Fintech 2024 Comparisons

The fintech market has continued growing at a significant pace, with the consolidation of the Asociacion Fintech de Guatemala, the promotion and collaboration between banks and fintechs, and the continuing dialogue with banking regulatory entities.

Looking ahead, the fintech sector in Guatemala will continue to evolve, with a focus on promoting financial inclusion, fostering collaborations between traditional banks and fintech companies, and navigating the regulatory landscape.

As of February 2024, according to the Asociación Fintech de Guatemala, there were 88 fintech companies in the country.

Digital payments are the main vertical of fintech business, followed by digital credits and the conformity of companies that render technology for financial institutions.

As of February 2024, no specific fintech law or regulation had been enacted in Guatemala and, therefore, all fintech companies are subject to the applicable general regulations. However, in certain cases and depending on the business model of each fintech company, they might have to comply with specific anti-money laundering obligations and to register as an Obliged Person before the Special Verification Intendancy (Intendencia de Verificación Especial or IVE) of the Superintendency of Banks of Guatemala (Superintendencia de Bancos de Guatemala or SIB).

There are no legal restrictions regarding compensation models in Guatemala; therefore, it is up to the companies to decide which compensation models they wish to implement.

As of February 2024, Guatemala did not have any fintech regulation.

In 2021, the SIB launched a meeting point where the SIB and fintech community could share their knowledge regarding trends and the regulatory framework (the “Hub”). 

For a fintech to apply to the Hub, it must first complete a confidential questionnaire through which the SIB gathers information regarding its business model and underlying technologies to determine what the fintech has to offer to the financial system.

The SIB will analyse the application questionnaire to determine if the fintech can join the Hub, in accordance with the following criteria:

• genuine innovation;
• financial inclusion;
• maturity level; and
• need of legal information.

This is not applicable in Guatemala.

In accordance with the Regulation to Manage the Technological Risk, issued by the Monetary Board JM-104-2021 (the “Risk Technology Regulation”), a fintech can be a technology provider for a bank or financial institution (“supervised entities”) if both the supervised entities and the fintech comply with all the requirements in the regulation. 

The Risk Technology Regulation defines and differentiates between the vendors, subcontractors and providers that any supervised entity hires to process and/or store information or to render any service related to it, inside or outside of Guatemala, and in infrastructure owned by the supervised entity or by the vendor, subcontractor or provider, as applicable.

Given that Guatemala does not have specific fintech regulation, fintech providers are obliged to comply with the same mercantile and consumer protection rules as every provider that renders services and/or offers products through a platform.

This is not applicable in Guatemala.

There is no privacy or data protection law per se in Guatemala, but there are certain dispositions in the Act for Access to Public Information, Decree 57-2008 of the Congress, in which the terms “personal data” and “sensitive personal data” are defined and the felony of commercialisation of personal data is included.

Regarding cybersecurity, only the banks, insurance companies and companies specialised in financial services that are part of a “financial group” (as defined by the Banks and Financial Groups Law) must comply with specific regulation issued by the Monetary Board in 2021 (regulation to manage the technological risk contained in the annex of the Monetary Board resolution identified as JM-104-2021).       

Consumer rights and provider obligations in accordance with the Consumer Protection Act fall under the Department of Attention and Assistance to the Consumer (Dirección de Atención y Asistencia al Consumidor or DIACO).

Guatemala’s Congress recently approved the Credit Card Law, Decree 2-2024, which has not yet become effective, but which will regulate the first product provided by both regulated entities and fintech companies.

In accordance with the Law against Money Laundering and Other Assets, Decree 67-2001 of Congress and its amendments, if the business model of a fintech company entails the systematic and substantial transfer of funds, the fintech company must register as an Obliged Person before the Special Verification Intendancy (IVE), under the Superintendency of Banks of Guatemala, and it must appoint a compliance officer and complete and file certain reports regarding the transfer of funds.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

In February 2021, the Superintendency of Banks released a press statement in which it communicated to the general population that in accordance with the Monetary Act, the official currency in Guatemala was el Quetzal (GTQ) and only Guatemala’s Central Bank (Banco de Guatemala) could issue bills and coins within the national territory. This means that virtual currency is not legal currency in the country. A press statement later warned the population that the use of virtual currency is risky and without any protection.

The only significant difference in the business or regulation of loans to individuals, small businesses and others is regarding the regulation issued by the Monetary Board and applicable to the banks, especially in relation to amounts, guarantees and terms, among other things.

In Guatemala, the Exchange Market and Merchandise Law, Decree 34-96 of the Congress and its amendments, regulates the private and public offerings of securities as well as the general regulation applicable to broker-dealers, brokerage houses and certain agreements of securities executed by broker-dealers. A private offering of securities can be made if offered to less than 35 persons or companies. A public offering is an offer made to more than 35 persons or companies, which can only be made after it has been registered at the National Stock Exchange.

There is no regulation regarding funds for loans, only what the Banks and Financial Groups Law states regarding the crime of financial intermediation, which occurs when a company not authorised to act as a bank receives funds from the public to lend to the public, by any means or form.

This means that anyone can lend funds to another person, provided that such funds are owned by the lender and not obtained from others for the sole purpose of lending them to others.

Syndication of loans is permitted by law, subject to the above-stated limitation of not obtaining the funds from others for the sole objective of lending them to others.

Given that there is no regulation, payment processors can use existing payment rails or create or implement new ones.

Cross-border payments and remittances are not regulated in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

There is no specific regulatory regime for trading platforms in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

There is no regulation on this matter.

Peer-to-peer trading platforms have a positive impact on both traditional and fintech participants. On one hand, they allow fintech companies to enter the system by offering practical and simple solutions, and on the other hand, they also enable traditional participants to provide their services to clients through these platforms, either directly or by contracting a fintech as a service provider. It is important to highlight that due to the innovation that these platforms entail and the speed of their evolution, they pose significant challenges in terms of regulation, primarily in terms of supervision.

As providers of financial services or products, fintech companies are subject to general consumer protection rules established by local legislation.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

Offences Defined in the Penal Code

Against persons

Calumny – this is the false imputation of a crime against others that gives rise to ex officio proceedings, as stipulated in Article 159. The person responsible for calumny shall be punished with imprisonment from four months to two years and a fine of GTQ50–200.

The person accused of slander may be exempted from any criminal liability by proving the truthfulness of the accusation.

Injury – this is any expression or action executed to dishonour, discredit or disparage another person, as described in Article 161. The person responsible for the injury shall be punished with imprisonment from two months to one year.

Defamation – this is when imputations constituting slander or libel are made in a manner or by means of dissemination that may provoke hatred or discredit, or undermine the honour, dignity or decorum of the offended party before society, as described in Article 164. The person responsible for defamation shall be punished with imprisonment from two to five years.

Against companies, banks or other entities

Commercial Disrepute Article 357 – whoever falsely imputes to another a fact that damages the credit, trust or prestige that the person deserves in their commercial activities, shall be sanctioned with a fine of GTQ200–2,000, if the fact does not constitute another more serious crime.

Article 342 “B” – it is a crime to prepare, divulge or reproduce by any means or communication system, false or inaccurate information that undermines the confidence of clients, users, depositors or investors of an institution that is subject to the surveillance and inspection of the Superintendency of Banks. It shall be understood that the confidence of clients, users, depositors or investors of an institution is undermined when, as a consequence of the aforementioned acts, the institution’s reputation or financial prestige is undermined or when the institution is subject to the massive withdrawal of deposits or investments, greater than its normal or ordinary flow. The person responsible for this crime will be sanctioned with three years’ imprisonment and a fine of GTQ5,000–50,000.

This is not regulated in Guatemala. Supervisory bodies usually issue warnings based on complaints and their own investigations.

The underwriting process is not explicitly dictated by the Law of Insurance Activity, but it is subject to the general principles and norms that govern insurance activity, such as solvency, liquidity, risk management, control and supervision.

In accordance with the Law of Insurance Activity:

• Life or personal insurance covers the risk of death or survival of the insured, as well as annuities.
• Damage insurance covers the risk of uncertain events that cause damage or loss to insured goods or to third parties. Within damage insurance, there are several subcategories, including personal accident insurance, health insurance, hospitalisation insurance, and surety insurance.

It is important to note that the law also provides for Compulsory Social Security Insurance, which offers health and accident insurance benefits to the citizens of Guatemala.

The only providers that are regulated are those that process and/or store technological information when they execute an agreement with a bank, financial entity, insurance company or any other entity supervised by the Superintendency of Banks in accordance with the Technological Services Regulation issued by the Monetary Board JM-104-2021.

Financial services firms seek to impose data protection, confidentiality, consumer protection and non-compete provisions and AML regulation on technology providers. There is only local regulation on certain data protection, consumer protection and AML regulation.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

This is not applicable in Guatemala.

The legislation in Guatemala prohibits open banking under the Banks and Financial Laws, and requires that banks and their employees must keep information about the operations and services they provide to their clients secret, unless there is a legal or judicial order to disclose it. The only exception to the confidentiality obligation applies to the Superintendence of Banks, the Banco de Guatemala, the Fondo para la Protección del Ahorro, the tax authorities, the financial intelligence unit, the credit bureaus, and other entities authorised by law or by the client.

As stated above, the legislation in Guatemala currently does not allow open banking to function; therefore, there are no risks related to this topic.

The elements of fraud as it relates to financial services and fintech in Guatemala are basically the financial intermediation and the securities trading intermediation.

The regulators in Guatemala are most closely focused on source and transfer of funds, and identity fraud.