This week, the Supreme Court of Justice of the Nation (SCJN) definitively upheld the power of the Financial Intelligence Unit (FIU) to freeze bank accounts without the need for a court order, as well as the mechanism through which affected parties may defend themselves. Although the ruling does not change the procedure established by a 2022 reform, it does determine the constitutionality of these FIU powers, which had been the subject of prior debate, and validates an administrative mechanism
The measure serves as a reminder to companies, compliance officers, and entities within the financial system of the mandatory nature of prevention programs, and constitutes a call to review internal procedures and to verify that they have robust compliance programs in place. This is a decision that recognizes the validity of a tool allowing the government to freeze funds without the need to go before a judge, shifting to companies the burden of acting with extreme speed to release their assets should they be affected. According to the SCJN, the "List of Blocked Persons" is a preventive and administrative mechanism operated by the Ministry of Finance, designed to protect the financial system. The FIU may include an individual or legal entity on this list when it has "sufficient indications of unlawful transactions." Under the procedure reformed in 2022, it is the financial institution, in compliance with the law, that notifies the customer that their accounts have been frozen and sets out the reasons for the measure. This procedure will also require financial institutions to review internal processes and to define an efficient and valid means of notifying their customers that they have been included on such list. From the moment of said notification, the person may begin their defense by requesting a hearing before the FIU within the following five days and, subsequently, submitting evidence to rebut the authority's suspicions within a period of ten days. The brief timeframes of this procedure demand swift and efficient action to prevent the freeze from being prolonged or escalating into the criminal sphere. With this ruling, the Mexican State consolidates a shift in regulatory paradigm. Previously, in the face of FIU freezes that did not stem from a request by a foreign authority, private parties resorted to amparo proceedings, arguing a lack of guarantee of a hearing, and obtained a stay of the act. Now the SCJN endorses such freezes, on the basis of the hearing procedure established by law, even though the hearing in question is not "prior" to the freeze. It is also relevant to recall last year's reform to the Amparo Law, which restricts the stay of the challenged act in cases that may favor transactions involving proceeds of unlawful origin. In view of the brevity of the legal deadlines, prevention emerges as the most effective strategy. The cost of being unprepared may mean the operational paralysis of businesses. Having rigorous internal controls serves a dual function: on the one hand, it helps prevent the company from becoming involved in high-risk transactions that trigger an account freeze; on the other, should a freeze materialize, it ensures that the company immediately has sufficient documentary evidence and financial traceability to clear itself of liability and mount a successful defense within the brief deadlines set by law. In summary, the SCJN's decision holds that: • The freezing of accounts ordered by a national authority is constitutional. The highest court determined that this is a precautionary measure of an administrative and preventive nature, not a criminal sanction. The FIU does not usurp the crime-investigation functions of the Public Prosecutor's Office. Its purpose is to protect the financial system on the basis of "sufficient indications," which allows it to act without requiring a prior judicial ruling. • The clarification procedure provided for in Article 116 Bis 2 of the Credit Institutions Law is constitutional. The ruling puts an end to years of prior debate, confirming that the national freezing system is indeed consistent with the constitutional framework thanks to the 2022 reform granting the guarantee of a hearing before the FIU. • The bank's role is instrumental, not that of an authority: The freeze notification, carried out by credit institutions, does not undermine legal certainty, since banks do not act as authorities under this scheme; it is a strictly material collaboration function. For any questions or personalized advice on how to strengthen your compliance programs, please do not hesitate to contact our team of experts. Luis Burgueño, Partner:+52 (55) 5258 1003 | lburgueno@vwys.com.mx Diego Sierra, Partner:+52 (55) 5258 1039 | dsierra@vwys.com.mx Alberto Córdoba, Partner:+52 (55) 5258 1016 | acordoba@vwys.com.mx Raymundo Soberanis, Partner:+52 (55) 5258 1059 | rsoberanis@vwys.com.mx Ricardo Cacho, Partner:+52 (55) 5258 1000 | rcacho@vwys.com.mx
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