Financial Crime World

Chile Tackles Money Laundering, Terrorist Financing, and Bribery with Tough Penalties

Strengthening the Fight Against Financial Crimes

Santiago, Chile - To enhance its efforts in preventing, detecting, controlling, investigating, and prosecuting money laundering, terrorist financing, and bribery, Chile has passed Law No. 20,818.

Regulatory Requirements

Financial and legal entities in Chile must adopt a risk-based approach to prevent money laundering and terrorist financing by:

  • Conducting proper due diligence measures for new customers, including individuals and legal entities.
  • Obtaining information on the customer’s:
    • Name
    • ID number or passport number
    • Citizenship
    • Profession
    • Country of residence
    • Address in Chile or origin
    • Email
    • Phone number
    • Purpose of the relationship

For legal entities, additional information is required, including:

  • Proof of constitution
  • Form and legal status

Enhanced Due Diligence

Institutions must apply enhanced due diligence measures when dealing with:

  • Politically Exposed Persons (PEPs)
  • Individuals listed in UN sanctions resolutions
  • Countries under international financial monitoring
  • Those with preferential tax regimes

Enhanced Customer Due Diligence includes obtaining additional information about the client’s:

  • Funds
  • Assets
  • Purpose of transactions

Record Keeping and Reporting

Affected institutions must:

  • Keep records of customer due diligence for at least five years
  • Report suspicious activities to the Financial Analysis Unit (UAF)
  • Have software to detect suspicious transactions
  • Submit reports if a customer refuses to provide required information or submits false documents

Penalties for Non-Compliance

The penalties for hiding or disguising the origin of illicit funds are:

  • Up to 15 years in prison
  • A fine of two hundred to one thousand monthly tax units

Transporting cash or bearer negotiable instruments exceeding USD 10,000 without declaration can result in fines of up to 30% of the currency’s value.

The final penalty will depend on:

  • The amounts involved
  • Entity size and nature
  • Economic capacity
  • Harm caused
  • Seriousness of consequences for public enterprises

Q&A

Is Chile a high-risk country for money laundering?

No, Chile is not on the FATF list of countries with strategic AML deficiencies, and it has one of the lowest corruption levels in Latin America.

Is Chile a FATF country?

Yes, Chile is a member of the FATF-style regional body—GAFILAT—and an associate FATF-member that includes countries throughout the Americas and adheres to FATF standards.