Only Chile, Mexico and Ecuador have specific regulations for the Fintech sector. Countries such as Argentina, Costa Rica, Peru, Bolivia, Paraguay, Uruguay and Colombia still do not have specific laws for this sector, according to a report by the member firms of the Compliance Latam platform.
Although Latin America has experienced an exponential growth of Fintechs in recent years, most countries in the region do not have specific regulations for this sector, revealed a study conducted by members of the Compliance Latam platform.
Specifically, Chile, Mexico and Ecuador have specific regulations, but other nations such as Argentina, Costa Rica, Peru, Bolivia, Paraguay, Uruguay and Colombia still lack one. In the document, entitled “Comparative Guide on Fintech”, an update was made on the state of progress in regulations, current problems, comparative experiences and the main challenges for companies in the field. Regarding these differences in Latin American countries, Rodrigo Albagli, partner at Albagli Zaliasnik (az), the firm in charge of carrying out the assessment for Chile, commented that it is difficult to expect this type of industry to be completely regulated.
“In Chile, some regulations have already been issued and others are being discussed and implemented, so there is no absolute lack of control mechanisms. However, as in all things, regulation always advances slower than reality,” he emphasized.
For the lawyer, technological innovations are advancing rapidly, so any matter that is attempted to be regulated could be left behind. “That may be one of the reasons why Latin America is just starting to worry about rules that regulate these new industries. The important thing is that these discussions are held and all the aspects involved are considered when sitting down to regulate. It is a new, different industry and, therefore, its inherent factors must be taken into consideration so that regulation does not become an obstacle to investment”, he explained.
Chile
The so-called “Fintech Law” was published in January 2023. Its focus is to foster competition and financial inclusion through innovation and technology in the provision of financial services.
Albagli stresses that one must “possess relevant experience in the supervision of this type of market, especially as it relates to the safeguarding of personal data, consumer protection, prevention of money laundering, criminal liability of legal persons, and, in terms of cybersecurity and artificial intelligence”.
Mexico
In 2018, the Law to Regulate Financial Technology Institutions or “Fintech Law” was published, which aims, among others, to provide legal certainty to users of financial services on digital platforms and regulate the services provided by financial technology institutions, as well as their organization, operation and functioning.
Pedro Said, partner at Basham, Ringe y Correa, stated that “further regulatory development and adaptation to the market is still required to provide maximum security in the offer of its services”.
Argentina
In Argentina there is no comprehensive regulation or Fintech law, although there are several regulations issued by different authorities. Although there is no specific regulation, there is a regulatory framework applicable to fintech activities, made up of substantive civil rules, provisions of the administrative regulator, as well as market uses and customs.
Daniel Levi, partner at Beccar Varela, said that “regulatory uncertainty has a constant influence on the progress of various industries, and the fintech field is no exception”. And he added: “The lack of a comprehensive regulatory framework generates different scenarios in which some industry participants operate in a sort of regulatory gray when they would prefer clear and predictable rules”, he said.
Costa Rica
In this country there are no special laws regulating the industry and there are only a few regulations such as, for example, the Regulations of the Electronic Payments System issued by the Central Bank, which allows these types of entities to participate in the system.
Andrés López, Partner of BLP Costa Rica, emphasized that the objective is that “Fintechs, banks, the Central Bank and regulators, mainly SUGEF and the Superintendencia General de Valores, can reach a consensus that allows the elaboration and operation of a regulation that, without being too restrictive and detailed, allows the security of consumers and market participants”.
Ecuador
In December 2022, the Organic Law for the Development, Regulation and Control of Technological Financial Services was enacted. Pedro Gómez de la Torre, director at Bustamante Fabara, highlights that “the entry of digital financial services in Ecuador has been a challenge for the creation of regulations that allow an adequate establishment of Fintech companies”.
He considers that “the regulatory entities determined in the Fintech Law should begin to develop regulations that form an enabling environment” for the development and proper development of this area.
Peru
Peru does not have a general law on Fintech, although it did opt for a regulation that is advancing in stages. “Future regulation should consider the speed and flexibility that characterizes the technology, as well as the potential risks it brings, and should find a balance, avoiding falling into over-regulation or excessive bureaucratic barriers that slow down the development of the Fintech market in Peru,” said Giuseppe Manini, partner at CPB Abogados.
Bolivia
To date, Bolivia has not fully regulated what is known and understood as Fintech. “The Bolivian financial consumer, for the most part, is accustomed to the use of traditional banking (traditional financial institutions) and not to the use of new technological and financial tools,” explained Santiago Rodríguez, senior associate at Ferrere Bolivia.
Paraguay
There is no defined legal framework, but Paraguay has recognized the rise of Fintechs and is seeking to adapt to this phenomenon in different ways. Thus, there are various regulations with direct impact on the practical operation of Fintechs in the country. “The banking penetration rate is an area of concern. With only 48.6% of the population with access to a bank account, Paraguay has a long way to go to reach higher standards of financial inclusion, especially when compared to other Latin American countries,” said Carlos Codas, partner at Ferrere Paraguay.
Uruguay
In Uruguay there is no special law specifically regulating fintechs. Instead, these companies operate under existing regulations applicable to traditional financial services, which means that they must comply with the general financial laws and regulations that apply to traditional financial institutions.
Colombia
It also does not have a comprehensive regulation for Fintechs and opted to provide mechanisms and incentives through regulation for the orderly integration of financial innovations in the Colombian financial system.
Julian Aguirre, director at Posse Herrera Ruiz, mentioned that this country has enormous challenges in terms of financial education and, therefore, in exercising financial inclusion. “Fintechs should consider managing educational tools and resources to help consumers improve their knowledge of financial products and services in a transparent and informed manner,” he added.
