By Harriet Murray ● Cochran Real Estate ● December, 2012
Recently Lic. Fernando Castro from the office of Notary 5, met with the Bay of Banderas Ampi chapters to update their members on recent bank anti-laundering laws.
According to Lic. Fernando, the Mexican government is taking a pro-active role in gathering information by requiring the co-operation from real estate agents and notaries to identify sources of money which their clients use to purchase Mexican real estate.
On July 18, 2013 the following changes in the law will take effect:
Real estate agents will need to report where the money for the purchase was derived from and where the client lives. How did the client come to you for realtor services? How was the sale closed: by what notary, where and when? The government may come to the agent at any time to ask these questions.
There are no cash transactions for purchasing property permitted. Money must be traceable from an account in a bank or financial institution by wire or check.
Notaries will also be part of the information pool from which the Mexican government will draw information. Notaries will have to report details of the transactions to the government. Notary records will need to include application forms for bank trusts answering questions about the source of funds, and other questions determined to be pertinent to identity correctly and thoroughly the funds and the persons with the funds. What does the buyer do for a living? How has he earned or acquired the funds he is using to purchase the real estate and pay the closing costs?
The government will check the answers from the real estate agents against the records of the notaries for verification of the information.
The Mexican government is also taking very seriously the Carta de Poder, or Power of Attorney which buyers and sellers give to third parties to sign a transfer of property. Real estate agents are warned to not take this responsibility lightly, and to be very sure of the identity of the client and the source of his funds. Mexican laws will hold the person with the POA responsible for the transaction and issues which come from it which may be fraudulent.
In Mexico, the term prestanombre is used to mean when the principal remains anonymous and the “straw person” signs for him. Anyone would have legal consequences if he took the “straw” position for a person laundering money.
Money laundering also includes illegally selling a foreign plated car in Mexico or earning rental income and not registering with Hacienda nor paying taxes. Tax appraisals of the property shall be reported to the government by the public notary as another form of tracing the values associated with a sale.
It is clear that the Mexico and many other countries including the USA and Canada have to determine where money is coming from into their countries. This endeavor is aided by the collection of information on people living in the country and their outside associates to cross reference data for the purposes of tracking the flow of money.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.