Real Estate Law. Buying and Selling Real Property and Mexico’s Anti-Money Laundering Act

On July 18, 2013, the Federal Law for the Prevention and Identification of Operations with IllicitResources (the “Anti-Money Laundering Act”) went into effect, the same which was issued bythe Mexican Congress for the purpose of serving as an information hub in the government’s fightagainst money laundering. Similarly, (i) on August 16, 2013, the Regulations to the Anti-MoneyLaundering Act (the “Regulations”) were published; (ii) on August 23, 2013, the General Rules(the “General Rules”) were published; and (iii) on August 30, 2013, the formats for registrationand notification in terms of the Anti-Money Laundering Act were published (the “Formats”).The Anti-Money Laundering Act contains a list of at-risk activities and requires those whoconduct such activities to file certain notices with the Mexican Department of Finance and PublicCredit (Secretaría de Hacienda y Crédito Público). Unfortunately, the Anti-Money LaunderingAct and the rules deriving from such contain various inconsistencies resulting from draftingissues. These inconsistencies are generating confusion and include issues such as whether thepurchase and sale of real property is considered an at-risk activity, as well as who is required topresent the corresponding notice as to such transactions.In this regard, it is important to note that while various activities in the real estate sector areconsidered at-risk activities subject to the law’s required notice, the Anti-Money Laundering Actdoes not establish an obligation on the seller and/or buyer of real property to give notice as tosuch given that activities considered to be at-risk and subject to presentation of the respectivenotices are the following:(i) Real estate brokerage in the purchase and sale of real property, with the real estatebroker being required to give notice when the price of the transaction is for an amountequal to or greater than 8,025 times the Minimum Salary in Effect in the FederalDistrict (Salario Mínimo Vigente en el Distrito Federal [“SMVDF”]), meaningMX$519,699.00;(ii) The rendering of professional independent services, without the existence of anemployment relationship, when a service provider, on behalf of and in representationof his client, carries out a financial transaction related to the purchase and sale of realproperty or a related trust;(iii) The participation of a notary public in the purchase and sale of real property, the samewho must give notice when the value of the transaction or the property is greater than16,000 times the SMVDFD, meaning MX$1,036,160.00; and(iv) The participation of a notary public in the formation of a trust transferring ownershipof real property, the same who must give notice when the value of the transaction isgreater than 8,025 times the SMVDFD, meaning MX$519,699.00.It is important to note that the Anti-Money Laundering Act prohibits the payment and receipt ofall or part of the purchase price for real property in cash when the value of the transaction isgreater than 8,025 times the SMVDFD, meaning MX$519,699.00. As a result, it is necessary toprovide the notary public who supervises the closing of the transaction with detailed informationregarding the form of payment of the purchase price, date, legal currency and respectiveamounts, without there being an obligation upon notaries public to include such references in theactual notarial instrument or deed. Therefore, the notary public’s certification that he or she hasreceived the corresponding information is deemed to be sufficient.