Business

Now the bank – and the fintech companies – know your location


As you know, a new law came into force on March 23, which obliges banks to know Location of your users in your digital applications In order to provide them with the service, the fintech companies were born with this requirement of the law.

Now the bank – and the fintech companies – know your location
Now the bank – and the fintech companies – know your location

As a user, you can refuse to grant your location. In this case, however, the bank will not allow you to use its application. Let’s face it, they force you to accept or you would have to go to the branch to complete your transactions. However, if you avoid giving your location and decide to go to the branch as a nonconformist, take into account that they also know that your location is the branch’s. In short, if you want to take advantage of financial services, bother with letting them know where you are.

However, you shouldn’t worry that they know your location. It is likely that before this law came into effect, these applications would have already obtained your estimated location through your IP. However, if you are paranoid there are apps that can help you change the location reported by your cell phone and additionally use a VPN to “hide” your IP address and complete the trick. If you do decide to “cheat” the bank with your location, I recommend that you do not pretend you are in Iran or North Korea, a high risk money laundering country like you are from the FATF (Traditional Financial Action Task Force) There is a risk of your accounts being frozen.

This brings me to the reason why the location is now a requirement of the authorities on banks and is limited to the prevention of money laundering (PLD). The same fintech that is regulated like Prestadero and that I run, we also need to know the geolocation of the users.

The general provisions referred to in Article 58 of the Law Regulating Financial Technology Institutions mention in their Articles 11, 35 and 101 the need to know the geographic location of users in order to integrate the files and the requirement to include such information in their transaction profile . In other words, in order to determine potential money laundering and terrorist financing risks in transactions, the agency believes it is important to know that a customer who declares his or her place of residence in Mexico is not entering into transactions from Iran or Yemen that trigger an alert could.

In general, banks and fintechs have already considered location data over IP not only for PLD but also for fraud prevention. For example, someone who claims to live in Mexico City but whose intellectual property is geolocated in Durango can be at risk for identity theft. Or someone using a VPN (detectable in most cases) can also be at risk.

Some have expressed fear that the bank employees will know their location and give the “whistle” to be robbed. However, 99% of the bank’s employees do not have access to this information, so the risk is low.

The location is undoubtedly very meaningful information and can be used for purposes beyond the main purpose of improving PLD practices, provided that this is mentioned in the facility’s privacy policy. For example, knowing the location of users could theoretically enable:

  1. Finding Criminal Debtors
  2. Identifying possible identity theft or fraud
  3. Strengthening fraud checks
  4. Alternative credit rating data
  5. Data that can be used by the authorities (after a proper search warrant) to find the whereabouts of criminals (including entire gangs of criminals and their dens).
  6. Data for determining strategic expansion or marketing plans (e.g. where to place / remove branches), where to place bank advertising, etc.
  7. Dates that are currently offering you promotions (“Welcome to Walmart San Jerónimo, use your Banco ABC card to buy XYX and we’ll give you a 5% discount”).
  8. Many others, limited only by the creativity of the data analyst.

What can you do? In my opinion, you loosen up the body. There isn’t much you can do about a regulatory problem, and if this information is used correctly by institutions it can help provide a country with safer financial transactions.

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