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Regulatory Compliance: IFEs and IBEs Face New Requirements

In a move to strengthen oversight and ensure compliance, the Commissioner has introduced new regulations for Institutions of Finance and Business Entities (IFE/IBE) operating in Puerto Rico.

Main Center of Operations

  • IFE/IBE’s main center of operations must be maintained in Puerto Rico.
  • Books and records must be kept at this location, including management, accounting, and compliance functions.

Annual Reports

  • IFE/IBE’s are required to submit annual reports on their financial conditions and operational results within 90 days of the fiscal year closing date.

Record Retention

  • IFE/IBE’s can destroy records after five years from the last entry or since an obligation ceased being enforceable.
  • However, they must maintain an annual registry of destroyed documents for 15 years. Prior to January 31st each year, a certified official will confirm that the previous year’s registry contains required information.

Transfers of Capital or Control

  • No transfers of equity or control can occur without prior written authorization from the Commissioner if a person could acquire more than 10% of any class of capital shares or participations.
  • A non-refundable fee of $35,000 applies, with excess costs paid by the applicant in advance.
  • For IBEs authorized to accept deposits, the Commissioner may establish legal reserve requirements not exceeding 20% of total deposits payable on demand.
  • The Commissioner will determine the reserve composition, calculation method, and other details.

New Permit and License Applications

  • Only legal entities can apply for an IFE permit, with a non-refundable fee of $50,000 covering initial investigation costs. Applicants must pay excess costs resulting from any investigation.

Licenses and Renewals

  • The annual license fee for IFE’s will be $50,000 for the original license, with $25,000 for each renewal and $5,000 for each additional office or branch.
  • Penalties apply for late renewals.

Transfers of Capital or Control (IFE)

  • Any transfer of capital shares or participations without prior written authorization from the Commissioner will be void.
  • A payment of $25,000 is required with the application.

Examinations

  • The Commissioner may conduct examinations or audits of IFE operations, requiring entities to provide accounting books and requested information, except for attorney-client privileged information.

Effective Date

  • These regulations will take effect 90 days after approval, on May 16, 2024.