New Constitutional Reform Responds to US Cartel Designations

Claudia Sheinbaum has proposed a constitutional reform aimed at reinforcing national sovereignty, following the United States' decision to classify several Mexican cartels as terrorist organizations. Sheinbaum announced that she will submit a proposal to Congress to amend Art. 19 and 40 of the Mexican Constitution. The reform seeks to legally fortify national sovereignty and impose stricter penalties on individuals involved in the trafficking of weapons into Mexican territory.

The proposed amendment to Art. 40 asserts that "the people of Mexico will under no circumstances accept interventions, intrusions, or any other acts from foreign entities that compromise the integrity, independence, and sovereignty of the nation, including coups d'état, election interference, or violations of Mexican territory, whether by land, water, sea, or air."

Additionally, the amendment to Art. 19 introduces the imposition of the most severe penalties and mandatory preventive detention for any individual, whether national or foreign, involved in arms trafficking or activities that threaten Mexican sovereignty.

"The classification of criminal organizations in Mexico, often referred to as cartels, as terrorist groups is a unilateral decision taken by the United States—one that was neither discussed nor agreed upon with us. While we respect US internal policies, such decisions cannot serve as a pretext to interfere in our sovereign affairs," stated Sheinbaum.

Implications for the Financial Sector Following Cartel Terrorist Designation

The US government's decision to label Mexican cartels as terrorist organizations will lead to increased scrutiny of financial operations and real estate transactions, as the cartels' preferred method of money laundering involves financial instruments and real estate, said Carlos Valderrama, Co-Founder, Legal Paradox.

Although Mexico has established strong anti-money laundering (AML) and counter-terrorism financing (CTF) laws, Valderrama notes that financial institutions, including traditional banks, fintech firms, and other entities, will need to strengthen their compliance measures.

Steven Dudley, Co-Director, Insight Crime, cautioned that companies in Mexico could face severe consequences if they inadvertently engage with criminal organizations. He noted that, for instance, if a US-based company’s Mexican subsidiary pays an extortion fee to criminal groups, it could be charged with "financing terrorism."