The current legislative period is about to end. In recent days, the Senate approved an initiative to reform the Law of the Bank of Mexico (Banxico), presented by Ricardo Monreal, Morena’s parliamentary coordinator, in which he proposed that dollars that cannot be repatriated should be converted into international reserves by the Bank.
The initiative was criticized because for some who also runs in the 4T is the businessman Ricardo Salinas Pliego, who would benefit from the reform and, it is said, that he does what he wants, without any consequences. The initiative would show that political and economic power remain complicit.
Proceso magazine, in its recent weekly publication, highlighted on its cover the image of businessman Ricardo Salinas Pliego, owner of Banco Azteca. In his note, it states: “Forcing the Bank of Mexico to buy the dollars that financial institutions in Mexico cannot change in the United States, as an initiative by Senator Ricardo Monreal claims, not only undermines its autonomy, puts it at risk and undermines international reserves, is a tailored suit for firms like Banco Azteca, one of the main recipients of remittances.” ( Process, December 12, 2020)
In his initiative, Senator Monreal says that if financial institutions cannot exchange the dollars they receive from users for pesos, it would affect millions of Mexicans who depend on that source of income from abroad, such as the flow of foreign exchange and the income of industry workers tourism, moreover, says, “it would harm the healthy development of the financial system, as well as the security of companies and citizens who currently use banking to exchange their currencies.” (El Financiero, 9 December 20209
Senator Monreal’s initiative was not consulted with Banxico. Bank governor Alejandro Díaz de León commented that there are risks if the reform of Banxico’s foreign exchange law is approved. He highlighted the breach of his relationship with the United States Federal Reserve. He cautioned that the reform would force Banxico to buy dollars that could not be repatriated to be incorporated into international reserves, which would increase the risk of international sanctions. (El Financiero, December 12, 2020)
In order to combat terrorism and drug money laundering, the US government imposed on the national and international system, in 2012, a series of restrictions on dollar operations to and from its territory, restricting the disposal and administration of foreign exchange to institutions foreign financial institutions and forced them to have correspondent agreements with banks in that country.
Since 2017 Banco Azteca has no correspondent agreement, as the United States Office of Financial Crime Control has sanctioned Lone Star National Bank, its partner, for violating the law sanctioning money laundering, in its relationship with Banco de Salinas Pliego. ( El Universal, December 14, 2020)
In the controversy, Banco Azteca was pointed out as responsible for accumulating, in the first nine months of 2020, more than ten million dollars in cash. Therefore, if the Monreal reform was approved, Banxico would be obliged to acquire them, without knowing the legality of their origin.
Banxico Governor Alejandro Díaz de León commented that advancing the law passed by senators would commit to the entire cash management ecosystem, only to benefit a financial institution unable to solve its correspondent contract problem.
On his Twitter account Jonathan Heath, deputy governor of the Bank of Mexico, said there are many arguments against the Bank of Mexico’s law reforms. “One of the most important is that it is not worth amending a law to favor a single company, especially with a negative background with the US SEC.”
Journalist Raymundo Riva Palacio commented that Deputy Deputy Secretary of the Treasury Department Scott Rembrandt, head of the Terrorism Financing and Financial Crimes Office, and a group of experts, told Banxico’s legal director, and the head of the Banking, Securities and Savings Unit of the Secretariat of Finance, “their dissatisfaction with the reform approved by the Senate and ask them the consequences that it would have on the bilateral relationship, and in the international context, that the plenary of the Chamber of Deputies pass on the terms as the minute reached them.” (El Financiero, 14 December 2020
The legislative procedure is underway and it is foreseeable that Senator Ricardo Monreal will be amended in the Chamber of Deputies or “freeze” the initiative, because it is not relevant to Ya Sabes Quien’s friend, Donald Trump. Although once again, let me see who handles the threads inside that 4T. And apparently it’s not AMLO, but someone who sells in fertilizers.
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