On August 3, 2011, a decree approving amendments to the General Act of Auxiliary Credit Transactions and Activities (“GAACTA”) was published in the Mexican Official Gazette to, among other matters, grant inspection authorities to the Mexican Banking and Securities Commission (in Spanish: Comisión Nacional Bancaria y de Valores, “CNBV”) over “non-regulated” financial corporations of multiple purpose (acronym in Spanish: “SOFOMs”).[1]
Prior to the publication of said decree, non-regulated SOFOMs were not subject to the supervision of the CNBV[2]. However, as per the new amendments, the CNBV has now authority to verify and supervise non-regulated SOFOMs strictly in order to verify their compliance to obligations relating to the prevention of terrorism and money laundering.
Subject to the above referred the limitation, the supervision and verification authorities granted to the CNBV over non-regulated SOFOMs are:
- To carry out verification visits;[3]
- To review accounting books, records and other documents during the verification visit;[4
- To require information and exhibition of documents, at the request of the federal Department of Tax and Public Credit (in Spanish: Secretaría de Hacienda y Crédito Público: “SHCP”).
In general terms, non-regulated SOFOMs will have the following new responsibilities:
- To establish proceedings and measures to prevent and detect activities, omissions and operations related to terrorism, international terrorism and transactions with illegal means (money-laundering).
- To file reports before the SHCP (through the CNBV) regarding acts, transactions and services executed by their employees, directors, clients, managers and board members that might involve any of said criminal transactions.
- To show records of transactions and acts executed with clients and financial institutions during an inspection.
- To observe proceedings and criteria in order to: (i) obtain information of clients when executing agreements and operations; (ii) protect and keep secure information relating to clients, transactions and operations; and (iii) carry out plans of internal training of staff for the compliance of the new regulations.
It is important to highlight that managers, directors, administrators, board members, agents, attorneys and employees of the non-regulated SOFOMs are responsible for the fulfillment of the above provisions; and therefore, both a non-regulated SOFOM and its work team can be held liable for lack of compliance with law provisions. The fines that may be imposed by the CNBV range between 200 and 100,000 days of minimum wage (approx. from US$1,000.00 to US$500,000.00), irrespective of the potential liabilities and penalties in case of cooperation with criminal activities.
Based on the above, it is now very important to review the legal standing of the respective SOFOM and implement the relevant internal controls, since the CNBV has now the authority to carry out visits at any time (to inspect records and books) and impose potentially severe fines not only to the company, but also to its officers and directors in case of infringement of the law.
Please do not hesitate to contact us in case of any questions or concerns about the scope of the recent amendments.
Mexico City: Elena Robles erobles@cuestacampos.com
Guadalajara: Azucena Marín amarin@cuestacampos.com
[1] Non-regulated SOFOMs are those that are not part, connected or controlled by a banking institution or a finance group in Mexico.
[2] Formerly, they were only subject to the supervision of the CONDUSEF (federal commission for the protection of users of financial services).
[3] Verification visits carried out by the CNBV shall be attended by the principal officer of the SOFOM or appointed substitute in case of absence. Verification visits are ordinary, special and for investigation purposes. The first ones are executed pursuant to the annual program of the CNBV; the second ones, every time the CNBV deems necessary for revising or correcting specific matters; and the third ones, for clarification purposes.
[4] A SOFOM shall keep, for a minimum term of 10 years, those records and documents related to its clients, transactions and operations.
The above is provided as general information prepared by professionals with regard to the subject matter. This document only refers to applicable law in Mexico. While every effort has been made to ensure accuracy no responsibility can be accepted for errors or omissions. The information contained herein should not be relied on as legal, accounting or professional advice being rendered. © Cuesta Campos y Asociados, S.C.
