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Banks Must Keep Core Activities In-House, Regulators Emphasize
Santiago, Chile - The Chilean government has reiterated its stance on outsourcing banking activities, emphasizing that certain core functions cannot be outsourced. According to regulatory guidelines, banks must maintain control over key operations and ensure that they are conducted in-house.
Regulatory Guidelines
The Central Bank of Chile (CMF) has outlined specific requirements for banks to assess the risks associated with outsourcing functions and establish a robust governance structure to mitigate those risks. The regulator has identified several elements that banks must consider when developing their outsourcing policies, including:
- Continuity of business
- Data security
- Compliance with banking secrecy regulations
Guidelines for Banks
In addition, the CMF has set strict guidelines for banks’ relationships with customers and third parties, emphasizing the need for transparency and fairness in all transactions. Banks are required to follow sector-specific regulations and report suspicious transactions to the Financial Analysis Unit (Unidad de Análisis Financiero).
Regulatory Highlights
- Banks must maintain control over key operations, including:
- Money lending
- Leasing
- Factoring
- Outsourcing of banking activities is subject to strict risk assessments and governance structures.
- Banks must comply with anti-money laundering regulations and report suspicious transactions.
- Customer data protection is a top priority for banks, which must ensure the confidentiality and security of customer information.
Industry Impact
The regulatory emphasis on in-house operations may lead to increased costs for banks as they invest in infrastructure and personnel to manage core functions. However, this approach can also provide greater control over banking activities and enhance customer trust and confidence in the financial system.
Conclusion
Chile’s regulators have made it clear that certain core banking activities must remain in-house to ensure the stability and integrity of the financial system. Banks must adapt to these requirements by developing robust outsourcing policies and ensuring compliance with regulatory guidelines. The emphasis on in-house operations is a crucial step towards strengthening Chile’s financial sector and protecting customers’ interests.