Financial Crime World

Here is the converted article in Markdown format:

Chile’s AML Investigation Process: A Step-by-Step Guide

As a member of the Financial Action Task Force (FATF) and the Group of Action Financiera de Latinoamérica (GAFILAT), Chile has implemented robust anti-money laundering (AML) regulations to prevent and detect suspicious financial transactions. This article will explore the country’s AML investigation process, including its regulatory framework, customer due diligence requirements, enhanced due diligence procedures, record keeping, suspicious activity reporting, and penalties for non-compliance.

Regulatory Framework

Chile’s AML regulations are set forth in various circulars issued by regulators, including:

  • “Circular UAF N° 49/2012”
  • “Manual para la prevención del blanqueo de capitales” published by the Asociación de Bancos e Instituciones Financieras de Chile A.G.
  • Recommendations for identifying and procedures related to Politically Exposed Persons (PEPs) issued by the Unidad de Análisis Financiero.

Customer Due Diligence

Institutions in Chile must conduct customer due diligence (CDD) on all new customers, including individuals and legal entities. CDD requirements include:

  • Obtaining information such as:
    • Name
    • ID number or passport number
    • Citizenship
    • Profession or degree/occupation
    • Country of residence
    • Address
    • Email or phone number
    • Purpose of the legal or contractual relationship

Enhanced Due Diligence

When institutions determine that a client poses a high risk of money laundering or terrorist financing (ML/TF), they must apply enhanced CDD measures, including:

  • Obtaining additional information about:
    • Intended nature of the relationship
    • Origin of funds
    • Source of assets
  • Approval from senior management to establish or continue the business relationship

Politically Exposed Persons

Institutions must implement enhanced due diligence procedures for PEPs, including:

  • Obtaining information on:
    • Intended nature of the relationship
    • Origin of funds
    • Source of assets
  • Requesting and obtaining senior management approval to establish a business relationship with a PEP

Record Keeping

Affected institutions must keep records of CDD and other AML-related activities for a minimum period of five years. Additionally, they must inform the Financial Analysis Unit (UAF) when required of any cash operation greater than $10,000 or its equivalent in Chilean pesos.

Suspicious Activity Reporting

Institutions must have appropriate software to develop warning systems that identify and detect suspicious transactions. If a customer refuses to provide required information or submits false documentation, it should be considered as an alert and sent to the UAF by means of a suspicious activity report (SAR). Cash transactions of over $10,000 or its equivalent in Chilean pesos must also be reported.

Penalties

Hiding or disguising the origin of illicit funds in Chile is punishable by:

  • 5 years and 1 day to 15 years in prison
  • A fine of 200 to 1,000 monthly tax units
  • The final penalty will depend on the amounts involved in the crime, size and nature of the entity, economic capacity, extent of harm caused, and seriousness of consequences

FAQs

  • Is Chile a high-risk country for money laundering?
    • No, Chile is not on the FATF list of countries with strategic AML deficiencies. It also has one of the lowest corruption levels in Latin America (second only to Uruguay).
  • Is Chile a FATF country?
    • Yes, Chile is a member of GAFILAT, an associate FATF-member that includes countries throughout the Americas and adheres to FATF standards.

By understanding Chile’s AML investigation process, financial institutions can ensure compliance with local regulations and prevent money laundering and terrorist financing activities.