Mexico 2020

Mexico ranks 130th out of 198 on Transparency International’s 2019 Corruption Perception Index, indicating that a high level of corruption is perceived to take place in the country.¹ This rank is the lowest of the member states of the Organization for Economic Cooperation and Development.² Mexico also continues to rank in the bottom half of the Basel Institute’s Anti-Money Laundering Index, indicating risk of money laundering taking place.³

While initially being lauded for its introduction, the Mexican National Anti-Corruption System (SNA) has faced challenges in preventing and addressing corruption. The SNA was designed to be governed by citizens, who coordinate decentralised agencies related to fighting corruption. A May 2020 progress report though has shown that it is largely failing to meet its goals⁴ and criticism has been levelled against it that its structure is too burdensome and inefficient, and that it has in part been captured by local leaders.⁵

While the current President of Mexico, Andrés Manuel López Obrador (AMLO), won the 2018 national election on the promise of ending the corruption inherited by previous governments, he has tried to operate outside the framework of the SNA,⁶ with the relationship between the presidency and the SNA becoming increasingly distant.

A recent Financial Action Task Force report highlighted that Mexican officials fail to proactively and systematically investigate and prosecute cases of money laundering, due to corruption within the country’s law enforcement agencies.⁷ When it comes to asset recovery, cases are hampered by issues of impunity,⁸ however Mexico has recently established several, new legal frameworks aimed at improving the fight against corruption and the recovery of stolen assets. In particular, a new law allowing the temporary disqualification or “civil death” of public officials who commit acts of corruption was approved in 2019. This prevents corrupt officials from working in the civil service for between one and ten years – or in severe cases – for life. It also introduces heavy fines to compensate for damage caused and measures such as domestic asset confiscation and freezing.⁹ Importantly, a new Asset Forfeiture Law was also introduced in 2019, which allows for the seizure of corruptly acquired assets from companies and individuals or when evidence of good title cannot be brought forward. A Special Forfeiture Unit in the Fiscalía General de la República (Attorney’s General Office) was also established in the same year.¹⁰

Several asset recovery cases are open and ongoing against former governors of Mexico’s 31 states. The most prominent of these are:

• César Duarte, the former governor of Chihuahua, who has been accused of embezzlement and fled Mexico in March 2018 to the United States. Twenty properties belonging to César Duarte have been seized since he fled. He was known for his luxury lifestyle and is accused of using an official helicopter to fly friends and family to his ranch at weekends. He was arrested in July 2020 in Miami and faces extradition to Mexico.¹¹
• Tomás Yarrington, the former governor of Tamaulipas, who also fled the country and was arrested in Italy in 2017. Some of the assets forfeited include: a USD 640,000 condominium, alleged to be the proceeds of corrupt payments received from the Gulf Cartel in exchange for non-interference in their criminal enterprise by public officials and law enforcement; a Pilatus aircraft; a 46,175-acre tract of land in Bexar County, Texas; and a residence in Port Isabel.¹²
• Javier Duarte, former governor of Veracruz, who was arrested in Guatemala after a six-month manhunt crossing three continents. He is alleged to have misappropriated over 55 billion pesos (USD 2.97 billion).¹³ He was prosecuted and in 2020 his sentence of nine years in prison was confirmed. An earlier order of confiscation of 41 properties was revoked though, pending further prosecutions.¹⁴

The Oderbrecht investigations affecting the Americas have also impacted Mexico. Unlike in other countries in the region, three separate federal investigations into the case have stagnated. The lack of progress in the Odebrecht case has been a sore point in Mexico since late 2016, when the company admitted to U.S., Swiss and Brazilian authorities in a multibillion-dollar settlement that it had paid USD 10.5 million in bribes to Mexican officials. To date, the only movement on this case in Mexico appears to be the arrest of Emilio Lozoya, the former director of Pemex.¹⁵

A past example of a successful recovery is the return of USD 74 million by the Swiss government to Mexico in 2008 after 12-year investigation into Raúl Salinas de Gortari, brother of former Mexican President Carlos Salinas.¹⁶

Mexico is a member of Financial Action Task Force of Latin America (GAFILAT) which is a regional body implementing the FATF Forty Recommendations. Mexico is also part of the GAFILAT Asset Recovery Network, which is a regional informal network that seeks to exchange information, as well as best practice, on asset forfeiture, confiscation and money laundering in Latin America.¹⁷

Mexico has 12 Information Exchange Agreements, through the which the Tax Administration Service – Servicio de Atribución Tributaria (SAT) – shares and receives information with institutions abroad. In addition, since May 2010 Mexico has acceded to the Convention on Assistance Mutual Management in Fiscal Matters of the OECD and the Council of Europe, which allows access to a broad international cooperation network for the exchange of information in fiscal matters.¹⁸