FinCEN backfires

“When you see your neighbor's beard cut, soak yours,” popular saying

Our northern neighbors boast of orchestrating surgical operations when it comes to targeted interventions or attacks that serve to dissuade or pressure other nations to carry out or refrain from certain actions that the United States considers contrary to its interests; it's the clearest example of the expression "you're not going to kill flies with a shotgun." It's then understood that the precision of the shot will be such that it will hit the target exactly, with the least possible collateral damage, cutting but not amputating, a small demonstration of power sufficient to align interests. They are often even recognized in films almost as masterpieces, but history shows us that, on many occasions, the price paid has been greater than the expected benefit. Exactly, due to a simple miscalculation by the gunner.

The June 30 publication in the U.S. Federal Register (announced a few days earlier) regarding the "administrative" restrictions FinCEN had imposed on three Mexican financial institutions confirmed the previously disseminated notice and also served as a reference point from which the 21-day period granted for the order to take effect began to run. The merits, materiality, or admissibility of this decision become marginal given that the impact on the entities' markets, media, and reputation was already evident. Many of the three entities' clients immediately sought to withdraw their funds and transfer them to another institution they considered healthy, free from the contagion that comes with being suspected of conducting transactions related to illicit funds and, worse still, terrorist activities or groups, as several of the criminal organizations that control the country are considered to be. The consequence is the immediate, real, and current risk of a financial run that could impact not only the aforementioned entities but the entire Mexican financial system.

On June 26, 2025, under the joint letterhead of each of the financial authorities, including the IPAB (because the first communication of June 25 was only signed by the SHCP), they announced the agreement to carry out a "temporary" managerial intervention (it should be noted that, due to its nature and given the circumstances, it is logical that it be temporary and not permanent; Article 129 of the LIC makes no distinction; ergo excusatio non petita, accusatio manifesta) of CI Banco and Intercam Banco; several hours later, a similar one was issued for the Vector Brokerage House. After several communications, on Friday night, July 4, a communication was released by the SHCP announcing that it would be the Development Bank that, following a "spin-off" of the bank trustees, would assume the entrusted businesses.

An interview with Emilio Romano, published on July 8 in Bloomberg Línea, is the new president of the ABM (Bank of America) and, coincidentally, CEO of Bank of America. Fortunately, the association had designated the union as its leader and interlocutor with Mexican and, of course, foreign financial authorities just days before this crisis. The headline reads "We must be paranoid," based on the statements "What we are seeking here is for the financial system to continue as it has been, being proactive and almost paranoid, taking care of these types of transactions" or "What we want is to move forward as quickly as possible, building on this moment where we have seen that the fiduciary problem is indeed a problem. We have to fix it because we are running out of fiduciaries more and more," an aspect that stems from the concentration of fiduciary business that CI Banco, especially a small institution, has achieved in recent times. A clear message and a key messenger.

The issue of the so-called temporary spin-off of the trust business sounds good but entails multiple legal, operational (due diligence and approval of each matter by the respective trust committees), time and even cost (where applicable, notarial, registry, tax and fees) complexities, since this figure is originally corporate and not operational, which in terms of articles 6 FI and 27 Bis of the LIC concerning the spin-off of banking entities, it seems to refer, as appropriate, to the General Law of Commercial Companies, and not to the partition of the trust business in a unilateral non-jurisdictional manner (even by a managing intervenor whose powers at most correspond only to those of the administrative body), when it is a contract in which the will of the parties will usually be required for its modification (except by court order or by operation of law), and that in fact, for this reason, various assemblies of holders are already being convened to reach the corresponding agreements.

For its part, on July 8, it was revealed through Fortuna Magazine that there were a series of letters requesting an extension for the originally granted 21-day period, particularly signed by very important international funds as petitioners to the United States Treasury Department, the reason being very simple: to make it clear that their interests could be affected given the urgency to be able to carry out the fiduciary migrations that the decision had forced.

On July 9, the U.S. Treasury Department announced that it would grant an additional 45 days for the originally announced restrictions to take effect. This does not mean any kind of absolution from the presumptions expressed by that authority, but it clearly provides some breathing space for such fiduciary migrations to be carried out in a less clumsy and hasty manner. This is good news for the Mexican financial system. Ultimately, these requests were successful, Money Talks!

There are several publications that mention other banking institutions and brokerage firms as possible subjects of restrictions, but in reality the issue goes further; any other company that receives or grants resources, manages or transfers them, should be aware of its standards regarding money laundering and combating terrorism, because it could also be in the crosshairs of the American authorities, and that could implicate SOFIPOs, Exchange Houses, Currency Exchange Centers, SOFOMEs and even financial entities from various sectors such as Insurance Companies that also receive billions of pesos in investments in certain products.

It seems these missiles did hit their target, but their shock wave wasn't as expected; coincidentally and temporarily, the shot backfired.