Legal protection considerations in the light of the Asset Seizure Law

On August 9, the Decree was issued in the Official Gazette of the Nation by which the first national asset seizure law is issued for the entire country (hereafter “LED” for its acronym in Spanish).

This law is regulated by article 22 of the Political Constitution of the United Mexican States, which regulates the general rules of the procedure that must follow the seizure of assets. As of today, most cases of assets seizure are lost by the state, therefore, this law emerges as a measure to have a real impact on crime finances.

Article 3 of the law defines the assets seizure as “the loss of the rights that a person has in relation to tangible or intangible assets, declared by sentence of the judicial authority, without consideration, or compensation for its owner or for those who hold or behave as such, or for those who, under any circumstances, own or hold the aforementioned Assets ”. [1]

The objective of the asset seizure is to have a real impact on the patrimony and finances of organized crime and corruption and will proceed over all assets of a monetary nature whose legitimate origin cannot be proven or that are the result or product of illicit acts. Some cases provided by this law are:

• Assets that come from illegal acts.
• Assets of legal origin used to hide goods of illicit origin.
• Assets that the holder does not prove their legal origin.
• Assets of lawful origin whose value is equivalent to any of the assets described in the previous sections, when their location, identification, seizure, assurance or material apprehension is not possible.
• Assets used for the commission of illegal acts by a third party, if the owner had knowledge of it and did not notify the authority or did anything to prevent it.
• Assets that constitute income, products, yields, fruits etc. of an illicit act.

Among the illegal acts provided for in this law are (i) acts of corruption,(ii) theft of hydrocarbons, (iii) organized crime, (iv) kidnapping, (v) crimes against health, (vi) human trafficking, (vii) aiding and abetting, (viii) crimes committed by public servants,(ix) theft of vehicles, (x) money laundering and extortion. 

The elements of the asset seizure action are: (a) the existence of an illicit act, (b) the existence of any property of illicit origin or destination, (c) the causal link of the preceding paragraphs, and (d) the knowledge that the owner has or should have regarding the destination of the good to the illicit act or that is the product of the wrongful act, all the elements must be complied with - except for those exceptions provided in the LED - for the domain extinction action to proceed.

In order to be able to exercise the asset seizure action, a jurisdictional process of a civil and nature will be carried out and there must be a definitive sentence that validates it. One of the main innovations of this procedure is that it will be oral and public, with characteristics very similar to the oral judgments of the criminal system.

The exercise of said action corresponds to the Public Ministry and it may be withdrawn at any time, with proven cause, before the dictation of the sentence.

The asset seizure action is imprescriptible in the case of goods that are of illicit origin. In the case of goods of illicit destination, the action shall prescribe in twenty years, counted from the moment the good has been destined to carry out illicit acts.

Article 172 of the law divides the procedure into two stages:

“A preparatory stage, which will be in charge of the Public Ministry for the investigation and accreditation of the elements of the action in accordance with the attributions assigned in said Law, and a judicial stage, which includes the stages of admission, notification, answer to the complaint, initial hearing, main hearing, appeals and execution of the sentence.”

The notifications to the owners and interested in a trial of this type will be made by edicts in the official newspaper of the federation or gazette or official newspaper of the government of the state where the property is located.

One of the things that worry the most about the LED is the figure of preventive asset seizure, this is an assurance that can be carried out by the Public Ministry to properties or bank accounts in a “preventive” way, even before the request to start the trial. This with the purpose of preventing that the goods can be affected in any way that may be prejudicial por the case.

This precautionary measure may be dictated before the trial begins and throughout all the trial; provided that, a competent judge must declare it (which will also know from such trial).

Once a sentence of asset seizure is issued, the state may reuse the goods for public service, as well as sell, auction or donate them in accordance with applicable civil laws.

Taking all of this in consideration, our suggestion is that both persons and corporations most protect their assets by integrating a record file with all of the information and documentation of the seller of the asset in reference, that contains, at least, the following: 

Individuals 

1. Official identification (voter card or passport).

2. Federal Taxpayers Registry.

3. Unique Certificate of Population Registration (CURP).

4. Proof of address.

5. General information (place and date of birth, marital status, occupation, place of work).

Corporations 

1. Articles of incorporation and amendments to the bylaws.

2. Certification of shareholding structure.

3. Deed containing the powers of the legal representative.

4. Official identification of the legal representative (voter credential or passport).

5. General information of the legal representative (place and date of birth, marital status, occupation, place of work).

6. Federal Taxpayers Registry.

7. Proof of address.

Additionally, express reference must be made in the contracts regarding the origin of the resources derived from the acquisition and must include, at least, audit clauses - in the case of leasing of real estate - and compensation that protect the owners of the goods and that allow them to fall into the exceptions provided in the LED.

It is important to mention that what the LED could initially look for would be that all the operations carried out be declared fiscally to collect higher taxes and give greater legal certainty in all these type of operations.

[1] Tangible assets should be understood as those that can touch and occupy a space, such as a computer, a chair, etc.; while intangible assets, are those that have a value but no physical presence, for example a brand.