Mexican regulations impose strict controls on Financial Technology Institutions (ITFs) for cloud usage, mainly due to political risks that could disrupt service. However, these requirements do not apply to other sectors, according to Luis Urrutia Corral, legal advisor of the International Monetary Fund (IMF).
Regulatory Disparity
Urrutia highlighted that while Institutions of Electronic Payment Funds (IFPEs) are aware of this, they do not respect the principle of ‘same activity, same risk, same regulation.’ This is crucial for the upcoming T-MEC negotiation.
T-MEC’s Service Chapter Impact
The current T-MEC agreement includes a footnote in its financial services chapter that has affected domestic regulation, particularly IFPEs’ provisions. However, it hasn’t had the same impact on other sector entities.
Urrutia’s Explanation
The footnote allows one party to adopt or maintain certain measures if they’re not incompatible with T-MEC exceptions. These can include financial regulation or cybersecurity measures deemed necessary for security or economic stability.
Data Flow Importance
Urrutia emphasized the need to ensure uninterrupted information and data flow among participants across T-MEC member countries, especially given the reliance on U.S.-based cloud computing providers for financial institutions.
IFPE Cloud Usage
As of October, 68% of banks, 56% of IFPEs, 71% of Collective Investment Institutions, and 58% of Sofipos used cloud services.
IFPE Challenges
The former Comisión Federal de Competencia Económica (Cofece) addressed the ‘double-cloud’ requirement for IFPEs, mandating business continuity plans for any operational disruption.
Mexican law requires IFPEs using foreign cloud computing services to have local infrastructure or a secondary provider in another jurisdiction. This could undermine their cost advantage over traditional banking.
