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.