Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—Guidance on currency restrictions on banks in Mexico updated, (Sep 30, 2013)

By Richard A. Roth, J.D.

The Financial Crimes Enforcement Network is supplementing earlier advisories on the meaning and effects of Mexican anti-money laundering regulations. According to the government of Mexico, the regulations, adopted in 2010, have resulted in a 63-percent drop in the value of U.S. currency exported from Mexican banks (FIN-2013-A007).

Mexican regulations. The 2010 regulations generally prohibit banks in Mexico from accepting U.S. currency, except that:

• a bank can accept up to $7,000 per calendar month from a legal entity bank customer that conducts most of its business within a designated tourist area, within 20 miles of the U.S. border, or within Baja California or South Baja California;

• a bank can accept up to $4,000 per calendar month from an individual who is a bank customer;

• a bank can accept up to $300 per day, to a maximum of $1,500 per calendar month, from an individual who is not a bank customer (in the case of a foreign tourist, the daily limit does not apply).

U.S. currency cannot be accepted from a legal entity that is not a bank customer.

In 2010, FinCEN warned that the regulations could mean increased efforts to launder U.S. currency using U.S. banks or through banks in third-party nations (FIN-2010-A007).

Red flags. In 2012, FinCEN described a number of methods that had been used to launder money through Mexican banks, in an effort to help U.S. banks to detect illegal activity (FIN-2012-A006). One method was called a “funnel account,” and was characterized as involving currency deposits into an account followed very quickly by withdrawals from the same account at a distant location. The activity was said to have no apparent lawful purpose and no relationship to the accountholder’s business activity.

The agency warned of several uses of wire transfers that had no apparent business purpose. Also, completed Reports of International Transportation of Currency or Monetary Instruments (CMIRs) had been used in an effort to legitimize large currency deposits. (A CMIR is a required form that reports the transportation of more than $10,000 in U.S. currency into or out of the country.) The existence of a CMIR was irrelevant to whether a deposit should be considered to be suspicious, FinCEN warned.

Current update. The new FinCEN advisory notes that the return to the U.S. of U.S. currency that was received as part of legitimate business activity is important to both the U.S. and Mexico. In an effort to facilitate the activities of Mexican banks, Mexico’s regulatory authorities have issued a set of best practices. The current advisory provides those best practices to U.S. banks in both Spanish and English. The recommendations focus on the need for the Mexican bank to determine and provide information on the expected number, size, and location of origin of the currency transactions, as well as the need to exchange confirmation that each institution is complying with appropriate anti-money laundering procedures.

RegulatoryActivity: BankSecrecyAct CrimesOffenses