Circular 2/2021 — Modifies Circular 3/2012

Wednesday, May 12, 2021 OFFICIAL GAZETTE 75 BANCO DE MEXICO CIRCULAR 2/2021 addressed to Credit Institutions, Regulated Multiple-Object Financial Societies that maintain equity links with Credit Institutions, and the National Financial Development Institution for Agricultural, Rural, Forestry and Fisheries Activities, regarding modifications to Circular 3/2012 (sight deposits denominated in national currency for Mexican natural persons residing outside the national territory and bank prepaid cards denominated in national currency).

A logo appears at the margin, stating: Bank of Mexico.- “2021: Year of Independence”.

CIRCULAR 2/2021 TO CREDIT INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH CREDIT INSTITUTIONS AND THE NATIONAL FINANCIAL DEVELOPMENT INSTITUTION FOR AGRICULTURAL, RURAL, FORESTRY AND FISHERIES ACTIVITIES:

SUBJECT: MODIFICATIONS TO CIRCULAR 3/2012 (SIGHT DEPOSITS DENOMINATED IN NATIONAL CURRENCY FOR MEXICAN NATURAL PERSONS RESIDING OUTSIDE THE NATIONAL TERRITORY AND BANK PREPAID CARDS DENOMINATED IN NATIONAL CURRENCY)

The Bank of Mexico, with the purpose of continuing to promote the sound development of the financial system, protect the interests of the public, and foster the proper functioning of payment systems, considers it important to continue taking actions to reinforce and expand the coverage of financial services under better terms and conditions, so that foreign currency entering the national territory through lawful activities flows in a simple, secure, and economical manner, in support of Mexican migrant persons and Mexican workers in tourist zones, their families, and the economies of their communities.

This Central Institute helps ensure the stability of the financial system by seeking to generate favorable conditions for the full exercise of freedom and rights enshrined in the Political Constitution of the United Mexican States, through the implementation of regulatory adjustments that allow for greater financial inclusion of migrant persons and their families.

In the National Financial Inclusion Policy, the Mexican migrant population and their families were identified as a vulnerable group, noting that the average cost of sending remittances to Mexico from the United States is higher than in other Latin American countries, averaging 5.7% of the amount sent by each migrant sending two hundred dollars to Mexico from the United States. As a result, one of the policy's objectives is to increase access to the national financial system by Mexican migrants and promote the use of financial products.

In the development of this objective, the Bank of Mexico has determined to modify the regulatory framework on passive operations of credit institutions with the purpose that Mexican migrant persons have access to more financial products, so that they can dispose of their resources fairly and competitively.

Likewise, the Bank of Mexico has considered it appropriate to provide within the passive operations that credit institutions may perform the issuance and offering of prepaid cards denominated in pesos in favor of foreign persons entering the country, with the purpose of expanding the range of payment instruments available to them, to the benefit of Mexican workers in tourist zones.

For the foregoing, based on Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 24 and 26 of the Bank of Mexico Law, 46, fraction XXVI Bis, and 48 of the Credit Institutions Law, 22 of the Law for Transparency and Ordering of Financial Services, 1, 4, first paragraph, 8, paragraphs fourth and eighth, 10, first paragraph, 12 Bis, first paragraph, in relation to 20 Quater, fraction IV, 14 Bis, first paragraph, in relation to 17, fraction I, 14 Bis 1, first paragraph, in relation to 25 Bis 1, fraction IV, and 19 Bis, fraction V, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Payment Systems and Market Infrastructures, the General Legal Directorate, the General Directorate of Financial System Affairs, and the National Operations Directorate, respectively, as well as Second, fractions I, VI, X and XVII, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, it has resolved to modify the Index and the definition of Development Banking Institutions contained in Article 2, as well as to add Article 14 Bis and a Section G Bis to Section I of Chapter I of Title Two with its corresponding Article 35 Bis, to the “Applicable Provisions to the Operations of Credit Institutions, Regulated Multiple-Object Financial Societies that Maintain Equity Links with Credit Institutions and the National Financial Development Institution for Agricultural, Rural, Forestry and Fisheries Activities”, contained in Circular 3/2012, to remain in the following terms:

APPLICABLE PROVISIONS TO THE OPERATIONS OF CREDIT INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH CREDIT INSTITUTIONS AND THE NATIONAL FINANCIAL DEVELOPMENT INSTITUTION FOR AGRICULTURAL, RURAL, FORESTRY AND FISHERIES ACTIVITIES

INDEX ...

TITLE TWO OPERATIONS WITH THE PUBLIC

CHAPTER I PASSIVE OPERATIONS

Section I National currency passive operations ...

Section B Sight Deposits ...

“Article 14 Bis.- Sight deposits for Mexican natural persons residing abroad” ...

“Section G Bis Bank Prepaid Cards Article 35 Bis.- Characteristics of bank prepaid cards” ...”

Definitions Article 2º.- … ...

“Development Banking Institutions: the National Foreign Trade Bank, S.N.C., Development Banking Institution; the National Bank of the Army, Air Force and Navy, S.N.C., Development Banking Institution; the Bienestar Bank, S.N.C., Development Banking Institution; Nacional Financiera, S.N.C., Development Banking Institution; the Federal Mortgage Society, S.N.C., Development Banking Institution, and the National Bank of Public Works and Services, S.N.C., Development Banking Institution. For the purposes of these Provisions, it shall be understood that the National Financial Development Institution for Agricultural, Rural, Forestry and Fisheries Activities is part of this definition, without prejudice to the nature and treatment given to said entity in other regulations. …”

“Sight deposits for Mexican natural persons residing abroad

Wednesday, May 12, 2021 OFFICIAL GAZETTE 77 Article 14 Bis.- Institutions that so determine may receive Sight Deposits from natural persons of Mexican nationality residing outside the national territory. Such Institutions may open the number of Accounts corresponding to these Deposits that they determine for each person in accordance with applicable regulations, without prejudice to any other Deposit Accounts provided for in Article 8 of these Provisions that the aforementioned Institutions offer to the referred persons.

Institutions may only open Accounts for these Deposits to persons who demonstrate that they fall under the scenario provided in the previous paragraph, through the consular enrollment certificate or passport issued abroad by the Ministry of Foreign Affairs, as well as the corresponding documentation, of which Institutions must keep a record.

The Deposits indicated in the previous paragraph must comply with the characteristics, transaction levels, limitations, requirements, terms and conditions indicated in these Provisions for Sight Deposits, except for the following:

I. They may only be denominated in pesos, national currency.

II. The respective Accounts may be of level 2, 3 or 4, in accordance with these Provisions, as determined by the Institutions themselves.

III. In the event that the depositing Institutions offer the public the opportunity to conduct cash Dollar purchase operations against national currency, they must offer such operations to the holders of the Accounts for the Deposits referred to in this article. Regarding the purchase of cash Dollars by the Institutions, they must credit the respective Accounts with the total amount in pesos resulting from such purchases, subject to the limits and other conditions of the applicable provisions. In this case, the Institutions must carry out the purchase of Dollars only with the holder of the respective Account.

IV. The cash Dollar purchase operations carried out by the Institutions in accordance with the preceding fraction III must be carried out under the following terms and conditions:

a) The amount in pesos that the Institution must deposit in the respective Account when carrying out the purchase of cash Dollars referred to in fraction III above cannot be less than the product of the multiplication of the following factors:

i. The amount of the quantity of Dollars presented to the Institution for purchase, subject to the limits indicated in subsection b) below, and

ii. The exchange rate that the Institution in question establishes, which corresponds to one of the following, as chosen by the Institution: (ii.1) the one resulting from multiplying the reference exchange rate indicated in the following paragraph by 0.971, or (ii.2) the one authorized by the Bank of Mexico to the Institution, upon request submitted by the Institution through the Electronic Attention Module, addressed to the Central Banking Authorizations and Consultations Management, provided that it demonstrates that it has the controls, procedures and mechanisms that ensure that the exchange rate subject to that authorization will correspond to the lowest offered by the Institution for the purchase of cash Dollars in its branches enabled to carry out said operation in the localities of the national territory.

For the purposes of the previous paragraph, the reference exchange rate indicated therein shall be the one determined by the Bank of Mexico in accordance with Title Three, Chapter V, of these Provisions, which it makes known on the same Banking Business Day it determines it, through its website, as the “FIX exchange rate”, which in turn is published in the Official Gazette of the Federation on the immediate next Banking Business Day, and which corresponds to the last one available on said website at the moment the Institution receives the cash Dollars for purchase in accordance with this article.

b) Additionally, the amounts of the cash Dollar purchase operations that Institutions carry out in accordance with fraction III above cannot exceed the maximum permitted amount of credits in a month for level 2 accounts in accordance with Article 14, fraction II, of these Provisions, as well as any other limits established by applicable regulations for said Currency.

V. With respect to those Accounts referred to in this article that correspond to levels 3 or 4, for the cash Dollar purchase operations referred to in amounts exceeding the monthly credit limit established for level 2 accounts in accordance with fraction II of Article 14 of these Provisions, the depositing Institutions may offer the applicable exchange rate in accordance with the preceding fraction IV, or another exchange rate that they determine in accordance with applicable regulations.”

“Section G Bis Bank Prepaid Cards”

“Characteristics of bank prepaid cards Article 35 Bis.- Institutions that so determine may issue bank prepaid cards in national currency, upon receipt of cash Foreign Currency or charge of a credit or debit card issued by a foreign financial entity, solely in favor of natural persons of foreign nationality. Institutions may only issue such cards in favor of persons who, through the corresponding documentation of the passport or passport card issued by a foreign authority, demonstrate that they fall under the aforementioned scenario, of which they must keep a record. Institutions may establish additional requirements to those indicated in this paragraph for the issuance of bank prepaid cards.

The bank prepaid cards in national currency issued by the respective Institution in accordance with this article will be means of disposition and payment that will not be associated with Deposits for the purposes of the applicable provisions. Likewise, said cards will consist of the set of data integrated independently of the medium in which they are stored that, when processed through determined systems, allow initiating a charge instruction to those cards.

Issuing Institutions, in order to allow the use of bank prepaid cards in national currency to carry out the operations referred to in this article, must make available to the natural persons of foreign nationality who acquire them, through the means agreed upon with them, at least the following information corresponding to each card:

I. The unique identification digits of the bank prepaid card.

II. The expiration date, which cannot be greater than ninety natural days counted from the date of issuance of the card.

III. The commercial brand under which the Institution issues the respective card, in accordance with the agreement entered into with the company holding said brand and in accordance with what is provided in the General Provisions Applicable to Disposition Means Networks.

IV. The card security code, assigned as additional security data in the performance of non-presence operations with it.

The Institution that issues bank prepaid cards in accordance with this article, with integrated circuit or chip, must observe the security and processing standards established by the company constituted in accordance with the legislation of the United States of America, known as EMVCo, LLC or, in its case, any other that the Bank of Mexico determines as equivalent in relation to the use and functioning of said integrated circuit or chip, in those cases where the card operation implies obtaining the card information directly from said integrated circuit or chip.

In the event that any Institution intends to use any standard different from that mentioned in the previous paragraph, it must previously obtain authorization from the Bank of Mexico, for which it must present the respective request to the Central Banking Authorizations and Consultations Management through the Electronic Attention Module.

Additionally, the following provisions will be applicable to the bank prepaid cards referred to in this article:

a) Offer No Deposit contract will be celebrated for the acquisition of these cards with the Institution issuing it, which must comply with what is provided for this purpose in the General Provisions referred to in Article 115 of the Credit Institutions Law issued by the Ministry of Finance and Public Credit.

Institutions may offer them:

i. In their branches.

ii. Through automated teller machines, only in those cases where the purchase of the respective card is made by charge to a credit or debit card issued by a foreign financial entity, which is used in the corresponding automated teller machine, and it is possible to collect the data and documentation of the person acquiring said prepaid cards, as established in the provisions cited in the first paragraph of subsection a) above.

b) Use The bank prepaid cards referred to in this article may be used under the terms provided for in Articles 19 and 19 Bis of these Provisions, solely within the national territory, therefore they cannot be used to withdraw cash or make payments abroad. Said cards also cannot be used to carry out national or international electronic fund transfers.

c) Limits These cards may be reloadable. In any case, the accumulated balance of the cards acquired by the same person cannot be, at any time, greater than the equivalent to 1,500 UDIS.

d) Characteristics and security measures Institutions will freely determine the characteristics of the storage media for the bank prepaid cards and the security measures of the cards, in addition to those indicated in this article.

e) Credits Institutions may allow credits for the acquisition of the respective cards only in cash or by charge to credit or debit cards issued by foreign financial entities in the name of the same persons who acquire said bank prepaid cards.

f) Return of resources Issuing Institutions of bank prepaid cards are obligated to return to the acquirers of these the balance of resources available in said cards in the event that they are cancelled due to card malfunction, theft or loss, at any time as requested by said acquirers or once their validity ends.

The foregoing will be appropriate provided that the acquirer presents or delivers the bank prepaid card in question to the issuing Institution and provides the information or documentation indicated in any of the following subsections:

i. The receipt of the acquisition of the bank prepaid card.

80 OFFICIAL GAZETTE Wednesday, May 12, 2021

ii. The number of the bank prepaid card and the personal identification number associated with it.

In these cases, Institutions must carry out the referred return solely through the delivery of the amount in cash or, in its case, through the credit to the credit or debit card issued by a foreign financial entity, which was used for its acquisition.

Regarding bank prepaid cards that have been issued by charge to a credit or debit card issued by a foreign financial entity, which maintain a balance on the date of their expiration, issuing Institutions must transfer, on that date, the referred resources to the same credit or debit card.

The amounts denominated in the respective Currencies that issuing Institutions of bank prepaid cards must return to the corresponding acquirers in accordance with the above indicated must be equal to the balance in national currency of the bank prepaid card converted at the exchange rate resulting from multiplying by 1.005 the Dollar exchange rate that the Bank of Mexico determines in accordance with Title Three, Chapter V, of these Provisions, which it makes known on the same Banking Business Day it determines it, through its website, as the “FIX exchange rate”, which in turn is published in the Official Gazette of the Federation on the immediate next Banking Business Day, and which corresponds to the last one available on said website at the moment the Institution must carry out the return.

In the event that the Currency subject to return is different from the Dollar, the amount that the Institution must return in accordance with the above cannot be less than the result of the following calculation: (i) first, the amount equivalent to Dollars of said amount in pesos will be calculated, in accordance with the above paragraph and (ii) second, the equivalence of the amount in Dollars to the respective Currency will be calculated in accordance with the last exchange rate available at the time that corresponds to the first paragraph of this subsection f), which has been made known by any authorized price provider to organize and operate with such character by the National Banking and Securities Commission in accordance with what is provided for this purpose by the Securities Market Law, as it has been published on the respective website of said provider.

In the event that the price provider contracted by the Institution in question does not make known the exchange rate applicable to the Currency in which the referred return is made, said Institution may use the market exchange rate made known by any company that does not have the character of a related person, in terms of Article 73, fractions I, V and VII, of the Credit Institutions Law. In this case, the Institution must keep a record of the source from which it obtained the exchange rate referred to in this paragraph.

In the event that the Institution in question carries out the aforementioned return through the delivery of the amount in cash, it may, if it so wishes, deliver the amount in the respective Currency in accordance with the exchange rate resulting in accordance with the provisions in the three previous paragraphs, subject to the availability of the respective banknotes and coins in the corresponding branch.

g) Information to the public Institutions are obligated to make known to the acquirers of the bank prepaid cards referred to in this article, prior to the acquisition of said cards, the terms and conditions applicable to them, as well as make this information available to the public on the website of the issuing Institution, as well as deliver it in writing to the persons who acquire them.

The referred terms and conditions must contain, at least, the following:

i. The ways in which said cards may be used and acquired.

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ii. The concepts, amounts, periodicity, and validity of any commissions charged, as well as the mechanism by which modifications to such commissions will be made known.

iii. The expiration date.

iv. Security measures for their use.

v. Procedures for reporting any malfunction of the card and, where applicable, theft or loss; these shall be subject to what is established in Articles 19 Bis 1 and 19 Bis 2 of these Provisions, as well as for requesting clarifications.

vi. Mechanisms to consult the balance, as well as, where applicable, transactions.

vii. Procedures to obtain the return of resources due to cancellation, theft, or loss of the card, which shall be subject to what is established in Articles 19 Bis 3 and 19 Bis 4 of these Provisions, due to card malfunction, or upon request by the acquirer or termination of its validity, as well as the indication that, if the return is made in cash, it may only be done in national currency or, if the Institution so agrees, in the Currency in question, subject to the availability of bills and coins of said Currency in the branch where the return takes place.

viii. A statement that the amounts credited to the payment and disposition medium in question will not be guaranteed by the Institute for the Protection of Bank Savings (IPAB) in case the issuing institution enters a resolution state, according to applicable regulations.

ix. In the event that the referred prepaid cards maintain a balance at their expiration and it has not been possible to carry out the return indicated in the previous subsection f), the respective resources will be subject to the same treatment contemplated in Article 61 of the Credit Institutions Law. Regarding this, it must be explicitly stated that such resources, for the amount indicated in the cited article, may prescribe in favor of public charity once the time limits set forth in that same article have elapsed.

Additionally, Institutions must deliver to their customers a receipt of the acquisition of the prepaid bank card.”

TRANSITIONAL PROVISION SINGLE. What is provided in this Circular shall enter into force on the Banking Business Day following its publication in the Official Journal of the Federation.

Mexico City, May 7, 2021.- BANK OF MEXICO: The General Director of Payment Systems and Market Infrastructures, Manuel Miguel Ángel Díaz Díaz.- Initials.- The General Legal Director, Luis Urrutia Corral.- Initials.- The General Director of Financial System Affairs, José Luis Negrín Muñoz.- Initials.- The Director of National Operations, Juan Rafael García Padilla.- Initials.

For any inquiries regarding the content of this Circular, the Bank of Mexico is available through the Central Banking Authorizations and Sanctions Directorate at phone number (55) 5237-2000 extension 3200.