The publication of the Ley Nacional de Extinción de Dominio (LNED) (National Domain Extinction Law) created a stir among the representatives of the private initiative a few months ago; however, this legal mechanism already existed in Mexican legislation. This new law replaces the Federal Domain Extinction Law and the 32 local laws that existed on the matter.
The scope of this new law is stricter and more precise than the previous versions, as it is a legal resource with which the government plans to combat organized crime and its various cells more efficiently. To learn what it is and the implications it entails, we visited Débora Espinosa, an independent bilingual lawyer graduated from the University of Guadalajara with a master’s degree in Tax Analysis who works in the fiscal, administrative, real estate and immigration fields.
Origin of the National Domain Extinction Law
“This law arises following a request made by the United States through the United Nations (UN). As the general development of Latin America is sought, they proposed that all Latin countries adopt this model law in their legal systems. On the other hand, since 2008, important reforms in Mexico have been very significant, as our old inquisitorial criminal system has changed to an accusatory and adversarial one, where more parties intervene with the objective of combating corruption and compensating the victims,” she explains.
What is Domain Extinction?
“It is the legal instrument with which a person can lose the right to own property of illicit origin and/or used to commit illegal acts. The assets pass to the power of the State, after the sentence of a judicial authority, without any type of compensation or consideration for its owner or whomever for any circumstance possesses said property. With the sale of these assets, the government seeks to compensate and/or repair the damage to the victims.”
This mechanism was introduced in Mexico in 2008 through the reform of Article 22 of the Constitution.
Rules for Domain Extinction
Assets Where Domain Extinction Proceeds
The extinction of ownership will proceed on those assets of a patrimonial nature whose legitimate origin cannot be proven, in particular assets that are an instrument, object or product of illegal acts, without prejudice to the place of their realization, such as
Good Faith in the Acquisition and Destination of Assets
“Good faith is a fundamental principle in law that implies acting with honesty and rectitude to perform actions with good intentions, without altering or damaging the rights of another,” explains our expert. In order to enjoy the good faith of the destination and acquisition of the goods, the defendant and/or affected persons must sufficiently prove the following:
In our next issue, we will address the second part of this valuable interview with Débora Espinosa, who will provide us with the details and implications for real estate agents with respect to the Ley Antilavado de Dinero (Anti-Money Laundering Law), which has as its main objectives the protection of the financial system and the national economy, as well as the establishment of measures and procedures to prevent and detect acts or operations with resources of illicit origin.