GP&H Suite


GP&H Suite

17 Oct



In today’s globalized economy, foreign investors are increasingly seeking to establish legal entities across multiple jurisdictions for various business objectives. However, one must understand the importance of adhering to the ultimate beneficiary owner (UBO) provisions when setting up a legal entity in Mexico within an existing corporate structure. These provisions play a crucial role in promoting transparency, preventing money laundering, and detecting illicit activities. This essay aims to explore the significance of UBO provisions in Mexico’s legal system and their implications for foreign investors.

The UBO of a legal entity refers to the natural person who ultimately owns or controls it. Mexico, like many countries worldwide, recognizes the importance of identifying the UBO as a way to tackle financial crimes such as money laundering, corruption, and tax evasion. The UBO provisions require the identification and disclosure of the individuals with significant control or influence over a legal entity, aiming to identify the true beneficiaries behind complex corporate structures.

When foreign investors establish a legal entity in Mexico within an existing corporate structure spanning multiple jurisdictions, UBO provisions become crucial for several reasons:

1. Enhanced Transparency:
UBO provisions foster transparency by requiring the disclosure of the individuals who ultimately control the legal entity. This ensures that the ownership structure is clear and accessible, helping both authorities and potential investors gain confidence in the business.

2. Prevention of Money Laundering and Illicit Activities:
Identifying the UBO is vital in the fight against money laundering and other illicit activities that exploit complex corporate structures. By disclosing the true beneficiaries, UBO provisions act as a deterrent, making it harder for criminals to hide their involvement in illegal activities.

3. Compliance with International Standards:
Mexico, as a member of the Financial Action Task Force (FATF), is committed to implementing robust regulations against money laundering and terrorist financing. UBO provisions align with international standards and recommendations, ensuring that Mexico remains compliant and attractive to foreign investors seeking lawful business opportunities.

While adhering to UBO provisions in Mexico is crucial, foreign investors may encounter certain implications and challenges during the establishment of a legal entity within an existing corporate structure:

1. Diligence and Documentation:
Investors must diligently identify and document the UBOs in accordance with Mexican regulations. This could involve conducting thorough due diligence, verifying corporate structures and shareholdings, and maintaining accurate records to comply with reporting requirements.

2. Potential Impact on Privacy:
The disclosure of UBO information may raise concerns regarding privacy, particularly for individuals who prefer to maintain their anonymity. Foreign investors must navigate this aspect carefully, balancing the need for transparency with privacy concerns, while abiding by the relevant laws and regulations in both Mexico and other jurisdictions involved.

3. Complex Corporate Structures:
If a legal entity is part of a broader corporate structure across multiple jurisdictions, complying with UBO provisions may become more challenging. Investors must ensure a thorough understanding of the UBO requirements in all relevant jurisdictions and establish effective mechanisms for information sharing and reporting, maintaining consistency and transparency throughout the process.

Establishing a legal entity in Mexico as part of an existing corporate structure across multiple jurisdictions necessitates a comprehensive understanding of the ultimate beneficiary owner provisions. By embracing these provisions, foreign investors can contribute to greater transparency, prevent money laundering, and ensure compliance with international standards. While challenges may arise, diligent adherence to UBO requirements ultimately strengthens the integrity of the global financial system and fosters a conducive environment for foreign investment in Mexico.

Giselle Villanueva

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