Financial Crime World

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Mexico’s Banking Regulations Toughen Up

In an effort to enhance the stability and integrity of Mexico’s banking system, regulators have introduced a series of stringent requirements for banks operating in the country. These regulations aim to ensure that banks are better equipped to manage risk, prevent money laundering and terrorist financing, and protect depositors’ funds.

Independent Board Members

One of the key reforms is the requirement for independent board members to be appointed by shareholders’ meetings. These individuals must meet strict criteria, including:

  • Having no professional, familial or commercial relationships with stakeholders, shareholders, or directors of the bank.
  • Officers in the two levels below the CEO and the CEO themselves must have at least five years’ experience in high-level positions requiring financial and administrative knowledge.
  • Residing in Mexico.

Remuneration Requirements

Banks are also required to implement a remuneration system that is consistent with effective risk management. The system must:

  • Consider the risks faced by the bank, its internal units, and employees.
  • Award specific remuneration mechanisms tailored to each risk profile.
  • Be reasonable and flexible enough to allow for reductions or suspensions in cases of losses or materialized risks.

Anti-Money Laundering and Combating the Financing of Terrorism

Mexico’s banking regulations also require banks to establish measures and procedures to prevent and detect money laundering and terrorist financing. This includes:

  • Implementing Know Your Customer (KYC) policies.
  • Corporate governance obligations.
  • Book and record-keeping rules.
  • Reporting requirements.

Banks must identify clients or users, verify information against public databases, and submit regular reports to the Ministry of Finance through the National Banking and Securities Commission (CNBV).

Depositor Protection

The Bank Savings Protection Law regulates Mexico’s depositor protection regime, which is administered by the Institution for the Protection of Bank Savings (IPAB). The regime covers bank liabilities up to 400,000 investment units (UDIs) per person, equivalent to approximately USD170,000. Operations not covered by the regime include obligations payable to national or foreign financial entities.

These regulations are designed to enhance the stability and integrity of Mexico’s banking system, protect depositors’ funds, and prevent financial crimes.