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Mexico’s Cloud Service Restrictions

Mexico’s Cloud Service Restrictions
Knowledge Base Article in: Big Tech Policy Tracker
Last Updated: May 26, 2025

The Framework

Mexico’s cloud service regulations impose specific data management requirements on financial technology institutions, particularly electronic payment fund institutions (IFPEs), as outlined in the Law to Regulate Financial Technology Institutions.[1] Article 49 of the implementing provisions mandates that IFPEs maintain transaction and accounting records within Mexico, either through their own infrastructure or that of a third party, to ensure operational continuity.[2] Article 50 adds that IFPEs using cloud services must designate a secondary infrastructure provider—either located domestically or governed by a different jurisdiction than the primary provider—once certain transaction thresholds are met.[3] These provisions are enforced by the Central Bank and the National Banking and Securities Commission, which also oversee a resource-intensive authorization process for cloud service usage. While data may be hosted with third-party cloud providers, institutions must ensure the ability to present original records to authorities upon request, reinforcing a strong element of domestic data control.

Implications for U.S. Technology Leadership

Mexico’s cloud regulations—particularly the requirement that financial institutions using cloud computing must designate a secondary infrastructure provider with either in-country infrastructure or one based in a different jurisdiction—weaken U.S. technology leadership by making it harder for American cloud providers to compete in a major regional market. These rules not only impose duplicative infrastructure obligations, which are especially costly for U.S. firms accustomed to operating at a global scale, but also introduce structural preferences for local and non-U.S. providers. The burdensome and discretionary approval process administered by Mexican regulators further tilts the playing field, disadvantaging U.S. companies in favor of domestic or less secure foreign firms.

Critically, the allowance for a secondary provider in an “alternative jurisdiction” opens the door to increased reliance on Chinese cloud services, particularly from firms like Huawei, which has invested heavily in Mexico’s cloud sector. This creates both a commercial and strategic disadvantage for U.S. cloud providers, who face stricter scrutiny and less regulatory flexibility than potential Chinese entrants. Left unchallenged, these localization rules risk weakening U.S. cloud leadership in a key regional market and eroding the digital trade gains secured through USMCA.

Endnotes

[1] Digital Policy Alert, “Mexico: Adopted Provisions Applicable to Electronic Payment Fund Institutions Under the Regulation of Financial Technology Institutions Act Including Location of Computing Facilities,” January 15, 2021, https://digitalpolicyalert.org/event/5873-adopted-provisions-applicable-to-electronic-payment-fund-institutions-under-the-regulation-of-financial-technology-institutions-act-including-location-of-computing-facilities.

[2] Ibid.

[3] Ibid.

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