Circular 16/2010 — Modifications to General Provisions for the Transfer of Salary and Other Labor Benefits

CIRCULAR 16/2010, addressed to Credit Institutions, regarding modifications to the general provisions for the transfer of salary and other labor benefits, in accordance with Article 18 of the Law for Transparency and Ordering of Financial Services.

At the margin a logo, which says: Bank of Mexico.

CIRCULAR 16/2010

TO CREDIT INSTITUTIONS:

SUBJECT: MODIFICATIONS TO THE GENERAL PROVISIONS FOR THE TRANSFER OF SALARY AND OTHER LABOR BENEFITS, IN ACCORDANCE WITH ARTICLE 18 OF THE LAW FOR TRANSPARENCY AND ORDERING OF FINANCIAL SERVICES

The Bank of Mexico, based on Articles 28 of the Political Constitution of the United Mexican States, paragraphs sixth and seventh; 24 and 26 of the Bank of Mexico Law; 18 and 22 of the Law for Transparency and Ordering of Financial Services; paragraphs third and sixth of Article 8th, 10, as well as Articles 14 in relation to Article 25 fraction II and Article 25 Bis 1 fraction V, 17 fraction I and 20 fraction IV, which provide for the attribution of the Bank of Mexico, through the General Directorate of Analysis of the Financial System, the Directorate of Central Bank Provisions, and the Directorate of Operational and Payment Systems, to participate in the issuance of provisions, respectively, all of the Internal Regulations of the Bank of Mexico, as well as in the Sole Article of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, fractions I, III and IV; with the objective of promoting the proper functioning of payment systems and protecting the interests of the public, considering that:

I. The "Decree by which various provisions of the Credit Institutions Law, the Law for Transparency and Ordering of Financial Services, and the Law for Protection and Defense of Users of Financial Services are reformed, added to, and repealed" specifies that in addition to salaries and other labor benefits, receiving credit institutions have the obligation to transfer resources related to the payment of pensions deposited in favor of their clients, at no cost to them, to the credit institution chosen by these clients;

II. It is useful to establish, for the benefit of clients, a standard format that facilitates the request for the transfer of resources from their payroll account to the account they hold at another institution, and

III. It is convenient that credit institutions that provide the payroll service allow employers to carry out, in an agile manner through the electronic fund dispersion process, the transfer of salary, pensions, and other labor benefits of their workers, to the credit institution requested by these workers.

It has resolved to modify the title of the "General Provisions for the Transfer of Salary and Other Labor Benefits, in accordance with Article 18 of the Law for Transparency and Ordering of Financial Services"; the definitions of "Originating Account", "Receiving Account", "Employer", and "Payroll Service" in section 1.; sections 2.1; 2.2; 2.3, first paragraph; 2.5 and 4.; as well as add the definition of "Labor Benefit" to said section 1. and an Annex to the aforementioned Provisions, contained in Circular 25/2008, to read as follows:

"GENERAL PROVISIONS FOR THE TRANSFER OF SALARY, PENSIONS, AND OTHER LABOR BENEFITS, IN ACCORDANCE WITH ARTICLE 18 OF THE LAW FOR TRANSPARENCY AND ORDERING OF FINANCIAL SERVICES"

"1. DEFINITIONS

For brevity, singular or plural, the following shall be understood as:

...

Originating Account: the demand deposit bank account held by a credit institution in which, among other resources, a Client receives Labor Benefits through the Payroll Service.

Receiving Account: the demand deposit bank account held by a credit institution for the Client to which, among other resources, those received by the Client by reason of Labor Benefits will be transferred.

Employer: the person who contracts the Payroll Service with an Originating Credit Institution and sends payment instructions for Labor Benefits to Originating Accounts or Receiving Accounts.

Labor Benefit: salaries, pensions, or any other benefit that the Employer pays to the Client.

Payroll Service: that provided by credit institutions to Employers through which resources related to the Labor Benefits of their employees are deposited, via electronic fund dispersion."

"2. GENERAL PROVISIONS

"2.1 Clients may instruct the Originating Credit Institution that on each Business Day when Labor Benefits are received in the Originating Account, it transfer without cost to the Client the balance of said account to the Receiving Account.

When the resources indicated in the preceding paragraph have been available in the Originating Account no later than 15:00:00 hours, the transfer to the Receiving Account must be made on the same Business Day, so that they are credited on that date.

In the event that the resources are available in the Originating Account after the mentioned time, the transfer to the Receiving Account must be made with sufficient advance notice so that said resources are credited no later than the opening of the next Business Day.

Prior to the transfer, charges may be made in the Originating Accounts: i) when so agreed with Clients to make payment of credits granted to them, or ii) in cases where Clients have authorized it through the direct debit service, for the recurring payment of goods, services, or credits."

"2.2 Originating Credit Institutions must receive at all their branches during hours of general public service, the instructions presented to them using the format established in the Annex to these Provisions. To this effect, said institutions must make the cited format available to their Clients at their branches and through their electronic page on the worldwide network (Internet), in the section accessible to the general public.

Originating Credit Institutions must comply with the respective instruction no later than the tenth Business Day following the date of its presentation, for which they shall only request the presentation of an official identification, as well as, at the Client's choice, the contract, the statement of account, or the debit card with the holder's name, related to the Receiving Account. In no case may Originating Credit Institutions request additional documentation beyond the aforementioned to attend to said instruction."

"2.3 Clients may order the Originating Credit Institution at any time to cancel the instruction to transfer resources from the Originating Account to the Receiving Account.

..."

"2.5 Credit institutions that hold Originating Accounts must disclose on the Internet, in the section through which the general public has access, as well as through easily visible signs placed in all their branches, in the months of January and July of each year, the following legend:

"You have the right to have, at no cost to you, the resources deposited in the account you hold at this institution where you receive your salary, pensions, and other labor benefits, transferred to the account you hold at another bank.

For this, you only need to deliver at any of our branches the format we have available at each of them and on our Internet electronic page, as well as exhibit: i) your official identification, and ii) the contract, statement of account, or the corresponding debit card with your printed name, of the account to which you wish your resources to be transferred."

Likewise, on the first Business Day of each week of the mentioned months, Originating Credit Institutions must publish, individually or jointly, in at least two newspapers of wide national circulation, the following legend:

"As a banking client, you have the right, at no cost to you, to request that resources from the account in which you receive your salary, pensions, and other labor benefits be transferred to another account held by the bank of your choice.

For this effect, the request format to be used will be available at the branches and on the Internet electronic page of your bank."

During each of the mentioned months, no more than one publication shall be made in the same newspaper."

"4. OTHER PROVISIONS

Credit institutions that offer the Payroll Service must allow Employers to deposit Labor Benefits directly in favor of their employees in the Originating Account or in the Receiving Account designated by these employees, through the same electronic fund dispersion process. The foregoing, without prejudice to what is stated in the last paragraph of section 2.1 of these Provisions.

The amount of commissions that institutions, if applicable, charge the Employer for the operation described in the preceding paragraph, shall not differ based on the credit institution that holds the account in which the resources are deposited."

"ANNEX

FORMAT FOR REQUESTING THE TRANSFER OF RESOURCES FROM ACCOUNTS IN WHICH LABOR BENEFITS ARE RECEIVED

___ of _________ of 20___

---

(NAME OF THE CREDIT INSTITUTION)

I request that the resources deposited in my account number ____________ (Originating Account) be transferred without cost to me to the account with CLABE number ________________ (eighteen digits) or with Debit Card Number _________________ (sixteen digits), held by __________________ (Name of the credit institution), on the same Business Day that Labor Benefits are deposited in it.

This is understood on the basis that if such resources are available in the Originating Account after 15:00:00 hours, the balance of said account shall be credited to the account to which I wish the resources to be transferred, no later than the opening of the next Business Day.

To make this request, I exhibit my official identification and regarding the account to which the resources will be transferred, one of the following documents:

Contract; Statement of Account, or Debit Card with my printed name.

This request shall take effect no later than the tenth Business Day following the date of this document and will remain valid until the date on which I order its cancellation.

Sincerely,

---

(CLIENT'S NAME)"

TRANSITORY PROVISIONS

FIRST. This Circular shall enter into force on July 30, 2010.

SECOND. The disclosure and publication of the legends provided for in section 2.5 of these Provisions that should have been carried out in July 2010, shall be carried out in August of the current year.

Mexico, D.F., June 1, 2010.- BANK OF MEXICO: The General Director of Analysis of the Financial System, José Gerardo Quijano León.- Signature.- The Director of Central Bank Provisions, Fernando Luis Corvera Caraza.- Signature.- The Director of Operational and Payment Systems, Ricardo Medina Alvarez.- Signature.

For any queries regarding the content of this Circular, please go to the Manager of Authorizations, Consultations and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Colonia Centro, Mexico City, Federal District, C.P. 06059, or to the phones 5237.2308, 5237.2317 or 5237.2000 Ext. 3200.