Mexico: Ministry Of Finance Prepares Draft FinTech Act

Last Updated: 30 August 2017
Article by Teofilo Berdeja Prieto
Most Popular Article in Mexico, September 2017

The Ministry of Finance completed an initial proposal to adopt a FinTech Act and amend various Mexican financial laws with changes incident to same.

Once the Ministry completes its review of comments being produced on the FinTech Act and prepares a final draft, the same will be submitted by the Mexican President to Congress.

The proposed Fintech Act's objectives include the creation of FinTech firms that will engage in financial activities including deposits and payments, lending activities and virtual asset management. The new institutions will be subject to capital and liquidity requirements, as well as a mandate to comply with prudential and consumer-protection laws and regulations.

The Financial Technology Institutions ("ITF"s), will require the authorization of the National Banking and Securities Commission ("CNBV"). Their activities will be limited to those permissible under the FinTech Act and applicable regulations, or those that the CNBV determines to be permissible. As mentioned before, core activities will include the taking of deposits and payments, lending activities and virtual asset management. Any activity not incidental to the above, should be discussed with the CNBV, after which the CNBV in consultation with other regulators, as required, will determine whether such activities are permissible for an ITF.

ITF's may take deposits from pre-screened persons for purposes of making electronic payments. Such deposits cannot accrue interest.

Institutions engaged in lending may fund loans by (i) issuing debt instruments, (ii) raising capital and (iii) receiving royalty payments.

ITF's chartered to manage virtual assets may (i) contact purchasers and sellers who wish to conduct a virtual asset sale, (ii) purchase or sell virtual assets whether for customers' or for their own account, and (iii) transfer payments with virtual assets.

A virtual asset is a representation of currency in some environment or situation. In the context of ITF's, currency can be defined as either a medium of exchange or a property that has value that can be translated into Mexican pesos. Monetary virtual assets are often called virtual currency.

Private digital currencies combine new payments systems with new currencies that are not issued by a central bank. The most well-known privately issued digital currency is Bitcoin, but other examples include LiteCoin, Ethereum and Ripple. Banco de México (Mexico's Central Bank) has assessed private digital currencies and concluded that while they are interesting, they do not currently pose a material risk to monetary or financial stability in Mexico. Banco de México continues to monitor developments in this area.

Activities deemed "supplementary" or "connected" to the core activities of ITF's may be authorized by the Ministry of Finance with the previous favorable opinion of the CNBV and Banco de México, as applicable.

Procedures for an ITF applicant will require a detailed submission including the filing of an authorization application, business plan, biographical report on all identified insiders, risk management, description of information technology and compliance management systems and details of financial management in formation. The CNBV may impose special conditions such as a resolution plan in the instance of a conditional authorization, higher capital requirements and other measures to be reflected in operating agreements.

Principles in evaluating a proposal will include (i) maintain a sound financial system, (ii) foster fair access to financial services, (iii) promote efficiency and better service through the adoption of innovative technology. Financial inclusion will be a focus in the application process. The provision of low cost services to underserved communities will be sought.

A proposed new activity not incidental to the above or involving the use of new technology, should be discussed with the CNBV in advance of the filing of an application. The CNBV is empowered to grant a conditional authorization for a two-year period that can be extended for an additional year before a decision is made to either grant a definitive authorization or let the conditional one expire. In the latter case, the applicant should follow the resolution plan requested by the CNBV at the time of filing the petition for a conditional authorization.

Providers of ITF services will face regulatory, supervisory, and enforcement requirements from a number of quarters including Banco de México, the CNBV and the National Consumer Financial Services Protection Commission.

Those firms currently engaged in the activities proposed to be authorized for ITF's, will have a six-month period after the coming into effect of the FinTech Act, to file a petition for authorization to act as ITF from the CNBV. In the meantime they will remain authorized to act as such, conspicuously stating in their websites that they are in the process of obtaining the required authorization from the CNBV.

A number of existing statutory provisions related to the FinTech Act are proposed to be amended. Among such provisions, the Financial Groups Act is proposed to be amended to provide that ITFs will be classified as "financial entities", subject to Mexican or foreign ownership in accordance with the provisions of such act and applicable regulations. Consequently, an ITF may be owned by the holding company of a "financial group".

The FinTech Act makes it clear that predatory products and unfair or deceptive acts or practices are to be forbidden. Violations will subject those responsible to civil and criminal liabilities.

We will keep you posted on future developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions