Strict Anti-Money Laundering and Know Your Customer Regulations in Chile
Introduction
The government of Chile has implemented stringent anti-money laundering (AML) and know your customer (KYC) regulations to prevent financial crimes. These regulations, governed by Law No. 19,913, aim to ensure that entities subject to these regulations are transparent in their transactions.
Relevant Laws and Authorities
- Law No. 19,913: Created the Financial Analysis Unit (UAF) and amended various provisions related to money laundering.
- Law No. 20,393: Sets forth the Criminal Responsibility of Legal Entities.
- Law No. 20,730: Regulates Lobbying and the Management that Represents Particular Interests to Authorities and Officers.
The UAF is the relevant authority for AML controls in Chile and is responsible for preventing and impeding the use of the financial system and other sectors of Chilean economic activity to commit crimes of money laundering and terrorism financing.
Entities Subject to KYC Requirements
The following entities must inform the UAF about suspicious operations they learn of in the exercise of their activities:
- Banks and financial institutions
- Factoring companies
- Financial leasing companies
- Securitisation companies
- General fund administrators
- Companies that manage private investment funds
- Individuals who carry or transport currency in cash or negotiable instruments to or from Chile for an amount exceeding USD 10,000
Informing Entities Must Conduct KYC
To identify and know their customers, Informing Entities must request certain information from them and use that information to prevent and detect money laundering and financing of terrorism. They must also keep special records, including the Customer Due Diligence and Customer Knowledge Register.
When initiating a KYC and Due Diligence process, Informing Entities must adopt DDC measures in three cases:
- Before or during the establishment of a permanent legal or contractual relationship between the customer and the Informing Entity.
- When one or more occasional transactions are carried out with a customer without a permanent relationship and the transaction is for an amount equal to or greater than USD 1,000.
- When there are suspicions of money laundering or terrorism financing.
Informing Entities must also keep customer files updated annually or when there are relevant changes. They may gather information regarding a customer from third parties, but their liability under AML regulations remains unchanged.
Conclusion
Chile’s strict AML and KYC regulations aim to prevent financial crimes and ensure that entities subject to these regulations are transparent in their transactions. By adhering to these regulations, Chilean entities can maintain a trustworthy reputation and avoid facing penalties for non-compliance.