First authorisation issued under the Fintech Law

Background

Mexico’s National Banking and Securities Commission (la “Comisión Nacional Bancaria y de Valores” or “CNBV”) has granted the first authorisation to operate as a financial technology institution under Mexico’s Fintech Law. The Fintech Law and its Supplementary Regulations (together, the “Fintech Legislation”), passed in March 2018 and March 2019 respectively, allow fintechs to operate as either Crowdfunding or Electronic Payment Institutions (Wallets) under the supervision of the CNBV. Fintechs which fell within the scope of the Fintech Legislation had until 25 September 2019 to submit their application and accompanying documentation to the CNBV for approval, in order to continue operating in the country. In total, 85 fintechs submitted applications before the September deadline.

CNBV Authorisation

Last week, the CNBV announced in the Federal Daily Gazette that NVIO Pagos México, an Electronic Payments Institution and one of 25 in that category to submit applications, is the recipient of the first authorisation under the Fintech Legislation. In the announcement, the CNBV noted that NVIO Pagos México complied with the specific requirements applicable to Electronic Payment Institutions (Article 23 of the Fintech Law) and the general requirements for authorisation applications (Article 39 of the Fintech Law and Articles 3, 4 and 6 of the Supplementary Regulations). On the basis that NVIO Pagos México’s application complied with the legal, financial and operational requirements, the authorisation was granted.

Important points to note from the CNBV announcement:

• As well as the Fintech Legislation, NVIO Pagos México is subject to relevant rules and norms issued by the Bank of Mexico, anti-money laundering and financing terrorism legislation.
• NVIO Pagos México must begin their authorised operations within six months of the publication date (22 January 2020) or the CNBV may revoke the authorisation.

NVIO Pagos México must demonstrate to the CNBV, at least 30 business days prior to beginning operations, that it:

• is properly constituted as a Mexican legal entity;
• meets minimum capital requirements;
• has a compliant board and directorship composition; and
• has the required technological infrastructure, adequate internal controls, as well as all the policies and manuals required by the Fintech Legislation.

Although these requirements were an essential part of the authorisation process and are likely to be fully prepared, the six month time gap between authorisation and the mandatory operational start date dictates that an additional check by the CNBV is necessary to ensure continued compliance.

Horizon

Almost two years after the initial excitement surrounding the enactment of the Fintech Law, this authorisation is a positive step highlighting the significant potential for Mexico’s fintech market. Although many of the 85 applications submitted the CNBV by the original deadline (with more applications in process) may fail at this hurdle, further authorisations are likely to follow. With the Government of Mexican President, Andrés Manual López Obrador, placing emphasis on its desire to spread financial inclusion across a country where cash is definitely still king and over half the adult population do not have bank accounts, there is an impetus and desire to make a success of the innovative solutions offered by fintechs.