Useful pages on the regulator website
- Arturo Herrera Gutiérrez, Secretary of Finance and Public Credit
- Gabriel Yorio González, Undersecretary of Finance and Public Credit
- Raquel Buenrostro Sánchez, Head of the Servicio de Administración Tributaria (SAT): Tax Administration Service
- Adalberto Palma Gómez, Head of the Comisión Nacional Bancaria y de Valores (CNBV): National Banking and Securities Commission
- Juan Pablo Graf Noriega, Head of the Unidad de Banca, Valores y Ahorro: Banking, Securities and Savings Unit
- Santiago Nieto Castillo, Head of the Unidad de Inteligencia Financiera (UIF): Financial Intelligence Unit
The SHCP is mainly regulated under the Federal Public Administration Organic Law (LOAPF). Its main functions include the supervision and regulation of Mexico’s public and private financial activities. Among other duties, the SHCP is responsible for collecting, managing and spending the public resources required to cover public services and sovereign financing, and acts as the supervisor and regulator of the Mexican financial system. Moreover, the SHCP is responsible for supervising sovereign and sub-sovereign public debt.
The SHCP is the governmental authority responsible for regulating and supervising the financial institutions and corporations participating in the Mexican financial system, as well as overseeing the banking sector, the stock market and the retirement fund system. The SHCP is also indirectly responsible for regulating and supervising activities in the areas of insurance, bonds, securities and credit.
The head of the SHCP has the authority to grant and revoke the operation authorisations in Mexico of banking institutions, securities firms, insurance and bonding institutions, financial technology institutions and subsidiaries of financial institutions abroad, among others. It also has the power to grant and revoke concessions for the operation of stock exchanges in Mexico.
The SHCP is also responsible for public financial activity, ensuring and supervising compliance with the country's tax and customs laws, organising and directing the customs services, and performing the collection of the country's income and taxes.
In addition to the LOAPF, the SHCP has its own internal regulations – the Internal Regulations of the Ministry of Finance and Public Credit – which set forth that the Ministry of Finance and Public Credit is in charge of its representation, and will be assisted by several administrative units for the matters within its scope of competence. Such units include the Banking, Securities and Savings Unit, and the UIF.
The Banking, Securities and Savings Unit is responsible for creating policies for the promotion, regulation and supervision of banking, credit and securities activities, as well as matters related to the protection of bank savings, and the protection and defence of users of financial services.
The UIF is responsible for preventing and combating operations executed with illegal proceeds and the financing of terrorism through investigations and the dissemination of information to the competent authorities of suspicious financial operations.
In addition, the SHCP has subordinated agencies that have specific responsibilities and authorities in certain sectors, including the following:
- the SAT;
- the CNBV;
- Comisión Nacional de Seguros y Fianzas (CNSF): National Insurance and Bonding Commission; and
- sp; Comisión Nacional del Sistema de Ahorro para el Retiro (CONSAR): National Retirement Savings System Commission.
Reporting and disclosure obligations
Given that the SHCP is the highest authority on financial matters, public and private financial entities are subject to disclosing information to the public, to the SHCP or to its subordinated agencies. These obligations are for all individuals and corporations in the financial sector, as well as for financial entities, which include, among others, participants in the banking, securities and retirement funds institutions, as well as people who carry out activities in the areas of trade, insurance, bonds, securities and credit.
The information must be disclosed to the corresponding agency depending on the type of sector and activities performed; however, the most common information that supervised persons and entities are required to disclose is corporate, legal and financial information.
Moreover, in regard to money laundering prevention, Mexican companies that carry out operations that could involve unlawful sources pursuant to the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin are required to submit to the SHCP, through its UIF, reports on such acts, operations or services that could involve illicit resources described under said Law. Automated systems have been enabled by the SHCP and its units and agencies to facilitate most of the reporting obligations.
Monetary sanctions and recent behaviour
The sanctions that the SHCP instructs its subordinated bodies to impose are very broad and depend mostly on the illicit conduct performed, the conduct itself, the damage caused and the background of the sanctioned person or entity. In general terms, the SHCP may impose, either directly or through its subordinated bodies, the sanctions that are set forth in the taxation, banking, credit and securities laws.
The SHCP may impose different types of monetary sanctions, the most common being fines in cases of non-compliance with the legal provisions applicable to matters in which it has jurisdiction. It is important to mention that most of the monetary sanctions are imposed by the SHCP’s subordinated bodies specialised in the different areas of competence of the SHCP, such as tax requirements.
The main subordinate bodies empowered to impose monetary sanctions are the CNBV for banking, credit and securities exchange matters; the Tax Administration Service for taxation and fiscal matters; the National Commission for the Protection and Defence of Users of Financial Services in relation to financial products and services to the general public; and the CNSF for insurance and bonding matters.
Non-monetary sanctioning powers and behaviour
The SHCP may impose non-monetary sanctions within its legal framework such as, among others, admonition, disqualification, or the revocation or suspension of authorisations and concessions of banking institutions, brokerage firms, insurance institutions, subsidiaries of foreign financial institutions and stock exchanges, as well as the suspension or limitation of certain activities.
Moreover, under the laws of the financial system, there are federal crimes that could be committed, but since crimes in Mexico are only judged by the competent criminal authorities, the SHCP has no jurisdiction to prosecute crimes directly; it informs the relevant public prosecutor’s office of the pertinent conduct and produces the requested evidence for the criminal process.
Recent and upcoming developments
Recently, Congress approved various tax reforms affecting both companies and individuals, such as the Federal Income Law and various federal tax laws. Due to a change in federal government in late 2018, several tax measures were introduced to increase tax collection during the 2020 fiscal year. This tax reform came into force with, among other changes, the incorporation of several new obligations aimed at taxpayers who receive services and have staff that have not been directly hired by them (outsourcing).
Likewise, the tax provisions applicable to foreign companies with operations in Mexico were modified, and new rules were established for digital service providers such as Netflix, Uber and Airbnb.
On a different note, progress in technology and the need for better financial services have resulted in the creation of financial technology (FinTech) companies, which have great opportunities in countries like Mexico because of the large number of unbanked persons. In this regard, and as a result of the growth of FinTech companies, in 2018 the Law to Regulate Financial Technology Institutions was published, which seeks to provide confidence and certainty to users of FinTech services, regulating the operation and security of companies that provide such services (mainly payment and crowdfunding companies).
At the end of last year, the government approved a constitutional reform that prohibits public officials from earning more than the President: that is, 108,000 pesos per month. This constitutional reform has caused great upheaval in the country, because senior public officials who were once paid more than the President will now be paid much less than they once were.
One of the main challenges facing Mexico is to achieve economic growth and increase foreign investment in the country. To achieve this, Mexico must have a favourable economic perspective and generate confidence in investors with the proper management of the country's public finances, a function resting with the SHCP.
Additionally, as a result of the current economic slowdown in Mexico, the SHCP has the responsibility to maintain healthy public finances and to increase tax collection to achieve the objectives of the country’s economic and social policies.
To achieve better economic and social development, the government, through the SHCP and Banco de México (the Mexican Central Bank), is developing public policies to make the Mexican financial system more inclusive and equitable, with the aim of promoting economic growth in the country.
Interacting with the regulator
Since the SHCP regulates so many different matters and depends on multiple agencies, the interactions that companies or individuals might have with this regulator is broad. The most common interactions with the SHCP include the Tax Administration Service and the relevant regulatory and supervision agency in connection with the financial activity carried out, including the CNBV. Such institutions have their own disclosing and reporting requirements before the SHCP.
Furthermore, each corporation or individual in Mexico is subject to several anti-money laundering provisions depending on the activities they perform. Apart from the applicable law, the SHCP establishes several secondary regulations that apply to multiple Mexican entities that perform vulnerable activities under the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin. Such activities include the issuance of credit cards, the sale and distribution of jewellery, works of art and vehicles, and the provision of certain legal services such as those provided by notaries public.
Notes for foreign investors
In Mexico, foreign investment is regulated by the Foreign Investment Law, which sets forth that foreigners may carry out any legal economic activity as long as there is no restriction specified in the applicable legislation. There are also restrictions on owning real estate near Mexico’s coastline and borders with other countries. For example, among the activities that are restricted to foreigners are those related to the land transportation of passengers, as well as owning property within 100km of the country’s borders and 50km of the country’s coastlines.
Further, there are provisions regarding foreigners’ activities in Mexico. These provisions establish that the country does not grant foreigners more rights and duties than those established for Mexicans. In addition, foreign investors must waive their right to appeal for the judiciary protection of their own country with respect to any conflict that may arise from an agreement, contract or among shareholders in Mexico.
As an example of the above, foreigners who seek to acquire property or any participation in the equity of a company in Mexico must agree with the Secretaría de Relaciones Exteriores (Ministry of Foreign Affairs) to consider themselves as Mexican citizens with respect to such property or rights regarding shares, and not invoke their government's protection with respect to such property or rights.
Foreigners who seek to acquire property in Mexico must agree with the Ministry of Foreign Affairs to consider themselves as Mexicans with respect to such property, and not invoke their government's protection with respect to such property.
Other regulators it works closely with
On a regular basis, the regulator works closely with the following authorities, in addition to all its agencies in Mexico:
- Banco de México: Mexican Central Bank;
- Servicio de Administración Tributaria (SAT): Tax Administration Service;
- Comisión Nacional Bancaria y de Valores (CNBV): National Banking and Securities Commission;
- Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros (CONDUSEF): National Commission of Protection and Defence of Users of Financial Services;
- Comisión Nacional de Seguros y Fianzas (CNSF): National Commission of Insurance and Bonding;
- Secretaría Economía (SE): Ministry of Economy;
- Secretaría del Trabajo y Previsión Social (STPS): Ministry of Labour and Social Welfare;
- Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT): National Workers' Housing Fund Institute;
- Instituto Mexicano del Seguro Social (IMSS): Mexican Social Security Institute; and
- Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE): Institute of Social Security and Services for State Workers.