Banking Regulations in Chile: Key Insights

Overview

This section provides an overview of banking regulations in Chile, highlighting key requirements and best practices for financial institutions operating in the country. Written by lawyers from Carey Chile, this article offers valuable insights into the complexities of banking regulation in Chile.

Liquidity Management Policy (PAL)

In Chile, banks are required to have a liquidity management policy (PAL) that includes:

Stress tests: Regular assessments of the bank’s ability to meet its short-term obligations
Contingency plan: A detailed plan for addressing potential liquidity deficits

These requirements aim to ensure that banks maintain adequate liquidity and are prepared to face unexpected events.

Term Mismatches

Banks in Chile must observe limits on term mismatches, which cannot exceed twice the bank’s basic capital. This means that banks must carefully manage their assets and liabilities to avoid excessive mismatching of terms.

The Central Bank of Chile (CMF) has introduced flexibility in the rules during exceptional cases, such as the COVID-19 pandemic. This demonstrates a willingness to adapt regulatory requirements to address specific challenges facing the financial sector.

Anti-Money Laundering Regulations

Banks in Chile are subject to strict anti-money laundering regulations, including:

Reporting suspicious transactions: Banks must report any suspicious transactions or activities to the relevant authorities
Cash transaction reporting: Cash transactions exceeding US$10,000 must be reported to the authorities
Know-your-customer system: Banks must have specific systems in place to verify the identity of their customers and assess potential money laundering risks

Authors’ Expertise

This section was contributed by lawyers from Carey Chile, including:

Diego Peralta
Fernando Noriega
Diego Lasagna

All authors have extensive expertise in banking law and finance, providing valuable insights into the complexities of banking regulation in Chile.

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