Circular 6/2019 — Foreign Currency Operations and Information Reporting by Collective Financing Institutions

90 (First Section) OFFICIAL GAZETTE Friday, March 8, 2019 BANCO DE MÉXICO CIRCULAR 6/2019 addressed to Collective Financing Institutions regarding the general provisions applicable to Collective Financing Institutions in the operations they carry out in foreign currency and the information reports to the Bank of Mexico.

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

CIRCULAR 6/2019
TO COLLECTIVE FINANCING INSTITUTIONS:
SUBJECT: GENERAL PROVISIONS APPLICABLE TO COLLECTIVE FINANCING INSTITUTIONS IN THE OPERATIONS THEY CARRY OUT IN FOREIGN CURRENCY AND THE INFORMATION REPORTS TO THE BANK OF MEXICO.

The Bank of Mexico, considering that the Law to Regulate Financial Technology Institutions establishes that collective financing institutions: i) may carry out operations in foreign currency subject to the regulation issued for such effect by the Central Bank itself, and ii) must send to the Bank of Mexico the information that it requires them to provide through general provisions, deems it convenient to harmonize the terms and conditions under which these institutions must comply in the celebration of such operations and in the sending of information to the Central Bank, with those applicable to electronic payment fund institutions for such effects, provided for in the provisions issued by the Bank of Mexico through Circular 12/2018, published in the Official Gazette of the Federation on September 10, 2018.

Therefore, based on articles 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States, 24 and 26, of the Bank of Mexico Law, 16, 46 and 57, of the Law to Regulate Financial Technology Institutions, 4, first paragraph, 8, fourth and seventh paragraphs, 10, first paragraph, 14 Bis, first paragraph in relation to 17, fraction I, and 14 Bis 1, first paragraph in relation to 25 Bis 1, 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 General Directorate of Affairs of the Financial System, respectively, as well as Second, fractions I and X, of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, has resolved to issue the following provisions:

GENERAL PROVISIONS APPLICABLE TO COLLECTIVE FINANCING INSTITUTIONS IN THE OPERATIONS THEY CARRY OUT IN FOREIGN CURRENCY AND THE INFORMATION REPORTS TO THE BANK OF MEXICO

CHAPTER I
PRELIMINARY PROVISIONS

1st. Purpose.- These Provisions aim to:
a) Establish the terms and conditions under which collective financing institutions may carry out their operations with foreign exchange, and b) Determine the information that collective financing institutions must report to the Bank of Mexico, as well as the corresponding periodicity.

2nd. Definitions.- For the purposes of these Provisions, in addition to the terms used in the Law to Regulate Financial Technology Institutions under the definitions included in said legislation, the following shall be understood:

Digital Certificate: a data message in digital format generated in terms of the "Rules to Operate as a Registrar Agency and/or Certification Agency in the Extended Security Infrastructure", contained in Circular-Telefax 6/2005 of the Bank of Mexico, or those that, in their case, replace them.

Banking Business Day: the days on which Institutions are not obliged to close their doors or suspend operations, in terms of the general provisions issued for such effect by the CNBV.

Dollars: the legal tender in the United States of America.

Foreign Currency: Dollars, as well as any other freely transferable and convertible currency to said currency.

CHAPTER II
FOREIGN CURRENCY OPERATIONS

3rd. Request for authorization to carry out Foreign Currency Operations.- Collective financing institutions that intend to carry out Foreign Currency Operations must obtain prior authorization from the Bank of Mexico, for which they must present their authorization request to the Central Bank Authorizations and Consultations Management of the Bank of Mexico in terms of the 7th of these Provisions. The aforementioned request must contain the following elements:

I. Description of the Foreign Currency Operations that the collective financing institution intends to carry out;
II. Relevance and scope of the foreign currency operations in the entity's business scheme;
III. Profiling and identification measures for the target population;
IV. Mechanisms that they will use to reveal to their Clients the risks they may incur from the celebration of the Foreign Currency Operations in question and, if applicable, to mitigate risks to their Clients;
V. Commissions they intend to charge for the celebration of the Foreign Currency Operations, and
VI. Description of the mechanisms that will be used to verify compliance with the applicable regulations for Foreign Currency Operations.

4th. Admissibility of the authorization to carry out Foreign Currency Operations.- The Bank of Mexico, regarding the authorization request it receives for the carrying out of Foreign Currency Operations in terms of these Provisions, will evaluate whether said request meets the requirements provided for in the previous 3rd Provision. Likewise, the Bank of Mexico may require the collective financing institution in question any information it deems necessary to determine the admissibility of said request.

The Bank of Mexico may require modifications to the documentation presented by the collective financing institution, for which it will grant a period of up to 45 Banking Business Days for the institution in question to make said modifications. Without prejudice to the foregoing, the Bank of Mexico may grant an extension for up to an equivalent period of 45 additional Banking Business Days, prior to the request of the corresponding collective financing institution. If, upon completion of the modification period or its extension, the institution in question has not made the referred modifications, the submitted request will be discarded.

5th. Response Time.- Once the Bank of Mexico has determined that the request meets the requirements provided for in these Provisions, it will have a period of 30 Banking Business Days to respond to the request.

If the period mentioned in the previous paragraph elapses without the Bank of Mexico having given a response to the authorization request, the corresponding resolution will be understood to be negative for the promoting collective financing institution.

92 (First Section) OFFICIAL GAZETTE Friday, March 8, 2019

6th. Obligation to supply information to the Bank of Mexico.- Collective financing institutions are obliged to supply the Bank of Mexico with the transactional information of their Operations, in the terms determined for such effect by the Bank of Mexico.

Without prejudice to the foregoing, collective financing institutions must deliver all the information that the Bank of Mexico requires them to provide, in the terms and deadlines indicated to them.

CHAPTER III
GENERAL PROVISIONS

7th. Sending of authorization requests to the Bank of Mexico.- The authorization requests referred to in the 3rd of these Provisions must be sent by the collective financing institution in question via email to the Central Bank Authorizations and Consultations Management of the Bank of Mexico at the address autorizaciones@banxico.org.mx.

The persons who sign the requests must:
I. Have a valid Digital Certificate issued in their name, and
II. Sign the requests digitally using the tool that the Bank of Mexico determines for these purposes and that it makes known, as well as the Digital Certificate referred to in fraction I of this Provision.

In cases where collective financing institutions do not have access to the necessary elements to send the requests signed digitally, they may deliver them to the Central Bank Authorizations and Consultations Management, at Avenida 5 de Mayo number 2, Colonia Centro, Postal Code 06000, Mexico City, in original, in duplicate, and signed by persons who have the authority to perform acts of administration or dominion, for which they must accompany their request letter with a certified and simple copy of the deeds in which the referred powers are stated, adding a communication specifying the reason why they are in the need to send requests by this alternative means.

8th. Sanction.- Collective financing institutions that fail to comply with what is established in these Provisions will be sanctioned by the Bank of Mexico in accordance with the Bank of Mexico Law, the Law and the other applicable provisions. This, without prejudice to the powers that the laws grant to other authorities.

TRANSITORY PROVISIONS

FIRST.- This Circular will enter into force the day after its publication in the Official Gazette of the Federation.

SECOND.- Regardless of what is established in these Provisions, without prejudice to the mechanisms that are established for the exchange and discussion of opinions, ideas and projects between the Bank of Mexico and the sector corresponding to the subject matter of these Provisions, any person may present to the Bank of Mexico, during the period of sixty Banking Business Days following the publication of these Provisions in the Official Gazette of the Federation, their comments or suggestions regarding what is established in this Circular, as well as, in general, regarding the foreign currency operations of collective financing institutions, as well as their modalities, which could be subject to the general provisions that the Bank of Mexico is required to issue.

The comments and suggestions that the persons indicated in this provision present to the Bank of Mexico will be public. For these effects, said persons must present their comments and suggestions through the public consultation portal established by the Bank of Mexico on its website, located at the following address:
https://www.banxico.org.mx/ConsultaRegulacionWeb/ The Bank of Mexico will consider the comments and suggestions presented in accordance with the above and, within the sixty Banking Business Days following the conclusion of the period indicated in the first paragraph of this Provision, will publish on its website a report on the recommendations and suggestions received, without prejudice to the powers that it may exercise as a result of the foregoing.

Friday, March 8, 2019 OFFICIAL GAZETTE (First Section) 93 Mexico City, March 6, 2019.- The General Legal Director, Luis Urrutia Corral.- Rubric.- The General Director of Affairs of the Financial System, Jesús Alan Elizondo Flores.- Rubric.
For any inquiries regarding the content of this Circular, please contact the Central Bank Authorizations and Consultations Management at the phones (55) 5237-2308, (55) 5237-2317 or (55) 5237-2000, extension 3200.