The publication of the Financial Technology Institutions Law (Fintech Law) on 9 March, 2018 was a long awaited piece of legislation which aimed to promote financial inclusivity and technological innovation through a joint collaboration between Mexican regulators, legislators, and important private actors in the field. This article considers the requirements under the Fintech Law that any third country entities will need to comply with in order to operate in Mexico in this space.
The Fintech Law intends to build a regulatory framework aimed at the development of innovative financial services, increasing the level of competition and financial inclusion, as well as placing Mexico at the forefront of the industry. The Fintech Law currently recognizes two types of financial technology institutions (FTI) and an innovative or sandbox model:
crowdfunding institutions; electronic money institutions (EMI); and the innovative model. The first of the recognized FTIs, crowdfunding institutions, connect people so that investors can fund investment seekers through mobile applications, interfaces, websites or any other means of electronic or digital communications. EMIs on the other hand offer services of issuance, management, accountability and transfer of electronic payments. The funds recorded in an electronic transaction accounting ledger and kept by an EMI will be considered as electronic payment funds.
The Fintech Law also establishes the possibility of operating on a temporary basis under an innovative model, namely institutions that provide financial services through technological tools with different characteristics to the ones available in the market. A temporary authorization will be granted to this type of FTI, in compliance with the Fintech Law.
As a matter of law, any entity that wishes to operate as an FTI will need to file for authorization to operate as an FTI with the National Banking and Securities Commission (known by its acronym in Spanish as CNBV).
This means that international entitieseven those that are already a Fintech company in their jurisdictionwho wish to incorporate and operate as an FTI in Mexico need to file for an authorization with the CNBV. International entities should therefore bear in mind that in order to operate in Mexico, all their activities should be conducted through an authorized FTI.
Under the Fintech Law, EMIs are allowed to outsource services, domestic or foreign, to third-party providers as needed in...