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Chile’s Banking Regulation Landscape
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As the financial landscape continues to evolve, Chile’s banking sector is subject to a complex web of regulations aimed at ensuring stability and consumer protection. In this article, we will delve into the key laws and regulations governing money lending operations in Chile.
The Money Lending Operations Act (Ley de Operaciones de Prestamos)
The Money Lending Operations Act sets out the rules governing what constitutes a money-lending transaction, interest accrual, and other matters, including the maximum conventional interest rate. Additionally, banks are required to comply with:
- Consumer Protection Act (Law No. 19,496)
- Data Protection Act
Sectorial Regulations
Banks in Chile must also adhere to specific rules governing their relationships with customers, which are largely contained in sectorial regulations enacted by the Financial Market Commission (Comisión para el Mercado Financiero, CMF). These regulations cover a range of topics, including:
- Bank hours
- Accounts
- Leasing and factoring operations
- Subordinated loans
Anti-Money Laundering Regulation
One area of particular importance is anti-money laundering regulation. Banks are required to follow Law No. 19,913, which sets forth the general framework for anti-money laundering measures. Under this law, banks must:
- Report suspicious transactions
- Report cash transactions exceeding US$10,000 on a semi-annual basis
- Provide documentation and antecedents related to previously reported suspicious transactions
Law No. 20,393 extends liability for criminal wrongdoings related to money laundering, financing terrorism, and bribery of civil servants to legal entities.
The “Know-Your-Customer” System
The CMF requires banks to have specific anti-money laundering systems in place, which are based on the “know-your-customer” system. According to Chapter 1-14 of the Updated Compilation of Rules (Recopilación Actualizada de Normas) of the CMF, every bank’s know-your-customer system should contain specific features, including:
- Customer identification and verification
- Transaction monitoring
- Suspicious activity reporting
Conclusion
Chile’s banking regulation landscape is characterized by a complex interplay of laws and regulations aimed at ensuring stability, consumer protection, and anti-money laundering measures. Banks operating in Chile must be aware of these requirements to avoid non-compliance and potential legal repercussions.
About the Authors
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- Diego Peralta is a partner at Carey and co-head of the firm’s Banking and Finance Group.
- Fernando Noriega is an associate at Carey and member of the firm’s Banking and Finance and Capital Markets Groups.
- Diego Lasagna is also an associate at Carey and member of the Banking and Finance Group.
About Carey
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Carey is a leading law firm in Chile, providing high-quality legal services to local and international clients. The firm has extensive experience in banking and finance, with a team of experts who are well-versed in the complexities of Chile’s financial regulation landscape.