An executive order has been published in the Official Gazette that amends several provisions of the Auxiliary Financial Institutions Law to impose rules on non-regulated multi-purpose financial institutions (SOFOMs), money exchange centres and money transmitters with respect to money laundering and financing of terrorism.

Pursuant to the amendment, the new legal concept of a 'money transmitter' has been created. A money transmitter is an entity that carries out the function of transferring funds; this assumes the status of a new activity in assisting in the provision of credit. As defined in the law, a money transmitter is an entity incorporated according to the General Corporation Law which, within the Mexican territory, receives rights or instruments in foreign or national currency in exchange of payment, commission, benefit or gain, and transfers such rights or means to the designated beneficiary in a foreign country or in any place within the Mexican territory according to instructions received from its clients. Such transfer of funds may be made directly or by any other means (including courier services, electronic media and electronic fund transfer). Money transmitters may not perform activities that are performed by money exchange centres pursuant to the Auxiliary Financial Institutions Law.

The amendment requires non-regulated SOFOMs, money exchange centres and money transmitters to:

  • establish measures and procedures to prevent and detect activities, omissions or operations that may facilitate the commission of a crime related to money laundering and terrorism financing;
  • submit to the Treasury and Public Credit Department, through the National Banking and Securities Commission (CNBV), reports of activities and operations carried out by clients in relation to such activities, as well as any event, operation or service that may constitute such a crime;
  • register in their accounts all operations or activities carried out by their clients and users, as well as the operations carried out with financial institutions; and
  • observe criteria and procedural guidelines relating to:
    • 'know your customer' policies;
    • information and documents required to execute operations and services that certify a client's identity;
    • security for clients and users and their identifying data; and
    • the provision of internal training.

Non-regulated SOFOMs, money exchange centres, money transmitters and their board members, officers, employees, agents and legal representatives are responsible for strict compliance with these obligations. In the event of a breach, the CNBV may impose a fine of between 200 and 100,000 times the minimum daily wage in the Federal District.

The CNBV is authorised to inspect non-regulated SOFOMs, money exchange centres and money transmitters exclusively in relation to money laundering and financing of terrorism. It may conduct inspections to verify compliance with Article 95bis of the law and must be given unrestricted access to the entity's books and operational records and documents.

For further information on this topic please contact Miguel Angel Peralta or Christian Dorantes Picazo at Basham Ringe y Correa SC by telephone (+52 55 5261 0474), fax (+52 55 5261 0557) or email ([email protected] or [email protected]).