Financial Crime World

Mexican Banking Regulator Temporarily Simplifies Know-Your-Customer Measures to Combat Terrorism Financing

Mexico’s banking regulator, the Comisión Nacional Bancaria y de Valores (CNBV), has introduced temporary simplification guidelines for know-your-customer (KYC) measures aimed at combating counter-financing of terrorism (CFT) in the country. The move is part of a draft regulation currently under public comment until July 14, 2020.

Mitigating the Effects of COVID-19 on Mexico’s Financial Sector

To alleviate the impact of the COVID-19 pandemic on Mexico’s financial sector, the CNBV has relaxed certain KYC requirements for banks and legal entities authorized to provide loans as their primary corporate purpose. This includes those with ties to financial groups known as Sociedades Financieras de Objeto Múltiple Reguladas.

New Guidelines

Under the new guidelines:

  • Legal entities can now open bank accounts remotely, a privilege previously reserved for individuals.
  • Existing clients of banks can access new banking products and services more easily, requiring only biometric data verification against official registries.
  • Non-existing clients must still undergo full due diligence procedures as per the Bank’s Anti-Money Laundering (AML) and CFT Rules.

Additional Measures

Legal representatives of legal entities must be clearly identified to ensure beneficial ownership is known. Innovative measures have also been introduced for conducting due diligence interviews, including:

  • Brief video calls with potential clients that can be recorded using automated mechanisms devised by banks themselves.

Proposed Amendments

The proposed amendments to the General Rules applicable to Banks are subject to public comment until July 14, 2020, and if enacted, will cease to be extraordinary and become definitive. The regulation outlines technological requirements for remote KYC, including:

  • Client fingerprint databases
  • Data verification means among others

Balancing Financial Inclusion and Consumer Protection

These measures reflect Mexico’s efforts to balance financial inclusion, consumer protection, data privacy, and effective combat against financial crimes such as money laundering and terrorism financing. While the regulatory requirements may pose challenges for banks and other financial institutions, they also present valuable opportunities in the Mexican financial sector.

Future Simplification Measures?

It remains to be seen whether further simplification measures will be introduced in the coming months. The CNBV’s temporary simplification guidelines are a step towards balancing the need for robust KYC measures with the need to mitigate the impact of COVID-19 on Mexico’s financial sector.