U.S. vs. Mexico: Why “Freezing Accounts” Does Not Mean the Same Thing

Executive Summary

This memorandum provides a comparative analysis of the legal mechanisms used by the United States and Mexico to combat money laundering, with particular focus on asset freezing, account blocking, institutional authority, and extraterritorial reach.

While both countries pursue the same objective, disrupting illicit financial flows, their approaches differ fundamentally:

• The United States employs a judicialized and sanctions-based model, reinforced by administrative powers tied to national security and foreign policy, many of which have extraterritorial effect.

• Mexico relies on a preventive, administrative model, centered on financial intelligence and constitutionally constrained by due-process requirements, with no comparable extraterritorial authority.

  The distinction is not merely procedural; it directly affects legal exposure, operational risk, correspondent banking relationships, and cross-border compliance obligations.
  

  1. Structural Overview of AML Frameworks United States

  The U.S. anti-money laundering (AML) framework is the product of five decades of statutory expansion, integrating criminal law, regulatory compliance, financial intelligence, judicial process, and economic sanctions. Key characteristics include:

•   A centralized regulatory core under the Bank Secrecy Act (BSA).

•   Strong enforcement powers through the Department of Justice (DOJ).

•   Broad administrative authority exercised by the Treasury Department.

•   Explicit linkage between AML enforcement and national security.

•   A mature system for civil and criminal asset forfeiture, including non-conviction- based forfeiture.

•   Extraterritorial reach when transactions touch the U.S. financial system or the U.S. dollar.

  The result is a coercive, procedure-driven system capable of producing immediate global financial effects.
  

  Mexico

  Mexico’s AML regime has developed more gradually and is heavily influenced by international standards and FATF (GAFI) evaluations. It emphasizes:

•   Criminalization of money laundering under federal criminal law.

•   Preventive compliance obligations for financial institutions and designated non-

  financial activities.

•   Centralized financial intelligence under the Unidad de Inteligencia Financiera (UIF).

•   Judicial control over asset seizures and forfeiture.

•   A strong constitutional focus on legality, proportionality, and due process.

  Mexico’s system is preventive and intelligence-led, not punitive or sanctions-based at the administrative level.

  2. Role of Financial Intelligence Units
  United States – FinCEN
  FinCEN functions both as:

  1. TheU.S. Financial Intelligence Unit, and

  2. The central regulatory authority for AML compliance.

  
  Distinctive powers include:

•   Nationwide rulemaking authority.

•   Administration of all federal AML reporting systems.

•   Strategic intelligence integration across federal agencies.

Authority to impose “special measures” on foreign institutions or jurisdictions deemed high-risk, including restrictions that can effectively exclude them from the U.S. dollar system.

These tools give FinCEN global financial leverage, even when acting without judicial proceedings.

Mexico – UIF The UIF:

•   Receives and analyzes financial intelligence.

•   Administers the “Lista de Personas Bloqueadas (LPB),” An internal “Mexican only”

  list similar to OFAC’s SDN.

•   Coordinates with regulators and prosecutors.

•   Issues interpretive guidance and compliance feedback.

  However, the UIF:

•   Does not exercise foreign-policy or sanctions authority.

•   Has no extraterritorial reach.

•   Operates strictly within the national legal framework.

  3. Asset Control: Blocking vs Freezing Mexico: Administrative Account Blocking

•   Blocking is a preventive administrative measure, not a sanction.

•   Executed immediately by financial institutions upon UIF instruction.

•   No predefined duration.

•   Judicial intervention occurs only if the affected party files an amparo (legal filing).

•   Constitutional jurisprudence restricts its use primarily to cases involving foreign authority requests or international cooperation.

•   The LPB is not public.

Recent legal reforms limit judicial suspension of blocking but still require proportionality and humanitarian exceptions.

United States: Judicial Seizure and Sanctions-Based Freezing

The U.S. does not operate a general administrative AML account-blocking mechanism. Instead, asset immobilization occurs through:

1. Judicial orders (seizure warrants, restraining orders, injunctions).

2. Civil and criminal forfeiture proceedings.

3. Administrative freezes under economic sanctions, executed without court involvement when justified by national security or foreign policy concerns.

Sanctions-based freezes are immediate, public, and often global in effect.

4. Sanctions and Liability Exposure Administrative Sanctions

•   United States: High-value, cumulative penalties imposed by FinCEN and sector regulators.

•   Mexico: Significant fines and operational sanctions, but sector-specific and generally lower in magnitude.

  Criminal Exposure

•   United States: Severe criminal penalties for AML violations and for transacting with sanctioned parties.

•   Mexico: Money laundering is criminalized, but violations of the LPB regime do not constitute standalone criminal offenses.

  Asset Forfeiture

  
  Both jurisdictions allow forfeiture without a criminal conviction, but:

•   The U.S. model is more flexible and aggressive.

•   The Mexican model is more procedurally constrained and judicially supervised.

5. Key Risk and Compliance Implications

1. ExtraterritorialRisk:
   U.S. AML and sanctions exposure can arise even from foreign-based conduct if U.S. financial channels are involved.

2. CorrespondentBanking:
   U.S. “special measures” and sanctions can effectively sever access to dollar clearing, creating immediate systemic risk.

3. DueProcessExpectations:
   Mexico’s AML tools are more vulnerable to constitutional challenge and judicial scrutiny.

4. FalseEquivalenceRisk:
   Treating Mexican account blocking as equivalent to U.S. sanctions is legally incorrect and may lead to flawed risk assessments.

5. PolicyTransferLimits:
   U.S. AML tools cannot be directly replicated in Mexico without significant constitutional and institutional reform.

Conclusion

Although the United States and Mexico share international commitments to combat money laundering and terrorist financing, their legal architectures differ in scope, coercive power, and constitutional limits.

•   The U.S. model is expansive, extraterritorial, and deeply integrated with national security and foreign policy.

•   The Mexican model is internally focused, preventive, and constrained by judicial oversight and constitutional safeguards.

  For regulated entities operating across both jurisdictions, effective risk management depends on understanding these distinctions, not merely the surface similarity of financial controls. Any strategy involving asset immobilization, correspondent banking, or cross- border compliance must be calibrated to these structural differences.