Money laundering is the process in which funds or assets generated by illicit activities are related to legal operations to circulate in the economic system.

Money laundering is one of the most serious problems in Mexico, in fact, some studies put the country in third place among those with the largest amount of illicit capital globally in their economies.

What is money laundering?

Money laundering is the process in which funds or assets generated by illicit activities are put in relation to legal operations in order to circulate within the economic system in a legal way, so that their origins cannot be traced, or at least that is the purpose. In Mexico it has three main forms: resources that come from activities related to corruption, those that are generated by organized crime and those that are not controlled due to tax evasion.

How does it work?

Although this activity has existed almost since the currency itself has existed, and today money laundering methods have become highly sophisticated, there are generally three phases of their operation:

1. Placement: The illicitly obtained resources are usually placed within the financial system in the name of someone who makes them appear legitimate. This is the time when there is the greatest susceptibility to identification and the greatest vulnerability for financial companies.
2. Stratification: Multiple transactions are carried out so that they strategically hide the origin of the resources. You can transfer capital between several accounts or buy and sell various goods or services that will serve to lose sight of where the money comes from.
3. Integration: It is when money is “clean” and has lost its true origin. It is reintegrated into the formal economy as an investment in a profitable business or in the purchase of final goods and it can even be re-entered the financial system.

How to fight it?

The sectors most susceptible to being victims of money laundering or suspected of carrying out this activity, are those related to the financial system or that handle large amounts of money such as real estate, marketers of sumptuous goods and vehicles, non-profit organizations. Profits received by donations, brokerage houses, betting houses, among others. Most of the companies that belong to these sectors, do not know from the beginning that they must comply with Money Laundering prevention standards, so they regularly incur omissions that imply fines ranging from 12 thousand to 4 million mexican pesos, how to notify the authority when they detect any suspicious activity.

To avoid interacting with companies or people whose purpose is to launder their capital, strategies for the Prevention of Money Laundering (AML) must be used and include processes like Know Your Customer (KYC), which allow companies to prevent, detect and report any Movement related to Money Laundering, such as the validation of the identity of its clients and partners, or the creation of digital files to avoid having their physical documentation for up to five years as established by the Federal Law for the Identification and Prevention of Transactions With Funds From an Illegal Origin in its Article 18.

Our solutions

Fortunately, Tu Identidad has the necessary solutions to implement this type of process, such as our official id module, fingerprint biometrics, background check, among others.