Circular 10/2019 — Modification of Circular 13/2017

Thursday, July 11, 2019 OFFICIAL GAZETTE 1 BANK OF MEXICO CIRCULAR 10/2019 addressed to Credit Institutions and other companies that professionally provide the service of fund transfers regarding the Reform to the General Provisions applicable to participants in the Interbank Electronic Payment System (SPEI), in matters of risk mitigation.

At the margin a logo, which says: Bank of Mexico. - "2019, Year of the Southern Leader, Emiliano Zapata".

CIRCULAR 10/2019 TO CREDIT INSTITUTIONS AND OTHER COMPANIES THAT PROFESSIONALLY PROVIDE THE SERVICE OF FUND TRANSFERS: SUBJECT: REFORM TO THE GENERAL PROVISIONS APPLICABLE TO PARTICIPANTS IN THE INTERBANK ELECTRONIC PAYMENT SYSTEM (SPEI), IN MATTERS OF RISK MITIGATION.

The Bank of Mexico, with the purpose of continuing to promote the proper functioning of payment systems and the sound development of the financial system, as well as the protection of public interests, has considered it necessary that credit institutions and other companies that professionally provide the service of fund transfers establish measures to strengthen the security of said transfers in addition to those currently provided for in the "General Provisions applicable to credit institutions and other companies that professionally provide the service of fund transfers, as well as to participants in the systems administered by the Bank of Mexico and to other interested parties in acting as participants in said systems", issued by this Central Institute through Circular 13/2017, published in the Official Gazette of the Federation on July 4, 2017. In this regard, regarding the modalities that beneficiaries of transfers and transfers for relevant amounts processed by the aforementioned entities on their behalf can use, it is considered convenient to include, among those that are only allowed to be offered from the next day following the crediting of the respective resources in the beneficiary's account, other modalities that could facilitate the operation of unauthorized transfers without, for that reason, affecting the crediting of said resources in the respective accounts or their disposal in any other way. Additionally, considering the development of systems and processes that the aforementioned entities would need to carry out, it is also convenient to recognize, as a non-binding recommendation, that said entities may establish the same restrictions referred to in the case where they receive, on the same day, several orders for transfers or transfers in favor of the same client whose sum is equivalent to an amount equal to or greater than that determined in the cited Provisions. As part of this, it is also convenient to define with greater precision those institutions and entities that receive the resources on behalf of their clients, corresponding to the transfers or transfers they process. In this way, with the measures contemplated in this Circular, the prevention mechanisms that the aforementioned entities could establish to achieve greater protection for their users' resources would be strengthened, thereby maintaining the proper functioning of the payment system, as well as the sound development of the financial system.

For the above, the Bank of Mexico, based on articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 2, 3, fraction I, 24, and 35 Bis, of the Bank of Mexico Law, 10 and 19, of the Payment Systems Law, 22 of the Law for Transparency and Ordering of Financial Services, 4, first paragraph, 8, paragraphs fourth and seventh, 10, first paragraph, 14 Bis, first paragraph, in relation to 17, fraction I, and 20 Quáter, fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Legal Directorate and the Directorate of Policy and Studies of Payment Systems and Market Infrastructures, respectively, as well as Second, fractions X and XVII, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, has resolved to modify the definition of "Receiving Entities" provided for in fraction II. Bis of the 2a., as well as the first paragraph of the 2a. Bis, of the aforementioned "General Provisions applicable to credit institutions and other companies that professionally provide the service of fund transfers, as well as to participants in the systems administered by the Bank of Mexico and to other interested parties in acting as participants in said systems", contained in Circular 13/2017, to remain in the following terms:

GENERAL PROVISIONS APPLICABLE TO CREDIT INSTITUTIONS AND OTHER COMPANIES THAT PROFESSIONALLY PROVIDE THE SERVICE OF FUND TRANSFERS, AS WELL AS TO PARTICIPANTS IN THE SYSTEMS ADMINISTERED BY THE BANK OF MEXICO AND TO OTHER INTERESTED PARTIES IN ACTING AS PARTICIPANTS IN SAID SYSTEMS

"2a. Definitions.- … I. to II. … II. Bis: Receiving Entities: credit institutions and other companies that professionally provide the service of fund transfers and that receive resources on behalf of their respective clients as a result of (i) the aforementioned transfers that other entities have sent them through multi-participant systems that settle them on the same day of their execution, or (ii) those other transfers that correspond to transfers of resources between deposit accounts that said institutions and companies are authorized to maintain. III. to XIII. … …"

"2a. Bis Disposition of Resources.- Receiving Entities, regarding those fund transfers or transfers executed, on behalf of their clients, for amounts equal to or greater than fifty thousand pesos, as well as, in their case, several transfers or transfers received on the same day that, resulting from the sum that it is recommended for said Receiving Entities to carry out, are equivalent to or greater than said amount, must allow those clients, as beneficiaries of such transfers or transfers, that, only from the next banking day following that on which the transfer or transfer in question has been executed, they dispose of the corresponding resources, for those same amounts, through the delivery of cash, in national currency or, in their case, in the foreign currency resulting from a currency exchange operation carried out with said resources, or gold or silver pieces or coins in fine metals derived from the sale carried out with said resources, or cashier's checks issued, in their case, by said Receiving Entities, including the delivery of cash for the payment of checks drawn, in their case, against the corresponding accounts of said clients. Additionally, Receiving Entities that offer demand deposit accounts with checkbooks in which, in turn, they make deposits of resources corresponding to transfers or transfers for the amounts referred to, must refrain from certifying, on the same day that the aforementioned deposits have been made, checks drawn against said accounts for those same amounts, as well as, in their case, carrying out those other operations or actions that the Administrator notifies through the communication systems agreed upon for the payment system in question. As an exception to what is provided in this paragraph, Receiving Entities may deliver, in cash, cashier's checks or gold and silver pieces and coins mentioned above, the amounts corresponding to the fund transfers or transfers provided for in this Rule, as well as certify checks or carry out the other actions indicated by the Administrator, on the same day of their crediting, provided that said Receiving Entities expressly authorize this to their clients individually, subject to compliance with the procedures they establish regarding this matter, which include the verification of the requirements they establish for these purposes, based on the characteristics of the clients in question and their observed operability. …"

Thursday, July 11, 2019 OFFICIAL GAZETTE 3 TRANSITIONAL SINGLE.- This Circular shall enter into force on the day of its publication in the Official Gazette of the Federation.

Mexico City, July 5, 2019.- The General Legal Director, Luis Urrutia Corral.- Signature.- The Director of Policy and Studies of Payment Systems and Market Infrastructures, Othón Martino Moreno González.- Signature.

For any inquiries regarding the content of this Circular, please contact the Central Bank Authorizations and Inquiries Department, at the phones (55) 5237-2308, (55) 5237-2317 or (55) 5237-2000 Ext. 3200.