By: Karla Valdés
On this week’s Compliance Blog we will talk about an issue of concern for everyone living in Mexico: the perception of insecurity in Mexican states. Which states are seen as the riskiest, and how does this relate to money laundering prevention? Keep reading to find out.
Which states are the riskiest?
The National Institute of Statistics and Geography (INEGI), assigns each Mexican state a rating that quantifies the perception of insecurity in the state, with a higher score meaning a larger perception of insecurity. Below are the 10 riskiest states today according to INEGI:
Perception of insecurity
State of Mexico
How is this indicator related to money laundering?
Institutions in the financial sector must adopt risk models that identify both their clients’ level of risk and the institution’s level of risk for money laundering.
Geographic location is one of the elements considered in the model, which means that institutions must understand and evaluate any geographic differences in potential money laundering risks when opening accounts, entering into contracts, or carrying out operations. Certain geographic areas carry higher risks when facilitating these operations compared to others.
Identifying the risks associated with different geographic areas of operation is essential for institutions to properly comply with regulations on the prevention of money laundering and financing of terrorism.
Models must take into consideration geographic areas that are identified as riskier due to prior money laundering evidence and other factors (such as high crime rates or social marginalization rates, border areas, international ports of entry and exit, major financial centers, etc.).
We hope this post has been useful. At Miranda Compliance we advise companies on the management and implementation of risk models and of their risk-based approach. We would be happy for the opportunity to help your company as well.
C O N T A C T
Miranda – Compliance
Karla Valdés Posada
Ernesto Gómez Gallardo