Posted on by Juan Carlavilla

Mexico and its definition of PEP

Mexico and its definition of PEP. Photo by Juanjo Jaramillo.

The concept of a person with public responsibility is an institution commonly spread across the globe. This is due to intergovernmental cooperation led by the FATF and the inclusion of PEPs in its Recommendations.

Mexico, like other Latin American countries such as Argentina, Uruguay, or Ecuador, also implements specific measures for preventing money laundering. The central axis of prevention regulation consists of the Federal Law for the Prevention and Identification of Operations with Illicitly Sourced Resources. Depending on the obligated entity, Mexican regulations further develop prevention obligations in various sector-specific norms.

For example, Article 115 of the Credit Institutions Law outlines a series of obligations regarding anti-money laundering that apply to entities governed by this law.

Regarding the definition of a PEP, the Ministry of Finance and Public Credit is responsible for establishing the criteria for designating an individual as a PEP. Article 27 of this agency’s regulations specifies that it has the power to implement the “criteria that entities referred to in this section must follow in terms of the law concerning the proper understanding of their clients and users.”

List of PEPs in Mexico

The Ministry of Finance and Public Credit, in the exercise of its functions, publishes a list of politically exposed persons. The purpose of this list is for obligated entities to be aware of the positions that will be considered PEPs under Mexican regulations.

Although the list is extensive, it can be divided into four distinct categories: federal, state, municipal, and political parties.

  1. Federal level
    • Executive branch
      1. Presidency of the Republic
      2. Departments, decentralized agencies, administrative bodies, and State Secretariats
    • Judicial branch
    • Legislative branch
    • Decentralized public administration
  2. State level
    • State executive branch
      1. Federative Entities and Mexico City
    • State judicial branch
    • State legislative branch
    • Autonomous and other organizations
  3. Municipal level
    • Municipal executive branch
  4. Political parties

Within each of these sections, the list published by the Ministry of Finance and Public Credit specifies which positions are relevant. For example, in the municipal category, the following positions are considered PEPs:

  • Municipal Presidents
  • General Councilors
  • First-level Secretaries
  • Municipal Treasurers
  • Council Members
  • Trustees
  • Heads of departments, down to two hierarchical levels below, in financial, human, and material resources areas
  • Up to three hierarchical levels below the listed positions

On the other hand, Mexican regulations also establish a series of risk factors that entities must consider “to determine if a Client or User or Real Owner may be considered a national Politically Exposed Person, even when the Public Office of such person is not included in the detailed list.” This means that the country’s regulations not only provide an exhaustive list of positions, but also consider various factors that could qualify someone as a PEP.

The risk factors indicated by the Ministry of Finance and Public Credit are as follows:

  • If the Public Office holds any of the following powers:
    1. Decision or direct/indirect participation in:
      • Public procurements (bids or direct assignments) as provided by the Law of Acquisitions, Leases, and Services of the Public Sector. Disposition or allocation of federal, state, or municipal budgets, or those of public entities or agencies.
      • Direct control over acquisitions
      • Granting of subsidies and subventions
    2. Handling or safeguarding of classified or confidential information as specified by law, with direct impact on life, liberty, property, or honor of individuals
    3. Management of public finances
    4. Handling of funds or assets, when there is legal authority to dispose of them and determine their application or destination
    5. Issuance of authorizations, concessions, licenses, or permits for private benefit
    6. Direct or indirect involvement in public audits and oversight
    7. Direction, as a result of legal authority, that grants permanent and general representation, implying decision-making power within public entities or agencies
    8. Access to confidential or classified information with potential economic impact or benefit
  • Individuals who, based on the customs of indigenous communities, act as representatives before municipal councils and manage public resources
  • If financial entities or obligated subjects are aware, by any means, of adverse news regarding the public official.

Below, we provide the main sources used by Pibisi to extract PEPs in Mexico:

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