An entity challenged the imposition of fines by the Tax Administration Service (“SAT”). The fines were imposed because the entity did not comply with certain obligations established in the Mexican Anti-money Laundering Law :
- It did not verify the identity of its clients and users as well as failed to request copies of such identity documents.
- It failed to request the client or user information on the existence of the beneficiary owner, as well as documents that allow its identification.
- It did not submit reports to the Treasury Department timely.
As a result, the company was imposed with fines in accordance with article 54 first paragraph, subparagraph III of the Anti-money Laundering Law that reads:
“A fine equivalent to ten thousand and up to sixty-five thousand days of current general minimum wage in Mexico City will be applied, or from ten to one hundred percent of the value of the transaction, when quantifiable in money, whichever is higher in the case of subparagraphs VI and VII of article 53 of this Law.”
The entity challenges the fines.
The entity dissatisfied with the fines and after having challenged them before the Federal Tribunal of Administrative Justice, filed a constitutional trial based on the following arguments:
- The fines are fixed and excessive.
- Article 54 subparagraph III allows that the SAT does not grade them according to the seriousness of the offense, the economic capacity of the offender, the incidence, or any other element from which the seriousness of the fact can be inferred.
The tenth Collegiate Tribunal in Administrative Matters of the First Circuit that handled the matter, determined that article 54 first paragraph, subparagraph III of the Anti-money Laundering Law does not breach article 22 of the Mexican Constitution by providing for the imposition of a fine between a minimum and a maximum amount. Therefore, it is not a fixed and excessive fine.
The fine will be applied by the SAT within that minimum and maximum parameter and taking into consideration the characteristics of the matter themselves.
Now, the last part of article 54 subparagraph III refers to subparagraphs VI and VII of article 53 of the Anti-money Laundering Law, which states that a fine will be applied to those that skip filing for the reports referred to in article 17 of the Anti-money Laundering Law and are involved in any of the acts or transactions forbidden by article 32 of the law.
The Collegiate Tribunal confirmed that even when such article 53 subparagraphs VI and VII establishes that the “higher fine will be imposed”, is not contrary to article 22 of the Mexican Constitution, since it derives from the authority conferred by the lawmakers to grade the seriousness of the breaches.
Even though this court decision is a non-binding decision, it is a guiding criterion for those who perform vulnerable activities as provided by the law and are therefore obligated to comply with the obligations listed above.
Now we can expect the sense in which the tribunals may decide if an imposition of fines is challenged arguing that those are fixed and excessive.
Article 18, first paragraph, subparagraphs I, III y VI as well as article 23.
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