Financial Crime World

Regulated Entities Face Stiff Penalties for Non-Compliance with Remuneration and AML/KYC Requirements

Santiago, Chile - The Board of Directors and Senior Management Team of regulated entities in Chile are being held to high standards when it comes to remuneration and anti-money laundering (AML) and know-your-customer (KYC) requirements.

Compliance with Remuneration Requirements

According to the Supervisory Entity for Financial Institutions (SUGEF), non-compliance with these regulations can result in severe penalties, including internal disciplinary actions, economic penalization, or even fines. Under SUGEF’s Corporate Governance Code, regulated entities are required to establish a remuneration policy that is aligned with their strategies and business horizon.

  • The Board of Directors must ensure that remuneration covers current and potential risks taken by employees, including internal procedure violations and regulatory requirements.
  • Staff members in risk-taking units must have incentives defined independently of business lines or substantial activities.

Remunerations Technical Committee

The Remunerations Technical Committee is responsible for monitoring the design and function of an adequate remuneration system, ensuring it encourages good performance and promotes acceptable risk management criteria. The committee must provide independent recommendations to the Board of Directors on policies and practices related to remuneration and incentives.

AML/CFT Requirements

In addition to remuneration requirements, SUGEF also regulates AML/ CFT activities. Article 15 of the Anti-Money Laundering Act (AML Act) requires regulated entities to comply with specific regulations, including:

  • The appointment of a compliance officer
  • Implementation of KYC procedures
  • Regular reporting obligations for suspect transactions

Regulated entities must:

  • Obtain and keep information about client identities
  • Register and verify client information
  • Report suspicious activities

Consequences of Non-Compliance

Failure to comply with these requirements can result in severe penalties. SUGEF is actively monitoring the application of remuneration policies and AML/ CFT regulations, and has implemented a robust supervisory framework to ensure compliance.

Regulated entities must be aware of their obligations and take necessary steps to avoid non-compliance, as failure to do so may result in significant consequences.

In related news, SUGEF has announced that it will be implementing new deposit protection measures, including the creation of a Deposit Guarantee Fund (FGD) to protect depositors in the event of bank failures. The FGD will provide coverage up to approximately USD10,000 per person/entity for deposits in public banks, private banks, and non-bank financial entities.