Introduction

On March 1 2018 Congress passed the bill on the Financial Technology Institutions Law, with 265 votes in favour, nine abstentions and 61 votes against.

The Senate had unanimously approved the bill on December 5 2017, with 102 votes in favour, and sent it to Congress for analysis (for further details please see "SHCP releases first draft of Financial Technology Institutions Law"). Congress made no amendments to the bill.

On March 8 2018 the president signed and enacted the bill. The law was published the next day in its final form in the Federal Official Gazette.

The law seeks to build a regulatory framework that will:

  • encourage the development of innovative financial services;
  • increase the level of competition and financial inclusion; and
  • place Mexico at the forefront of the industry.

Institutions regulated by law

The law recognises two types of financial technology institution (FTI) and an innovative model:

  • Crowdfunding institutions – these connect people so that investors can fund investment seekers through mobile applications, interfaces, websites or any other means of electronic or digital communication.
  • Electronic payment institutions – these offer issuance, management, accountability and transfer of electronic payment services. Funds recorded in an electronic transaction accounting ledger and kept by an electronic payment institution will be considered electronic payment funds.
  • Innovative model – the law provides for the possibility of operating on a temporary basis under an 'innovative model' (ie, institutions which provide financial services through technological tools or means different to those available in the market). A temporary authorisation will be granted to this type of FTI, in compliance with the law.

Virtual assets

Under the law, virtual assets are account units that:

  • are electronically recorded and used by the public as a payment method for all types of legal transaction; and
  • can be implemented only through electronic means.

The Bank of Mexico (Banxico) will determine, through general provisions, the virtual assets that FTIs can use.

Next steps

SHCP The Ministry of Finance and Public Credit (SHCP) must take the following steps:

  • Within six months of the law's issuance, the SHCP must issue general provisions establishing procedures and methods to prevent and detect acts, omissions and operations that finance terrorism.
  • Within 12 months of the law's issuance, the SHCP must issue general provisions establishing additional criteria and conditions to grant temporary authorisations for the operation of innovative models.

CNBV The National Baking and Securities Commission (CNBV) must take the following steps:

  • Within six months of the law's issuance, the CNBV must issue general provisions establishing the rules relating to FTI accounting and business continuity plans.
  • Within 12 months of the law's issuance, the CNBV must issue general provisions relating to:
    • information accessibility with regard to FTI operations;
    • the use of equipment and technological means;
    • outsourcing; and
    • the operation of innovative models and FTI self-correction programmes.
  • Within 24 months of the law's issuance, the CNBV must issue general provisions:
    • relating to the capital requirements; and
    • establishing certain bases for data and information exchange.

CONDUSEF The National Commission for the Protection and Defence of Financial Services Users (CONDUSEF) must take the following steps:

  • Within 12 months of the law's issuance, CONDUSEF must issue general provisions:
    • relating to the FTI activities that must be reported to the financial authorities; and
    • establishing additional criteria and conditions to grant temporary authorisations for the operation of innovative models.

CONSAR and CNSF The National Commission of the Retirement Savings System (CONSAR) and the National Insurance Commission (CNSF) must take the following steps:

  • Within 12 months of the law's issuance, CONSAR and the CNSF must issue general provisions regarding:
    • the additional criteria and conditions for the granting of temporary authorisations for the operation of innovative models; and
    • FTI self-correction programmes.
  • Within 24 months of the law's issuance, CONSAR and the CNSF must issue general provisions regarding the basis for the exchange of the data and information that may be shared.

Banxico Banxico must take the following steps:

  • Within six months of the law's issuance, Banxico must issue general provisions relating to:
    • the operations carried out by electronic payment institutions;
    • activities linked to payment systems; and
    • limits for the resources which may be maintained on behalf of electronic payment institutions' clients or which such clients may use.
  • Within 12 months of the law's issuance, Banxico must issue general provisions regarding:
    • the virtual assets which FTIs may operate;
    • the operations that may be carried out with said assets;
    • the information relating to an FTI's activities that must be reported to the financial authorities;
    • the additional criteria and conditions for the granting of temporary authorisations for the operation of innovative models; and
    • self-correction programme regulations.
  • Within 24 months of the law's issuance, Banxico must issue general provisions establishing the rules for the exchange of the data and information that may be shared.

CNBV and Banxico Within 12 months of the law's issuance, the CNBV and Banxico must jointly issue:

  • general provisions regarding:
    • the data security of electronic payment institutions;
    • the third-party services that electronic payment institutions can hire; and
    • the equipment and technological means that they may use to carry out their operations; and
  • a collaboration agreement that will establish:
    • the form and terms for supervising FTI compliance; and
    • the enforcement procedures that may be adopted by the corresponding authorities in exercise of their attributions.

Inter-institutional committee

The law provides for the formation of an inter-institutional committee, which will comprise six proprietary members. The heads of the SHCP, the CNBV and Banxico will each designate two members.

The inter-institutional committee and the CNBV will be responsible for, among other things, discretionally granting the necessary authorisations in accordance with the law to ensure that FTIs operate correctly in Mexico.

Obtaining authorisation

Parties that are currently carrying out the activities regulated by the law must request authorisation from the CNBV to continue doing so within 12 months from the law's issuance.

Such parties may continue to carry out such activities until the CNBV approves or denies their request. However, they must publish on their website that:

  • their authorisation to carry out said activity is under consideration; and
  • the activity is therefore not being carried out under the authorities' supervision.

The CNBV will automatically deny any authorisation if the respective parties fail to comply with this obligation.

For further information on this topic please contact Federico de Noriega Olea, René Arce Lozano, Mayuca Salazar or Luis Dávalos at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (federico.denoriega@hoganlovells.com, rene.arce@hoganlovells.com, mayuca.salazar@hoganlovells.com or luis.davalos@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

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