The New North American Hierarchy: Why Mexico Is Now the Gold Standard for the Travel Rule

The Financial Action Task Force’s (FATF) consolidated technical compliance table, refreshed on 23 April 2025, has laid bare a striking regional divergence. In North America, the illusion of parity is over. Mexico now leads with a rare Compliant score for Recommendation 16, Canada holds a Largely Compliant rating, and the United States has slipped to Partially Compliant. These are not merely cosmetic rankings. They influence correspondent banking dynamics, recalibrate supervisory expectations, and impact the commercial viability of every cross-border payment flowing between Mexico City, Toronto, and New York.

Mexico: The New Regional Standard

Mexico’s elevation to Compliant status in May 2023 was the result of a transformative three-year legislative effort. It hard-wired the real-time inclusion of full originator and beneficiary data into every inbound and outbound transfer, regardless of value, currency, or payment rail. Crucially, the Comisión Nacional Bancaria y de Valores (CNBV) paired this legal mandate with robust technological controls. Pre-settlement analytics reject incomplete SWIFT or ISO 20022 messages before they can enter the financial system. FATF evaluators described the framework as “best in breed”, granting it the region’s only green score.

The reputational and commercial benefits have been immediate. Peso-denominated cross-border spreads have tightened, while international money service businesses are increasingly routing payment flows through Mexico’s upgraded infrastructure. What was once perceived as an outlier jurisdiction is now the benchmark others must meet.

Canada: On the Cusp of Compliance

Canada’s trajectory is upward, though not yet complete. Following a 2021 FATF follow-up that upgraded its rating to Largely Compliant, Ottawa has continued to address technical deficiencies. On 26 March 2025, sweeping amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations were unveiled. These reforms mandate private-to-private information sharing, expand AML obligations to cheque-cashing and leasing firms, and tighten beneficial ownership requirements.

New guidance from FINTRAC further obliges institutions to transmit full originator and beneficiary data with all electronic fund transfers and virtual currency movements. It also mandates the integration of ISO 20022 message fields across all payment rails. These updates close most of the gaps that have kept Canada from a green rating. Barring implementation hiccups, Canadian authorities anticipate a favourable outcome in the next FATF review, likely in 2026.

Yet even now, Canadian institutions face a practical dilemma. Their existing threshold of CAD 1,000 for domestic transfers leaves them exposed to frictions when dealing with counterparties that enforce Mexico’s stricter zero-threshold model. Without pre-emptive upgrades, they risk costly delays and compliance rejections in cross-border corridors.

United States: From Architect to Outlier

The United States, once the architect of the original travel rule in 1996, now lags behind. Despite a March 2024 FATF follow-up report, its rating remains stuck at Partially Compliant. The chief deficiency is the outdated domestic threshold of USD 3,000, which remains in place for most wire transfers within the United States. While FinCEN lowered the threshold to USD 250 for international transactions involving jurisdictions outside the US, this narrower application leaves domestic instant-payment systems like FedNow outside the scope of current travel rule coverage.

Compounding the problem is weak enforcement. FATF cited inconsistent oversight of money-services businesses and limited sanctions when intermediary banks forward incomplete messages. This patchy supervision creates gaps that undermine the entire regional AML framework.

More concerning is the current political climate. The second Trump administration has launched a sweeping deregulatory campaign. A regulatory freeze now blocks new Treasury and FinCEN rules without Cabinet-level approval, and Project 2025 proposes deep cuts to AML enforcement budgets.

Existing guidance is already being repealed, framing it as 'regulatory overreach'. In such an environment, meaningful reform of travel rule requirements appears unlikely, virtually guaranteeing that the US will retain its amber rating well into the next FATF evaluation cycle.

Operational Realities for Cross-Border Firms

This tri-coloured FATF scoreboard is more than a technical chart. It directly impacts cost, risk, and operational viability. A firm that aligns its systems to Canada’s obligations will still face message rejects when dealing with Mexico and scrutiny from US regulators aiming to close domestic gaps. By contrast, adopting Mexico’s zero-threshold, real-time compliance model satisfies all three regulatory environments. It minimises false positives in sanctions screening, reduces friction in correspondent banking, and future-proofs systems against likely FATF revisions.

The Coming Global Travel Rule Standard

On 24 February 2025, FATF launched its second public consultation on changes to Recommendation 16. Proposed revisions would embed structured ISO 20022 message elements, extend coverage to instant-payment systems, and tighten requirements for digital-asset transfers. Countries like Mexico that already validate full payment data before settlement are poised to glide through the transition. Canada will need only modest adjustments. The US, however, must undertake a fundamental rewrite of its thresholds, message formats, and supervisory structures to regain competitiveness.

Strategic Imperatives for Compliance Leaders

The message to multinational financial institutions, virtual asset service providers, and payment platforms is clear: assume that Mexico’s rulebook is tomorrow’s global baseline. First, adopt a nil-threshold policy for all transfers, whether domestic or cross-border. Second, implement ISO 20022-native architecture across all channels, including wire, ACH, card, and instant payments. Third, apply the travel rule to crypto transactions without delay, as regulatory grace periods are closing fast. Finally, embed real-time pre-settlement analytics that can block non-compliant messages before execution.

This approach transforms compliance from a reactive obligation into a proactive risk control that also enhances sanctions and fraud screening capabilities. It also positions firms to benefit from the deeper intelligence-sharing now enabled by Canada and Mexico under existing treaties with US authorities, even if Washington’s own systems remain outdated.

Conclusion: A Continental Divergence

The travel rule landscape in North America is no longer unified. Mexico sets the pace with a model that is technically rigorous and operationally mature. Canada is catching up fast, aided by legislative reforms and regulatory guidance. The US, constrained by political headwinds and legacy systems, risks falling further behind.

For compliance leaders seeking to insulate their firms from regulatory uncertainty and cross-border frictions, the prescription is now strategic rather than tactical. Align with the most demanding regime - Mexico’s. Doing so will reduce the long-term cost of compliance, improve operational resilience, and align institutions with the higher global standard FATF is almost certain to adopt before the end of 2025.