On June 30th, 2025, the Chamber of Deputies approved the bill amending the Federal Law for the Prevention and Identification of Operations with Illicitly Sourced Funds (“LFPIORPI”), which was published in the Official Gazette of the Federation on July 16th, 2025, and entered into force on July 17th of the same year.
This reform originated from the recommendations issued by the Financial Action Task Force (“FATF”) during its mutual evaluation of Mexico in January 2018. The recommendations aim to enhance the transparency and clarity of corporate structures in Mexico by significantly strengthening the compliance standards applicable to parties engaged in vulnerable activities.
One of the main pillars of the reform is the modification of obligations and thresholds related to the Beneficial Owner, incorporating clear and strict rules for its proper identification and regulation. Previously, the obligation to identify the Beneficial Owner applied only to those engaging in vulnerable activities as defined under Article 17 of the LFPIORPI, creating a regulatory gap that enabled many companies to conceal their ultimate control structures. In line with FATF recommendations, the reform broadens this obligation to all obligated parties under the law and establishes rigorous parameters for the identification and documentation of the Beneficial Owner.
Among the substantial changes in the regulation of the Beneficial Owner are the redefinition of the concept, the incorporation of Chapter IV Bis entitled “On the Beneficial Owner,” and the expansion of the obligations for obligated parties, as well as the consequences arising from noncompliance, which are detailed below:
1. Definition of the Beneficial Owner and New Identification Parameters.
With respect to the redefinition of the Beneficial Owner set forth in Article 3, Section III of the LFPIORPI, the reform focuses on lowering the control threshold and providing a precise definition of Beneficial Owner and effective control. Key elements include:
a) Lowering of the Control Threshold. The control threshold for identifying a Beneficial Owner based on voting rights in a company was reduced from fifty percent (50%) to twenty-five percent (25%). This change aligns with FATF Recommendation 24 and implies that more individuals must now be identified and registered as Beneficial Owners.
b) Clarification of Beneficial Owner. Previously, the LFPIORPI was ambiguous and allowed for legal entities to be considered beneficial owners. The reform now expressly defines a Beneficial Owner as “the natural person or group of natural persons” who ultimately benefit from or control the entity, either through direct benefit or through the exercise of effective control.
c) Clarification of “Effective Control”. The law now specifies scenarios that constitute effective control, going beyond mere shareholding, such as the ability to impose decisions at shareholders’ meetings, appoint or remove the majority of board members or managers, or direct the main strategies, administration, or policies of the company.
d) Terminological Harmonization. The reform equates the terms “Beneficial Owner,” “ultimate beneficiary,” and “real owner” for purposes of this law and other applicable legal provisions, with the aim of unifying standards across different legal frameworks.
2. Addition of Chapter IV Bis, “On the Beneficial Owner”.
This new chapter sets forth the following obligations:
a) Duties of Commercial Companies. Commercial companies must respond to information requests related to the identification of their Beneficial Owners, retain supporting documentation, and report any transfer of equity interests through the electronic system managed by the Ministry of Economy.
b) Beneficial Owner Registry. Companies are required to identify and register in the electronic system referred to in Article 33 Bis of the LFPIORPI the necessary information to identify their Beneficial Owners or those who may qualify as such.
This registry complements the notices required by the Tax Administration Service (“SAT”) regarding updates to shareholders and partners, as well as those under the General Law of Commercial Companies.
c) Implementation in Federal Entities. The Ministry of Finance and Public Credit (“SHCP”) will encourage competent authorities in the states to adopt measures to identify the Beneficial Owners of local civil associations and corporations.
Accordingly, the reform imposes on all commercial entities in Mexico the obligation to identify, document, and register their Beneficial Owners, regardless of whether or not they carry out vulnerable activities. The identification and retention of Beneficial Owner information becomes a permanent and inherent duty of Mexican companies.
3. New Compliance Framework for Obligated Parties.
Entities engaged in vulnerable activities must now fully restructure their compliance processes. Specifically, the reform adds:
a) Obligations for Beneficial Owner Identification. Obligated parties must now obtain and retain documentary evidence supporting the identity of their Beneficial Owners. This includes analyzing articles of incorporation, shareholder registries, trust agreements, and establishing the “chain of control.” These activities must be carried out in accordance with the General Rules (“RCG”) issued by the Ministry of Economy.
b) Key Operational Obligations. The reform also establishes five (5) key operational obligations:
(i) Risk-Based Approach (“RBA”). Risk identification, assessment, and mitigation.
(ii) Internal Policies Manual. Development of a compliance policies and procedures manual.
(iii) Annual Training. Training programs for all relevant personnel.
(iv) Automated Systems. Tools for ongoing monitoring to detect irregularities and manage thresholds.
(v) Annual Audit. Internal or external audit to assess compliance effectiveness based on risk level.
Given their complexity, these obligations will enter into force according to the timelines established in the upcoming RCGs to be published by the SHCP within the next twelve (12) months. However, the fundamental obligation to identify and retain Beneficial Owner information has been mandatory and enforceable since the reform’s entry into force on July 17th, 2025.
4. Updated Sanction Regime.
The reform introduces specific penalties for failing to identify, document, or register Beneficial Owners, or for breaching any of the new obligations related to them. Sanctions range from two hundred (200) to ten thousand (10,000) Units of Measure and Update (UMA), depending on the severity of the infraction.
This reform marks a turning point in Mexico’s corporate compliance culture. Companies that adopt these new standards will not only avoid sanctions but also strengthen their reputation and competitive standing in an environment that increasingly demands transparency and accountability.
