Understanding the Limits of Bank Deposit Insurance
As a user of the financial system, it’s crucial to know what protects your savings in banks, but it’s equally important to understand the limits of that protection. The recent case involving CIBanco, Intercam, and Vector Casa de Bolsa clearly illustrates the need to understand how far the deposit insurance of the Institute for the Protection of Bank Savings (IPAB) extends.
Excluded Financial Products
The IPAB insurance does not cover certain financial products, even if they are offered within bank branches. These exclusions include:
- Investments in investment companies, insurance firms, savings banks, savings and loan associations, stock casas, and development banks.
- Obligations towards financial entities, both domestic and foreign, as well as societies that are part of the financial group of the bank.
- Obligations towards shareholders, members of the board of directors, and high-level employees.
- Operations involving negotiable or bearer securities, or operations that do not comply with legal provisions or adhere to sound banking practices.
However, the IPAB does cover bank deposits at call and term, as well as savings accounts, salary accounts, and similar products in banking institutions. This coverage applies to a maximum of 400,000 Units of Investment (UDIS) per person and per bank, equivalent to over 3 million pesos.
The National Commission for the Protection and Defense of Financial Services Users (Condusef) advises considering this amount as the maximum savings limit per bank to ensure resources are protected.
Advancements in the Money Laundering Case
This week, fines imposed by the National Banking and Values Commission (CNBV) on CIBanco, Intercam, and Vector were announced in June, totaling nearly 185 million pesos. These penalties primarily stem from shortcomings in anti-money laundering prevention.
These fines correspond to June 25 and 26, close to accusations made by the U.S. Department of the Treasury and CNBV’s administrative intervention.
“These fines are a result of CNBV’s administrative findings,” said Mario Di Costanzo, former Condusef president. “It remains to be seen if they lead to criminal charges filed with the Federal Public Ministry or the Financial Intelligence Unit.”
Meanwhile, the U.S. Financial Crimes Enforcement Network (FinCEN) granted a 45-day extension for the involved institutions to submit required information and evidence.
Implications for Bank Account Holders
Carlos Ramirez, Integralia’s partner and co-director, emphasized that the situation for account holders has not changed. The penalties do not pose immediate risks to their resources.
“The only new development in this case has been the transfer of trusts to Nacional Financiera and FinCEN’s extension. There are no signs of liquidity or risk issues for savers,” he stated.
For those with credits from the involved institutions, it’s essential to continue making payments on time. If any entity were to cease operations, their loan portfolio would be transferred or sold, but debts wouldn’t be canceled.
Key Questions and Answers
- What does the IPAB insurance cover? The IPAB covers bank deposits at call and term, savings accounts, salary accounts, and similar products in banking institutions, up to a maximum of 400,000 Units of Investment (UDIS) per person and per bank.
- What financial products are excluded from IPAB insurance? Excluded products include investments in investment companies, insurance firms, savings banks, savings and loan associations, stock casas, development banks, obligations towards financial entities, obligations towards shareholders, high-level employees, and certain operations involving negotiable or bearer securities.
- What were the recent penalties imposed on CIBanco, Intercam, and Vector? The CNBV imposed nearly 185 million pesos in fines on these institutions for shortcomings in anti-money laundering prevention.
- How do these penalties affect bank account holders? The penalties do not pose immediate risks to account holders’ resources. It’s essential for those with credits from these institutions to continue making timely payments.
