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  • Writer's pictureBrandon Guillermo Lopez Moreno

Anti Money Laundering Law – Limitations to Cash Payments


Cash is the most common way to pay since its use is the simplest. There is no need to use technology nor intermediaries. The transactions in cash are not registered in any way and are pretty much impossible to track down. And this is why, for the laws related with money laundering all around the world, the use of cash is highly risky.

In the case of Mexico, for the before-mentioned reasons, the Anti money laundering establishes limits to cash payments. Limits that, if are not complied with, carry with them really high fines. That is why you must have some knowledge about the regulations in terms of Anti Money Laundering in order to avoid the no-compliance.

Limitations to cash payments for vulnerable activities

Years ago, it was really common to use cash in high-value transactions. Purchase/sale of automobiles, jewelry, real estate leasing and even land and property purchases. It is also important to take into consideration that not all the activities paid in cash are subject to the Anti Money Laundering law.

As seen before, the AML law considers some activities as “vulnerable”, and some of these are the ones subject to the limitations to cash payments. The following table indicates the maximum amounts that can be paid in cash, depending on the transaction:

It is worth mentioning that only the before mentioned activities are the ones with established limitations to cash use. All the other activities have no limits.

Sanctions established by the Anti Money Laundering Law for not complying with the limitations to cash payments

As usual with the Anti Money Laundering law, the fines are quite high, but in the case of non-compliance with the limitations to cash payments, we find that the fines are particularly high.

The law establishes a fine that goes from $806,000 to $5,239,000, or the 10% of the amount of the transaction in question, whichever is higher.

It is obligation of the notary to give public faith to transactions related with the activities before mentioned in which he or she participates, to establish on the public deed the payment method, and in the case of cash transactions that are lower than the limits established on the Law, having the client sign a declaration under penalty of perjury will be enough. This statement should include the elaboration date to avoid future problems, since these amounts could change.

On a more cultural note, Mexico is applying monetary sanctions to the use of cash, but there are countries in Europe where using cash is comparable with crime, and as such is penalized like it.

As a last note, we have to remember that the Anti Money Laundering law establishes that if a client doesn’t want to comply with the obligation regarding the limits in cash payments, the person carrying out the vulnerable activity will have to avoid completing this transaction. This means that the sale of the property, vehicle or leasing would have to be canceled if the client wanted to pay in cash a higher amount that the ones mentioned before. And, if a sale goes through with a cash payment higher than the amounts accepted by law, the seller would have to give back the money to the buyer in the same way in which was given to him, meaning that he would have to deposit the cash to the buyer bank account.

As everything related to Anti Money Laundering Law, it is very important to look for specialized advisory in this topic to help you find a solution, given that the fines are high enough to maybe even force a medium-sized company to make the decision to close its doors for being unable to pay these fines.

If you need further assistance, please contact us and one of our associates will review your case in specific, in order to provide a solution for your problem.

 

Published on April 04th, 2018.

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