Circular 40/2020 — Modification of Circular 8/2020

Friday, October 23, 2020 OFFICIAL GAZETTE CIRCULAR 40/2020 addressed to entities subject to the supervision of the Bank of Mexico, regarding the resolution concluding the exemptions and provisional measures related to the COVID-19 pandemic established through Circulares 8/2020 and 12/2020.

A logo appears at the margin, stating: Bank of Mexico. - "2020, Year of Leona Vicario, Meritorious Mother of the Fatherland".

CIRCULAR 40/2020 TO THE ENTITIES SUBJECT TO THE SUPERVISION OF THE BANK OF MEXICO:

SUBJECT: RESOLUTION CONCLUDING THE EXEMPTIONS AND PROVISIONAL MEASURES RELATED TO THE COVID-19 PANDEMIC ESTABLISHED THROUGH CIRCULARES 8/2020 AND 12/2020.

The Bank of Mexico —regarding the exemptions and provisional measures adopted, in consideration of the effects of the COVID-19 pandemic, to suspend the calculation of deadlines corresponding to diligence and actions related to administrative sanction imposition procedures, including those corresponding to appeals, both of review and reconsideration, as well as those related to information requests associated with said procedures; to refrain from initiating administrative sanction imposition procedures for non-compliance with the obligations established in numerals II.VII.2 and II.VIII.2.4 of the Cash Operations Circular within the corresponding deadlines; to extend the deadline for credit institutions to deliver to the Bank of Mexico information on securities transfer companies referred to in numeral II.II.7 and Annex 28 of said Circular; and to limit the operating days of cash correspondents— has decided that, in view of the evolution of the effects of the aforementioned pandemic, the calculation of said deadlines be reinstated and the provisional measures related to the aforementioned cash operations and correspondent banking conclude. Therefore, with the purpose of continuing to promote the sound development of the financial system and foster the proper functioning of payment systems, as well as to provide certainty to credit institutions regarding the fulfillment of their obligations, it has resolved to determine the dates on which the aforementioned exemptions and provisional measures adopted through Circulares 8/2020 and 12/2020, published in the Official Gazette of the Federation on April 9, 2020, and modified through Circulares 14/2020 and 21/2020, published in said Gazette on May 8 and June 2 of this year, respectively, will conclude, in accordance with the following:

FIRST. Subsections i., ii., and iii. of Circular 8/2020, published in the Official Gazette of the Federation on April 9, 2020, and modified, in turn, through Circular 14/2020, published in said Gazette on May 8 of this year, are modified, to read as follows:

“i. The Bank of Mexico will refrain from initiating administrative sanction imposition procedures for infractions committed from March 19, 2020, and up to the dates indicated below that are applicable to the corresponding period in which the infraction related to said procedures was committed, resulting from the failure by credit institutions to deliver suspected counterfeit pieces within twenty (20) banking business days, as well as to register the result of the verification of claims in the Currency Authentication System (SAM) within five (5) banking business days, as referred to in numerals II.VII.2 and II.VIII.2.4 of the Cash Operations Circular, respectively.

a) October 31, 2020, regarding the diligence and actions corresponding to infractions carried out from March 19 to June 30, 2020. b) November 30, 2020, regarding the diligence and actions corresponding to infractions carried out during July 2020. c) December 31, 2020, regarding the diligence and actions corresponding to infractions carried out during August 2020. d) January 31, 2021, regarding the diligence and actions corresponding to infractions carried out during September 2020. e) February 28, 2021, regarding the diligence and actions corresponding to infractions carried out during October 2020.

Consequently, on the days considered non-working days as indicated in the aforementioned subsections, the calculation of the deadlines corresponding to the diligence and actions related to the procedures referred to in the first paragraph of this numeral is suspended, so that the deadlines will begin to be calculated again from the next working day following the one corresponding according to said subsections.

Likewise, the publication of the result of the analysis of the pieces referred to in the first paragraph of the present subsection i. by the Bank of Mexico may be carried out in deadlines subsequent to those established in the current regulations.”

“ii. The deadline for credit institutions to deliver to this Central Institute the information on Securities Transfer Companies referred to in numeral II.II.7 and Annex 28 of the Cash Operations Circular is extended. Credit institutions must deliver said information to the Bank of Mexico no later than December 1, 2020.”

“iii. The operation of cash correspondents with Users will be carried out from Monday to Friday, in accordance with applicable provisions, unless the Bank of Mexico authorizes or determines a different number of operating days, which the Bank of Mexico will communicate individually to the corresponding cash correspondent.”

SECOND. The first paragraph of Circular 12/2020, published in the Official Gazette of the Federation on April 9, 2020, and modified, in turn, through Circular 21/2020, published in said Gazette on June 2 of this year, is modified, to read as follows:

“The Bank of Mexico, with the purpose of continuing to promote the sound development of the financial system and foster the proper functioning of payment systems, as well as to provide legal certainty to entities and financial intermediaries under its supervision, given the circumstances derived from the COVID-19 pandemic, for the purposes of diligence and actions regarding administrative sanction imposition procedures, as well as procedures corresponding to appeals, both of review and reconsideration, in addition to those related to information requests associated with said procedures, has decided to consider non-working days those comprised between March 23 and the dates indicated below that are applicable to the corresponding period in which the notification giving rise to the diligence and actions referred to was made:

a) October 31, 2020, regarding the diligence and actions corresponding to notifications made from March 23 to June 30, 2020. b) November 30, 2020, regarding the diligence and actions corresponding to notifications made during July 2020.

c) December 31, 2020, regarding the diligence and actions corresponding to notifications made during August 2020. d) January 31, 2021, regarding the diligence and actions corresponding to notifications made during September 2020. e) February 28, 2021, regarding the diligence and actions corresponding to notifications made during October 2020.

Consequently, on the days considered non-working days as indicated in the aforementioned subsections, the calculation of the deadlines corresponding to the diligence and actions referred to in the first paragraph of this Circular is suspended, so that the deadlines will begin to be calculated again from the next working day following the one corresponding according to said subsections.

The foregoing does not apply to information requests made by the Bank of Mexico in relation to the procedures referred to in this Circular in which a contrary specification is made to what is provided in this Circular.

Likewise, the Bank of Mexico has resolved to suspend ordinary inspection visits from March 23, 2020, until the date that the Bank of Mexico itself announces through a resolution to be issued subsequently, without such suspension being applicable to the exercise of the other powers conferred upon this Central Institute by the applicable regulations in the matter of supervision. The Bank of Mexico will notify entities with ongoing supervision procedures individually of the manner in which proceedings will be conducted once the suspension ends.”

This resolution is issued based on Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States; 2, 3, fraction I, 4, 24, and 25 of the Bank of Mexico Law; 48 and 48 Bis 1 of the Credit Institutions Law; 22 of the Law for Transparency and Order 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, 15 Bis 1, in relation to 29 Bis, fraction VIII, and 16, in relation to 16 Bis, fraction II, 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, the General Directorate of Information Technologies, and the General Directorate of Issuance, respectively; as well as Second, fractions I, III, IX, X, and XVII, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico.

TRANSITIONAL SINGLE.- This Circular shall enter into force the day following its publication in the Official Gazette of the Federation.

Mexico City, October 19, 2020.- BANK OF MEXICO: The General Director of Payment Systems and Market Infrastructures, Manuel Miguel Ángel Díaz Díaz.- Signature.- The General Legal Director, Luis Urrutia Corral.- Signature.- The General Director of Financial System Affairs, José Luis Negrín Muñoz.- Signature.- The General Director of Information Technologies, Octavio Bergés Bastida.- Signature.- The General Director of Issuance, Alejandro Alegre Rabiela.- Signature.

OFFICIAL GAZETTE Friday, October 23, 2020 For any inquiries regarding the content of this Circular, the Bank of Mexico is at your disposal through the Central Bank Banking Authorizations and Sanctions Directorate at phone (55) 5237-2000 extension 3200.