and a Member of the International Real Estate Federation.

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