The Office of the Commissioner of Financial Institutions (OCIF) is seeking to approve five new regulations governing both the local and international banking sectors, including new regulations to oversee sports betting in Puerto Rico.

The new regulations consolidated old standards and modernized administrative practices, strengthening the regulator's capacity, said Commissioner Natalia Zequeira Díaz.

"In this regulation, what is being done is that, instead of the institutions having to go to the initial regulation and its five amendments, they are being consolidated into a single unified document, seeking procedural economy between the regulator and those supervised," explained Natalia Zequeira Diaz, commissioner of the OCIF.

This is the first time in nearly two decades that the OCIF has embarked on a comprehensive review of the rules governing most of Puerto Rico's financial system, from commercial banks to the so-called "cashitos."

"The OCIF is working to review and update its regulations, because we understand that this is a very important effort," said Zequeira Díaz.

The amendments to the regulations managed by the OCIF respond to an order issued by the State Department earlier this year, under then-designate Secretary Veronica Ferraiuoli. The order required all agencies to review all regulations that had not been amended in the past five years, on or before May 9.

Enforcement of the order is now under the supervision of the new position of Coordinator of Government Efficiency, or the so-called "local DOGE," which refers to the Department of Government Efficiency created at the federal level by President Donald Trump.

Ferraiuoli takes over as coordinator after Governor Jenniffer González Colón withdrew her nomination due to lack of Senate approval.

If no amendments are published within that timeframe, the agencies will have until next June to justify why those regulations should not be automatically repealed.

In the case of the OCIF, the public comment period for the proposed drafts will run until next Monday, June 9.

 NEW SPORTS BETTING REGULATIONS

Furthermore, in response to the growing number of sports betting establishments in Puerto Rico, the OCIF drafted new regulations to increase visibility and oversee these businesses.

Currently, there are no sports betting regulations, and the oversight of these types of businesses is a shared task between the Puerto Rico Gaming Commission and the OCIF.

“The Sports Betting Regulations aim to establish the rules and regulations for betting on sporting events and electronic gaming leagues (such as eSports), so that these are supervised and inspected by the OCIF and, in turn, verify compliance with Law 81-2019 (Puerto Rico Government Gaming Commission Law),” said Zequeira Díaz.

The OCIF, so far, only has visibility into sports betting within casinos. However, there are approximately nine major sports betting operators and 40 satellites, according to data provided by the Gaming Commission.

With the regulation, the OCIF will be able to conduct industry examinations and monitoring, as well as develop tools and processes to prevent and identify potential money laundering activities and any other violations of state and federal legal frameworks.

In addition, it would require these concessionaires to submit notifications to the OCIF, books and records, financial statements, internal controls, and compliance with other applicable laws, among other matters.

INTERNAL REGULATIONS AMENDED

Separately, as part of the agency's internal procedures, the OCIF revised the Regulations for the Issuance and Renewal of Licenses to encourage the more than 4,445 entities under the regulator's jurisdiction to begin the license renewal process before December 31.

"We want to reward institutions that diligently renew their licenses. "Any licenses submitted for renewal prior to the expiration date (December 31st) will be able to continue operating in January even if the renewal is still pending," explained Zequeira Díaz.

 According to data from the OCIF, as of December 31, only 1,921 applications for license renewal were received, which is less than half (43.2%) of all applications that were due.

The commissioner also amended the Regulations on Security Standards and for the Operation of the Electronic Operation System Using Security Cameras to store content in the cloud.

Following the publication of the edicts amending these five regulations, Zequeira Díaz estimates that the process from receiving suggestions and comments to their entry into force could take about six months.