Legal and regulatory framework
The central statute governing this subject matter is the General Law of Credit Organizations and Auxiliary Credit Activities. This law establishes the categories of entities that are recognized as auxiliary credit organizations, describes the activities that are considered auxiliary to credit, and grants the Mexican Ministry of Finance and Public Credit (“Ministry of Finance”), the authority to interpret and enforce its provisions for administrative purposes.
The supervisory structure is complemented by several additional authorities. The National Banking and Securities Commission (“CNBV”) performs inspection and supervision duties over all organizations and activities that fall within the scope of the statute. The Bank of Mexico, which is the Mexican central bank, issues binding rules related to monetary control and foreign exchange operations that interact with auxiliary credit activities. The Financial Intelligence Unit (“UIF”) enforces obligations related to AML. These authorities, together with the Ministry of Finance, form an integrated supervisory system that provides legal certainty and ensures compliance with national and international standards.
Auxiliary credit organisations
Article Three of the General Law of Credit Organizations and Auxiliary Credit Activities identifies the entities that are legally considered auxiliary credit organizations. These include general deposit warehouses, credit unions, and any other entities that other statutes recognize as auxiliary credit organizations. Although the statute formerly included additional categories, several sections were repealed through later reforms, which means that general deposit warehouses and credit unions remain the principal organizations under this legal definition.
Auxiliary credit organizations are incorporated as Mexican commercial corporations and require express authorization from the Ministry of Finance before they may begin operations. Authorizations are nontransferable and must be published in the Official Gazette of the Federation. In every case, the Ministry of Finance must consult the CNBV and the Bank of Mexico before granting authorization. This structure ensures that the entities established under the law possess adequate financial capacity, internal controls, and operational integrity.
General deposit warehouses
General deposit warehouses are specialized organizations that store, guard, preserve, manage, and certify goods and merchandise on behalf of third parties. These organizations play a central role in commercial and industrial sectors, because they issue warehouse receipts and pledge bonds, which are negotiable instruments that facilitate financing, collateralization, and commercial transactions. General deposit warehouses are also authorized to advance funds against stored goods, provided they comply with the provisions of the General Law of Negotiable Instruments and Credit Transactions.
Authorization for the incorporation of a general deposit warehouse is subject to the discretionary judgment of the Ministry of Finance, which may grant or deny authorization based on an assessment of convenience, operational capacity, and financial stability. Once incorporated, these organizations may only operate within the boundaries established by the statute. Article Eleven of the General Law of Credit Organizations and Auxiliary Credit Activities establishes a detailed list of prohibitions that are designed to protect the integrity of these entities. These prohibitions include the inability to receive bank deposits, the inability to grant surety bonds, the inability to carry out operations with gold and silver except in cases expressly permitted by the Bank of Mexico, and the prohibition on acquiring real property not related to their corporate purpose. They are also prohibited from engaging in transactions that may result in conflicts of interest with their directors, commissioners, or external auditors.
The statute also regulates the pledge of goods stored in warehouses. The pledges on goods and securities must be constituted in accordance with the General Law of Negotiable Instruments and Credit Transactions and that, when the debtor defaults, the sale of pledged goods may be executed through a licensed public broker or through two local merchants. The warehouse may apply the sale proceeds to cover the debtor’s obligations and must return any surplus to the debtor. This mechanism provides legal certainty for structured trade finance operations.
Credit unions
Credit unions are cooperative organizations formed by members who share a common commercial, industrial, or agricultural interest. Although they are recognized as auxiliary credit organizations under Article Three of the General Law of Credit Organizations and Auxiliary Credit Activities, they are governed by a separate legal statute that supplements the general framework with detailed provisions concerning membership, capital requirements, permitted operations, and governance standards.
Credit unions may grant credit exclusively to their members, and they may facilitate the acquisition of goods, machinery, and inputs necessary for productive activity. They may also carry out financial leasing, factoring, and other financing operations, provided that these operations are directed solely toward their members. The cooperative nature of credit unions distinguishes them from commercial lenders and ensures that the risks and benefits of their operations are shared among their members.
The CNBV supervises credit unions with respect to solvency, capital adequacy, accounting standards, operational risk, and compliance with AML obligations. Although they are not deposit taking institutions, credit unions play an important role in supporting productive sectors and regional economies, and their regulatory oversight ensures the stability and transparency of their operations.
Auxiliary credit activities
Article Four of the General Law of Credit Organizations and Auxiliary Credit Activities identifies the financial activities that are considered auxiliary to credit. These activities include the habitual and professional purchase and sale of foreign currency, the regular and professional performance of credit operations, financial leasing, and financial factoring, and the habitual and professional transfer of funds. Organizations that carry out these activities must obtain the authorizations or registrations established by the statute and must comply with the supervisory authority of the CNBV.
Exchange Centers
Exchange centers are entities that engage in the habitual and professional purchase and sale of foreign currency. Their operations may include the exchange of banknotes, coins, and traveler cheques, as well as certain electronic transactions related to currency exchange. Unlike general deposit warehouses, exchange centers do not require express authorization from the Ministry of Finance. Instead, they must obtain registration from the CNBV and must comply with the technical conditions and AML obligations established by law.
Exchange centers must comply with extensive AML requirements, including customer identification, ongoing transaction monitoring, reporting of suspicious and unusual transactions, appointment of a compliance officer, and periodic submission of information to the Ministry of Finance, the CNBV, and the UIF.
Money transmitters
Money transmitters engage in the professional transfer of funds for the public, either within Mexico or across borders. This activity is expressly identified as an auxiliary credit activity in Article Four of the General Law of Credit Organizations and Auxiliary Credit Activities. Money transmitters must register with the CNBV and must obtain a technical anti money laundering opinion before they may begin operations.
The regulatory framework applicable to money transmitters is heavily focused on AML. Obligations include robust due diligence measures, verification of customer identity, analysis of ownership structures, continuous monitoring of transactions, and the reporting of suspicious, unusual, and relevant transactions. Money transmitters must also maintain internal control policies, conduct periodic training, and implement technological systems that allow them to detect and mitigate risk. These requirements are aligned with international standards issued by the Financial Action Task Force.
Money transmission services that involve foreign currency or cross border transfers must also comply with the Monetary Law of the United Mexican States. This law regulates the use of legal currency in Mexico and establishes principles for the conduct of foreign exchange operations, which must always respect directives issued by the Bank of Mexico.
SOFOM
Although multiple purpose financial entities, known as SOFOM are not classified as auxiliary credit organizations under Article Three of the General Law of Credit Organizations and Auxiliary Credit Activities, they operate within the same broader regulatory environment and are therefore relevant for contextual understanding. These companies were created through a significant legal reform in the year two thousand six, which eliminated the former categories of financial leasing companies, factoring companies, and limited purpose financial companies, and consolidated their activities into a new legal figure that may engage in a wide range of commercial credit transactions. SOFOM are governed by Articles Eighty-Seven B through Eighty-Seven P of the General Law of Credit Organizations and Auxiliary Credit Activities, which establish their corporate structure, their requirements for incorporation, their registration obligations, and the manner in which they may engage in credit operations, financial leasing, and financial factoring. They may be registered as regulated entities when they maintain certain equity or business links with financial institutions supervised by the CNBV, or they may remain as non-regulated entities when they operate independently.
Regardless of their regulatory status, the SOFOM must comply with extensive obligations related to the AML, and they must maintain operational transparency in accordance with the requirements of the Ministry of Finance, the CNBV, and the UIF. Although multiple purpose financial companies do not belong to the same category as general deposit warehouses or credit unions, they interact frequently with these entities and form part of the broader ecosystem of non-bank financial institutions that support credit and investment activity in Mexico.
Accounting, inspection and enforcement
The General Law of Credit Organizations and Auxiliary Credit Activities contains detailed provisions regarding accounting, recordkeeping, inspection, and enforcement. Article Fifty-Two states that any act or contract that changes the assets or liabilities of an auxiliary credit organization, or that creates an immediate or contingent obligation, must be recorded in its accounting books. These records must be kept in accordance with the general provisions issued by CNBV. The statute also permits the use of microfilming technologies for the preservation of documents and recognizes microfilmed records as having full evidentiary value in legal proceedings.
The CNBV may carry out inspections at any time and may request any information it deems necessary to verify compliance with the law. If violations occur, the statute authorizes a range of sanctions, including written warnings, fines, and daily penalties for continued noncompliance. Certain violations may require the intervention of public enforcement authorities to compel compliance.
These enforcement mechanisms provide regulatory authorities with the necessary tools to ensure that auxiliary credit organizations and auxiliary credit activities operate with transparency, integrity, and adherence to the law.
Anti Money Laundering and Anti-Terrorism Financing Framework (“AML”).
The Mexican AML regime applicable to auxiliary credit organizations and auxiliary credit activities has undergone continuous strengthening. The current regime incorporates obligations derived from the Federal Criminal Code, the General Anti Money Laundering Rules for Financial Entities, and various administrative provisions issued by the Ministry of Finance, the CNBV, and the UIF.
Recent reforms introduced greater transparency in the identification of beneficial owners, enhanced penalties for willful noncompliance, and new requirements for internal risk assessments. The legal framework currently applicable is fully aligned with international standards and emphasizes technological monitoring, documentation of customer profiles, and integration of risk matrices into internal control policies.
Interaction with the Mexican financial system
Auxiliary credit organizations and auxiliary credit activities form an important part of the Mexican financial system, although they do not perform deposit taking and are therefore not subject to the prudential requirements applicable to credit institutions. General deposit warehouses support trade finance and logistics. Credit unions promote cooperative financing and support small and medium sized enterprises and regional development. Exchange centers facilitate the availability of foreign currency and provide an important service in tourism regions, border zones, and remittance corridors. Money transmitters connect Mexican consumers to domestic and international payment networks and enable the efficient flow of remittances.
These entities including the SOFOM are operationally significant, and their regulation contributes to financial transparency, AML compliance, and the proper functioning of commercial transactions.
Conclusion
Auxiliary credit organizations and auxiliary credit activities occupy a defined and stable position within the Mexican financial system. These organizations and activities are governed by a specialized statute that provides legal certainty, operational clarity, and a regulatory structure aligned with international standards.
General deposit warehouses continue to serve as essential institutions for trade and logistics. Credit unions promote cooperative financing in productive sectors. Exchange centers and money transmitters provide essential foreign exchange and remittance services and operate under comprehensive AML requirements and SOFOM area leading entities providing lending, leading and factoring transactions, promoting financial inclusion in the Mexican market. The supervisory role of the Ministry of Finance, the CNBV, the Bank of Mexico, and the UIF ensures the integrity and reliability of these entities.
The regulatory framework is mature, coherent, and aligned with best international practices, making auxiliary credit organizations and auxiliary credit activities a stable and trustworthy component of the Mexican financial landscape.
Thank you to Miguel Gallardo Guerra from the Mexican law firm Bello, Gallardo, Bonequi y García, S.C. (“bgbg”).
