Mexican authorities may freeze bank accounts without court order under new law

Mexico’s congress is poised to approve a bill that would give the federal government’s financial crimes unit (UIF) the ability to freeze bank accounts without a court order in suspected cases of money laundering and financing of terrorism. 

The senate approved on Wednesday by 45 votes to 27 the bill passed by the lower house with modifications and with President Andrés Manuel López Obrador’s (AMLO) Morena party holding majorities in both houses and sponsoring the proposed legislation, the lower house is expected to sign off on the modifications in the coming days.

The proposed legislation, dubbed the Ley Nieto after UIF chief Santiago Nieto, is viewed by proponents as a powerful tool that will help the country comply with stringent international anti-money laundering/financing of terrorism (AML/CFT) guidelines established by intergovernmental agency FATF.

Nieto, in an interview with W Radio, said the legislation responds to FATF recommendations that call for “an effective, direct and immediate mechanism to block accounts and prevent resources of illicit origin from being introduced into the financial system at a global level.”

Freezing accounts has become a frontline weapon of the UIF in its attempts to combat drug-related activity, with the blocking more than 12,000 banks accounts this year.

The UIF said there are 2bn pesos (US$99mn) in blocked bank accounts that have not been claimed by any individual, adding they believe they have blocked accounts holding 1bn pesos tied to the infamous Jalisco Nueva Generación cartel, as well as 1,300 accounts held by 14 criminal organizations frozen in the so-called Operation Zócalo. 

Opposition

The legislation’s opponents, however, see the bill as giving the executive branch a relatively unchecked ability to freeze accounts on suspicion alone, with the wording of the proposed legislation paves the way to freezing the accounts of more than just suspected drug traffickers, terrorism backers or money launderers.

The senate version of the bill reads, “The blocking of active and passive operations and banking services for reasons of national causes is completely constitutional when it responds to the administrative procedures carried out by the SHCP [finance ministry] and the UIF, which aim to prevent or interrupt illicit acts that pose a risk to national or public security, the national economy or the financial system.” 

Senator Damián Zepeda of the opposition PAN party, said the legislation is a mistake, and opens “a door to arbitrariness,” adding that the head of the finance ministry’s UIF unit is ultimately a subordinate of the president of the republic. 

“The executive power, no matter how noble it may be, and we will assume they believe they are acting correctly, is not a judge,” he said, according to news outlet Proceso. “Judges exist precisely to assess whether the elements exist to declare someone guilty,” Zepeda added. “It is not up to the executive to say when there is guilt.”