Technology, markets, and money laundering: the challenges for the new head of the CNBV

The change of president at the National Banking and Securities Commission (CNBV) comes at a time when the Mexican financial system is facing some turbulent times. The most recent: accusations of alleged money laundering by the U.S. Treasury Department against CIBanco, Intercam Banco, and Vector Casa de Bolsa (which led to the immediate temporary intervention by the regulator) and which today, two months later, have all three institutions in suspense.

On Friday night, it was announced that Ángel Cabrera Mendoza will assume the presidency of the CNBV starting September 1, replacing Jesús de la Fuente, who will step down after nearly four years at the helm of the regulatory body.

In its statement, the Ministry of Finance and Public Credit (SHCP) highlighted Cabrera Mendoza's solid career in federal public administration, specifically in regulatory matters of the financial sector, as he has held high-level positions such as in the Banking, Securities and Savings Unit, the Sub-Attorney General's Office of the Federal Tax Attorney's Office and the Undersecretary of Expenditures.

The agency emphasized that its track record and experience in financial and regulatory matters provide support for fulfilling the powers conferred upon the commission by law, particularly with regard to issuing regulations and monitoring compliance with applicable provisions, as well as the supervision and operation of the financial system.

In this regard, he emphasized that the new president of the CNBV will assume the responsibility of helping to maintain a solid, modern, and inclusive financial system, capable of meeting the needs of users and responding to the challenges posed by technological innovation, market transformation, anti-money laundering oversight, and the importance of preserving public confidence in institutions.

Key moment

Although the Mexican financial sector is one of the most robust, complying with some of the strictest regulations locally and globally, driven by its authorities, including the CNBV, it is currently facing difficult times that have placed it in the "eye of the storm," and that is precisely what the new head of the commission will face.

On June 25, the U.S. Treasury accused CIBanco, Intercam Banco, and Vector Casa de Bolsa of having enabled money laundering operations related to fentanyl trafficking.

This led to the immediate temporary intervention of the three institutions by the CNBV, and today, almost two months after the accusations, they are facing a complicated situation that has led them (at least the two banks) to sell a significant portion of their businesses.

This situation has occurred despite the strict regulation of the financial sector, especially the banking sector, resulting from the measures established by the regulator.

The issue of sofipos

Popular financial companies (sofipos) are another of the various sectors supervised and regulated by the CNBV.

However, this segment has been under scrutiny in recent years due to cases such as the Ficrea fraud, which has been going on for more than a decade, and more recently the situation with CAME, an entity that abruptly shut down operations, forcing its intervention by the authorities.

In both cases, the savers of these entities have been affected.

This has raised the question of whether regulation for the sector is adequate.

Neobanks and fintech

Following the emergence and growth of financial technology companies in the country, the CNBV's work has increased.

Today, for example, some banking licenses are pending for technology players that have applied for them (such as Mercado Pago and Finsus); and authorization to begin operating as banks for other entities, such as Nu México (which has already obtained a license), is pending.

Furthermore, despite Mexico being a pioneer in having a Fintech law , driven by financial authorities and other players, since 2018 it seems that the regulatory framework for this sector has stagnated, and since then, secondary regulation for this segment has been pending, which, despite having slowed its dynamism, continues to grow.

Lack of staff?

Hence, the question arises as to whether the CNBV's current staff is sufficient for all the regulatory and supervisory work it performs on entities in different sectors, such as banking, brokerage firms, savings and loan cooperatives (SOFIPOS), savings and loan cooperatives (SOCAPS), multi-purpose financial companies (SOFOMES), general deposit warehouses, financial technology institutions, and general deposit warehouses, among others.

What are you doing?

The CNBV is a decentralized body of the SHCP (Ministry of Finance and Public Credit), with powers to authorize, regulate, supervise, and sanction the various sectors and entities that comprise the Mexican financial system, as well as individuals and legal entities that carry out activities provided for in the laws relating to the financial system.

In addition to the presidency, he has 10 vice presidencies and other areas that support him.