In Guatemala, there is currently no specific legislation or regulation applicable to Fintech. However, due to the rapid growth and evolution of this ecosystem in the country, the Monetary Board, through proposals from the Banking Superintendency (SIB), has issued regulations related to the management of technological risks and even a draft law on electronic money operating entities (“the Draft”).
The objective of the draft is to establish the regulatory framework for the provision of electronic money services in the country. For this purpose, it defines the term “electronic money” as the digital representation of money with the following characteristics:
- It is of a value equal to the money received by the electronic money operating entity.
- It constitutes an enforceable payment obligation of electronic money for the amount equivalent to the money delivered to the entity.
- It is digitally registered in an electronic, magnetic, or other similar system or device.
- It is acceptable as a means of payment by individuals or legal entities other than the electronic money operating entity.
- It is convertible immediately into cash.
- It does not constitute a demand or savings deposit and is not covered by deposit protection funds.
- It does not generate interest, returns, or financial compensation of any kind.
- It is not subject to bank reserve or liquidity requirements.
Banks and microfinance institutions may carry out electronic money operations and services if they comply with the obligation to establish the guaranteed deposit established in the draft.
The draft defines and regulates the main actors involved in operations and activities related to electronic money, namely electronic money operating entities and electronic money agents.
Electronic money operating entities are legal entities authorized to carry out operations and provide services related to electronic money. They must be established as anonymous societies, and their sole purpose is to carry out operations and provide services with electronic money. The Monetary Board will authorize or not the establishment of such entities, based on the opinion of the Banking Superintendency. The draft also allows these entities to be part of a financial group subject to the existence of common control, ownership, administration, use of corporate image, or common control decision between it and the controlling company or the bank responsible for the financial group.
The electronic money agent is the individual or legal entity that carries out commercial activities, with which an electronic money operating entity enters a contract so that, on its behalf, it can carry out operations and provide the services indicated in the contract.
The draft defines 3 types of accounts that can exist and differentiates them by use and owner, namely:
- Electronic money account: This is the record in which the electronic money operator will keep a detailed account of the money delivered by the holder, as well as the transactions carried out in it.
- Personal electronic money account: This can be opened by an individual in their name, without commercial purposes, and in a simplified manner. It is not defined what is meant by simplified.
- Special electronic money account: This will be opened by an individual or legal entity to carry out commercial, professional, and other activities inherent to the nature of its activities.
- In one of its chapters, the draft establishes that for the proper administration of liquidity, operational, technological, and other risks, electronic money operating entities must observe the regulations issued by the Monetary Board, upon the proposal of the SIB.
The draft establishes the conditions that electronic money transactions must meet, including the identification of participants, verification of the authenticity of the instruments used, and the security of transaction data.
Likewise, the draft lists the operations and services that electronic money operating entities may carry out:
- Open electronic money accounts for money received.
- Convert money into electronic money in the same currency received.
- Convert electronic money into money in the same currency received.
- Carry out transfers between electronic money accounts expressed in the same currency.
- Carry out transfers between electronic money accounts and bank accounts, to convert into electronic money or money, at the instruction of the holder of an electronic money account.
- Make payments to service-providing entities and affiliated businesses, at the instruction of the holder of an electronic money account.
- Credit to electronic money accounts on behalf of third parties.
- Pay international remittances to holders of electronic money accounts.
- Buy and sell United States dollars to holders of electronic money accounts for operations they carry out with the electronic money operating entity, with the consent of the holder of the electronic money account.
Similarly, the draft establishes and regulates the figure of the security deposit, which will consist of the non-interest-bearing deposit account, in the national currency and in United States dollars, as applicable, at the Bank of Guatemala. This must be equivalent, at a minimum, to 100% of the balances of electronic money accounts, guaranteeing the balances of electronic money accounts and being non-seizable.
Also, the draft establishes that there may be an electronic money clearinghouse that may be public or private and, through which, operations carried out between electronic money operating entities using the resources existing in one or more guarantee deposit accounts will be offset and settled at the Bank of Guatemala.
The structure, and even certain articles of the draft, such as those related to the applicable legal regime, requirements, qualifications, and impediments of shareholders, members of the board of directors and managers, and minimum required capital, among others, are very similar to the structure and content of the Banking and Financial Groups Law and the Insurance Activity Law.
Currently, the SIB is still receiving comments from various sectors to whom it presented the draft before submitting it for approval as a bill to the Congress of the Republic.