Real Estate KYC: Customer Due Diligence for Agents and Notaries

Regulatory Framework and Subjective Scope

The Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI), published in the Official Journal of the Federation on October 17, 2012 and with amendments in effect through 2025, establishes in its Article 17, Section XII, that the transfer or constitution of real property rights constitutes a vulnerable activity subject to the obligations of identification, notice and safekeeping of information. This classification extends to both public notaries who formalize such acts and real estate agents who participate in their intermediation, in accordance with Article 17 itself and the General Rules referred to in the LFPIORPI issued by the Ministry of Treasury and Public Credit through a resolution published in the Official Journal on August 23, 2013, with subsequent modifications.

The value threshold that activates the obligation to file a notice with the Financial Intelligence Unit (UIF) in real estate matters is established directly in Article 17, Section XII of the LFPIORPI and clarified in the General Rules: the equivalent of 8,025 times the daily value of the Measurement and Updating Unit (UMA). At the UMA values in effect for 2025 (MXN 108.57 daily in accordance with the INEGI resolution published in the Official Journal on January 9, 2025), this threshold equals approximately MXN 870,873. It should be noted that the daily value of the UMA is updated by INEGI each year in January, so the peso equivalent of the threshold is adjusted annually and must be verified at the time of each operation. The Regulations of the LFPIORPI (Official Journal, August 16, 2013) complement the operational framework of reporting obligations, but is not the normative source of the specific threshold applicable to the real estate sector. Exceeding such threshold in a single operation, or in operations that the entity identifies as fragmented, activates the reporting duty.

Concrete KYC Obligations: Identification and Controlling Beneficial Owner

KYC compliance in the real estate sector operates at three concurrent levels:

1. Customer Identification: Article 18 of the LFPIORPI requires obtaining full name, address, nationality, activity or occupation, CURP or RFC, and valid official identification document. For legal entities, the corporate charter, notarial powers and proof of tax status are additionally required.
2. Identification of Controlling Beneficial Owner: Article 32 Bis of the Federal Tax Code, introduced by the 2022 tax reform and complemented by rules 2.8.1.20 and following of the Tax Miscellaneous Resolution, imposes on legal entities, trusts and similar legal structures the obligation to identify and maintain an updated record of the natural person exercising effective control. These rules were introduced in the Tax Miscellaneous Resolution 2022 and have been maintained in subsequent editions; for purposes of current citation, the version of the RMF 2025 published in the Official Journal should be consulted, noting that equivalent rules are expected in the 2026 edition once it is formally issued. This obligation is independent and parallel to that derived from the LFPIORPI; obligated parties in the real estate sector must verify its compliance before formalizing the operation.
3. Customer Due Diligence Policy (PEP and Restrictive Lists): The General Rules require verifying whether the customer or its controlling beneficial owner is a Politically Exposed Person (PEP) in accordance with Article 3, Section XVI of the LFPIORPI, as well as cross-referencing data against the list of blocked persons published by the UIF and the applicable OFAC, UN and EU lists for foreign customers.

Fragmented Operations and Pre-Sale Structures in Quintana Roo

The General Rules provide that the UIF and the obligated parties themselves must treat as a single operation any series of acts or contracts that, by their nature, timing or relationship between the parties, appear designed to circumvent the reporting threshold. The relevant parameter for threshold determination is not the amount of each individual disbursement, but the total value stipulated in the contract at the time of its execution. This rule has direct and material consequences in the real estate market of the Riviera Maya, where pre-sale structures are the dominant marketing modality: a developer who divides the price of a property into multiple deferred payments is not exempt from the reporting obligation if the total value of the contract exceeds the threshold, regardless of whether any individual payment reaches it.

The same logic applies to administration trust structures used in pre-sale developments and to contracts for the assignment of fiduciary rights over units not yet registered. In these cases, the obligated subject must calculate the threshold based on the total value of the rights assigned or placed in trust pursuant to the underlying contract, document that determination in the operation’s file, and, if applicable, submit the corresponding notice to the UIF before the date of execution of the instrument that transfers or establishes the real or fiduciary right.

Restricted Zone Trust: Distribution of KYC Obligations in Acquisitions by Foreign Nationals

Article 27 of the Mexican Constitution and the Foreign Investment Law prohibit foreign individuals or legal entities from acquiring direct ownership of real property located in the restricted zone, defined as the strip of one hundred kilometers along borders and fifty kilometers from the coastlines. The entire coastline of Quintana Roo falls within this strip, so any acquisition of coastal property by a foreign buyer requires establishment through a restricted zone trust, in which a Mexican banking institution acts as trustee and the foreign buyer as beneficiary with rights of use, enjoyment, and disposition over the real property.

This structure generates a triangular dynamic of obligated subjects that significantly complicates KYC compliance. The banking institution acting as trustee is, by its own nature, a regulated entity under the supervision of the CNBV and subject to its own AML obligations derived from the Credit Institutions Law and applicable General Provisions. The real estate agent that intermediated the transaction and the notary that formalized the trust are simultaneously obligated subjects under the LFPIORPI. This concurrence of obligations does not imply that the duties cancel each other out: each obligated subject must comply independently with its own identification obligation and, where applicable, notice obligation.

With respect to the identification of the controlling beneficiary, the fact that the nominal holder of the real property is the trust institution does not displace the obligation to identify the natural person who exercises effective control over the trust estate. Both the notary and the real estate agent must identify the foreign beneficiary as the true controlling beneficiary, obtain their identification documentation in accordance with article 18 of the LFPIORPI, and verify their PEP status and appearance on international restrictive lists. The primary obligation to submit the notice to the UIF when the transaction exceeds the threshold rests with the notary who authorizes the deed of trust establishment, without prejudice to the fact that the real estate agent is also obligated to report within the scope of their own participation. The trustee bank, for its part, must comply in parallel with the obligations imposed by its own sectoral rules before the CNBV.

Alerts for Unusual Transactions and the Role of the Notary

The notary public does not act as a mere certifying officer in the Mexican AML scheme. Article 17, section XII, subsection b) of the LFPIORPI expressly configures the notary as an obligated subject when intervening in the transfer of real rights over real property. The obligation to give notice to the UIF, through the electronic system enabled for such purpose, arises when the transaction exceeds the threshold or when signals of alert provided in Annex 1 of the General Rules are detected, among which stand out: payment in cash or foreign currency outside banking channels; intervention of third parties without apparent economic justification; incongruity between the client’s economic profile and the value of the real property; and unjustified refusal to deduct the acquisition cost in the tax return.

Regarding judicial criteria, it must be stated with precision that to date there is no firm jurisprudential thesis nor an isolated thesis with a registration number published in the Federal Judicial Weekly that has established in binding form the objective nature of the notary’s responsibility as an obligated subject under the LFPIORPI. What does exist is an emerging interpretive tendency in resolutions of Collegiate Circuit Courts in administrative matters, derived from amparo proceedings brought against UIF sanctions, to the effect that the absence of willful intent in the underlying illicit transaction does not exempt the obligated subject from sanctions for omission of timely notice. This tendency has not reached the threshold of compilation in the Federal Judicial Weekly with an identifiable thesis number, which in itself is analytically relevant data: the absence of firm criteria means that the objective liability standard may still be subject to controversy via amparo proceedings, which reinforces the advisability of a maximum preventive stance in compliance with reporting obligations.

Similarly, the distinction between the duty to report acts of third parties and the right against self-incrimination guaranteed by article 20 of the Mexican Constitution has been subject to reasoning by the First Chamber of the SCJN in the context of reporting obligations imposed on private parties by public order regulations. However, at the time of preparation of this article, no thesis with a registration number in the Judicial Weekly has been located that resolves this question specifically in the context of the LFPIORPI. The prevailing doctrinal position holds that the obligation to report acts of third parties does not violate the guarantee against self-incrimination, given that the reporting party does not confess its own acts, but this interpretation remains as an argumentative tendency rather than as consolidated judicial doctrine.

Practical implications for real estate agents

The real estate agent who receives compensation for acting as an intermediary in a purchase and sale is equally an obligated subject under article 17, section XII of the LFPIORPI. Its specific obligations include: designating a compliance officer before the UIF; implementing an internal risk management program; maintaining the customer identification file for a minimum of five years counted from the conclusion of the transaction, in accordance with article 20 of the LFPIORPI; and refraining from executing the transaction when it is not possible to complete due diligence, an obligation internationally known as right to refuse.

Non-compliance exposes the agent to the sanctions provided for in article 55 of the LFPIORPI, ranging from warning to a fine equivalent to 10,000 days of UMA, independent of the criminal liability that could arise from article 400 Bis of the Federal Criminal Code regarding transactions with resources of illicit origin.

Operative conclusion and minimum viable protocol

The effective integration of KYC in real estate transactions in the Riviera Maya requires a unified protocol between the agent and the notary covering identification, verification of controlling beneficial owner, consultation of restrictive lists and evaluation of warning signals, all documented in the transaction file. The fragmentation of responsibilities between both obligated subjects has been the main source of non-compliance detected by the UIF in the last supervision cycles. A coordinated and preventive approach is not only a regulatory requirement: it is an element of legal risk management for the developer, fund or buyer that structures the acquisition itself.

As a minimum operative reference, the joint agent-notary protocol must contemplate the following elements:

1. Initiation of KYC at the offer or promise stage: Customer identification and documentation collection must be carried out before or simultaneously with the signing of any binding instrument (offer, promise to purchase and sell, pre-sale contract or adhesion contract), not at the time of the deed.
2. Documentary allocation by obligated subject: The agent retains in its file the identification documents, proof of address and declarations of origin of funds obtained during intermediation. The notary collects and integrates to the notarial protocol the identification documents, powers of attorney and constitutive instrument in accordance with article 18 of the LFPIORPI, with acknowledgment of the date of receipt.
3. Verification of controlling beneficial owner registry: Before the signing of the final instrument, the notary must verify that the acquiring legal entity or trust has submitted or updated its registry with the SAT in accordance with article 32 Bis of the CFF. This verification must be documented with the date of consultation and the result obtained.
4. Consultation of restrictive lists with date stamp: Both the agent and the notary must independently consult the list of blocked persons of the UIF, the OFAC SDN list, the consolidated UN list and, for European Union clients, the EU sanctions list. Each consultation must be documented with a screenshot dated and signed by the person who performed it.
5. Determination and documentation of PEP status: If the client, its controlling beneficial owner or any attorney-in-fact with power of disposition is identified as a PEP in accordance with article 3, section XVI of the LFPIORPI, the enhanced diligence level is activated. The file must contain the client’s declaration regarding its PEP status, the reasoned determination of the compliance officer and the additional measures adopted.
6. Calculation and documentation of the threshold: The agent or compliance officer must calculate the applicable threshold using the daily value of the UMA in effect at the time of the contract, multiplied by 8,025, and compare it with the total value agreed in the instrument (not with partial disbursements). For pre-sale structures or assignment of fiduciary rights, the calculation is performed on the total contractual value. The result of the calculation, the UMA value used and the conclusion regarding reporting obligation must be recorded in the file.
7. Submission of notice to the UIF: If the threshold is exceeded or if there are alert signals from Annex 1 of the General Rules, the notice must be submitted through the UIF’s Online Notice System (SAL) before the signing of the deed or, in cases where the alert signal arises later, within the timeframe provided by the Rules. The receipt acknowledgment from SAL must be integrated into the agent’s file and the notary’s protocol.
8. Retention and custody of the file: The complete KYC file must be preserved by each obligated subject for a minimum of five years from the conclusion of the transaction, in accordance with article 20 of the LFPIORPI. In transactions with a restricted zone trust, the trustee bank maintains its own file in accordance with its obligations before the CNBV, without this substituting the independent obligation of the agent and the notary.

At IBG Legal we structure KYC compliance programs for real estate developers operating under pre-sale schemes in Quintana Roo, we advise foreign investment funds on the distribution of AML obligations in restricted zone trusts and we represent obligated subjects in administrative proceedings before the UIF. If you are a developer, fund, real estate agent or notary requiring implementation or review of your compliance protocol for operations in the Riviera Maya, we invite you to contact us for an initial consultation.

Sources and References

Legislation

• Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI). DOF, October 17, 2012. Latest reform published in the DOF in 2025. Articles 3 section XVI, 17 section XII, 18, 20 and 55.
• Regulations of the LFPIORPI. DOF, August 16, 2013. Operational framework for reporting obligations; the specific threshold for the real estate sector is established in LFPIORPI article 17 section XII and in the General Rules, not in the Regulations.
• General Rules referred to in the LFPIORPI. SHCP, DOF, August 23, 2013, with subsequent amendments. Real estate threshold of 8,025 times the daily value of the UMA; Annex 1 (alert signals); rules on fractional operations.
• Tax Code of the Federation. Article 32 Bis, added through reform published in the DOF on November 12, 2021, effective as of January 1, 2022. Obligation to register controlling beneficial owner.
• Miscellaneous Tax Resolution 2025. DOF, publication corresponding to fiscal year 2025. Rules 2.8.1.20 and following relating to the registration of controlling beneficial owner, originally introduced in RMF 2022 and maintained in subsequent editions. Note: RMF 2026 will be cited with the exact DOF reference once it is formally published.
• Federal Criminal Code. Article 400 Bis, regarding operations with resources of illicit origin.
• Political Constitution of the United Mexican States. Article 27, regime of the restricted zone and prohibition of acquisition of direct ownership by foreigners in coastal and border strips.
• Foreign Investment Law. Provisions relating to the restricted zone trust as a vehicle for acquisition by foreign natural and juridical persons.
• Law of Credit Institutions and General Provisions of the CNBV. AML obligations applicable to banking institutions in their capacity as trustees in restricted zone trusts.
• INEGI Resolution on the value of the UMA in effect for 2025. DOF, January 9, 2025. Daily value: MXN 108.57. Basis for calculating the real estate reporting threshold.

Judicial Criteria

• Collegiate Courts of Circuit in administrative matters. Emerging interpretive trend derived from direct and indirect injunctions against UIF sanctions, to the effect that the absence of intent in the underlying illicit operation does not exempt the obligated party from sanctions for failure to provide timely notice. As of the date of preparation of this article, no isolated or jurisprudential thesis with a registration number published in the Federal Judicial Weekly compiling this criterion in a binding manner has been located; this is an argumentative trend in the process of consolidation.
• First Chamber of the SCJN. Reasoning regarding the compatibility between reporting obligations imposed on individuals by AML rules and the right against self-incrimination provided in article 20 of the Constitution. No thesis with a registration number in the Federal Judicial Weekly specifically referring to the context of the LFPIORPI has been located; the predominant doctrinal position supports compatibility based on the distinction between reporting acts of third parties and confessing one’s own acts, but this interpretation does not constitute firm judicial doctrine as of this date.

Doctrine

• Díaz Bravo, Arturo. Prevention of Money Laundering in Mexico. 3rd ed. Editorial Porrúa, 2010. Note: this work predates the enactment of the LFPIORPI (2012), so its usefulness is limited to analysis of the prior framework and conceptual background of the Mexican AML system; its specific normative references should be contrasted with the current regime.
• International Financial Action Task Force (FATF). Guidance for a Risk-Based Approach: Real Estate Sector. FATF, Paris, 2022.
• FATF. Beneficial Ownership and Transparency: Technical Guidance. FATF, Paris, 2023.

Official Sources

• Federal Official Journal (DOF). Publications of the LFPIORPI, its Regulations and General Rules: www.dof.gob.mx.
• Financial Intelligence Unit (UIF), Ministry of Finance and Public Credit. Online Notice System (SAL) and registry of obligated parties: www.uif.gob.mx.
• Tax Administration Service (SAT). Controlling Beneficial Owner Registry: www.sat.gob.mx.
• National Institute of Statistics and Geography (INEGI). Annual publication of the UMA value: www.inegi.org.mx.