Circular 12/2016 — Modifies Circular 3/2012

(First Section) OFFICIAL GAZETTE Thursday, November 3, 2016 BANK OF MEXICO CIRCULAR 12/2016, addressed to Credit Institutions and the National Agricultural, Rural, Forestry and Fisheries Development Financial Institution, regarding Modifications to Circular 3/2012 (transfers between participants in a dollar payment system).

A logo appears on the margin, stating: Bank of Mexico.

CIRCULAR 12/2016 TO CREDIT INSTITUTIONS AND THE NATIONAL AGRICULTURAL, RURAL, FORESTRY AND FISHERIES DEVELOPMENT FINANCIAL INSTITUTION: SUBJECT: MODIFICATIONS TO CIRCULAR 3/2012 (TRANSFERS BETWEEN PARTICIPANTS IN A DOLLAR PAYMENT SYSTEM)

The Bank of Mexico, with the purpose of continuing to promote the sound development of the financial system and the proper functioning of payment systems, has determined to clarify that only credit institutions that are participants in an electronic payment system that allows for the execution of such transfers in Dollars, whose internal rules are authorized by the Bank of Mexico, or which is administered by the Bank of Mexico in accordance with the Payment Systems Law, may offer and execute credits or debits to deposit accounts with or without checkbooks in Dollars through electronic transfers of any type. In addition to the foregoing, it is contemplated that institutions are obligated to execute only fund transfers in Dollars that are directed to accounts denominated in that same currency through the referred payment systems.

For the above, based on Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 24 and 31, of the Bank of Mexico Law, 22, of the Law for Transparency and Regulation of Financial Services, 4, first paragraph, 8, paragraphs fourth and seventh, 10, first paragraph, 17, fraction I, 19 Bis, fraction V, 20, fraction XI and 25 Bis 1, fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the Directorate of Central Banking Provisions, Directorate of National Operations, Directorate of Payment Systems and Directorate of Regulation and Supervision, respectively, as well as Second, fractions I, VI, VIII and X, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, it has resolved to modify the index, Articles 2, in the definition of “SPID”, 48 Bis and the Second Transitory Article of Circular 5/2016 “Modifications to Circular 3/2012 (Demand deposits in dollars)”, published in the Official Gazette of the Federation on March 11, 2016, and to add an Article 86 Bis, of the “Provisions applicable to the operations of credit institutions and the National Agricultural, Rural, Forestry and Fisheries Development Financial Institution”, contained in Circular 3/2012, to remain in the following terms:

PROVISIONS APPLICABLE TO THE OPERATIONS OF CREDIT INSTITUTIONS AND THE NATIONAL AGRICULTURAL, RURAL, FORESTRY AND FISHERIES DEVELOPMENT FINANCIAL INSTITUTION

INDEX SECOND TITLE OPERATIONS WITH THE PUBLIC CHAPTER III SERVICES Section III Other services …

“Article 86 Bis.- Transfers between participants in a dollar payment system”

Thursday, November 3, 2016 OFFICIAL GAZETTE (First Section) Definitions Article 2°.- … … “SPID: the payment system named ‘Interbank Payment System in Dollars’ that allows the sending, processing and settlement of Interbank Transfer Orders with the aim of transferring, through electronic means, amounts denominated in Dollars to demand deposit accounts denominated in that currency, with or without checkbooks payable in the Mexican Republic, opened only in the name of legal entities that have their domicile in national territory.” …

Additional characteristics of Demand Deposits in Dollars with or without checkbooks “Article 48 Bis.- Regarding Demand Deposits in Dollars with or without checkbooks payable in the Mexican Republic that Institutions offer to account holders referred to in subsection b) of fraction I of Article 46 of these Provisions, such Institutions may only execute in the respective accounts credits and debits of amounts in Dollars through electronic interbank fund transfers through an electronic payment system that allows for the execution of such transfers in Dollars, whose internal rules are authorized by the Bank of Mexico, or which is administered by the Bank of Mexico in accordance with the Payment Systems Law. In the event that the Institution referred to in the preceding paragraph does not comply with the requirements established in the applicable regulations for the referred payment system to carry out, through said system, the electronic transfers in question or to receive other transfers in favor of the respective account holders, such Institution must, as an exception to what is provided in Articles 47, fraction I, and 48, fraction I, above, refrain from offering and executing credits or debits to the accounts respective through electronic transfers of any type.”

“Transfers between participants in a dollar payment system Article 86 Bis.- The Institution that, in accordance with applicable provisions, is a participant in any of the payment systems indicated in the preceding Article 48 Bis may only execute, through said system, all those fund transfers in Dollars that are directed to Accounts denominated in that same currency opened in other Institutions that are also participants in said payment system, therefore such Institution must refrain from executing electronic transfers of funds by other means.”

“SECOND. Institutions that on the date of entry into force of this Circular offer deposit accounts referred to in Article 48 Bis of these Provisions must obtain authorization to act as participants in an electronic payment system in Dollars national whose internal rules are authorized by the Bank of Mexico, or which is administered by the Bank of Mexico in accordance with the Payment Systems Law, no later than April 1, 2016. Those Institutions that do not have the aforementioned authorization are prohibited from opening new accounts referred to in the cited article. Likewise, the aforementioned Institutions that do not obtain authorization to act as participants in an electronic payment system in Dollars national whose internal rules are authorized by the Bank of Mexico or which is administered by the Bank of Mexico in accordance with the Payment Systems Law, may not, from August 31, 2017, maintain open those accounts corresponding to the deposits referred to in Article 48 Bis of these Provisions and must refrain from receiving, from that same date, any other additional amount as part of said deposits, by any other modality.”

TRANSITORY PROVISIONS FIRST. This Circular shall enter into force on the next Banking Business Day following its publication in the Official Gazette of the Federation, except for what is provided in the following transitory article. SECOND. What is provided in Articles 48 Bis and 86 Bis shall enter into force on May 31, 2017.

Mexico City, October 28, 2016.- The Director of Regulation and Supervision, Viviana Garza Salazar.- Signature.- The Director of Central Banking Provisions, Mario Ladislao Tamez López Negrete.- Signature.- The Director of National Operations, Juan Rafael García Padilla.- Signature.- The Director of Payment Systems, Miguel Ángel Díaz Díaz.- Signature.

(First Section) OFFICIAL GAZETTE Thursday, November 3, 2016 For any inquiries regarding the content of this Circular, please contact the Department of Authorizations, Inquiries and Legal Control, at telephone numbers (55) 5237-2308, (55) 5237-2317 or (55) 5237-2000 Ext. 3200.