Chile Establishes Penal Responsibility for Legal Entities Relating to Money Laundering, Terrorist Financing, and Bribery
Santiago, Chile - In a significant move to strengthen its efforts against financial crimes, Chile has introduced new regulations that hold legal entities accountable for money laundering, terrorist financing, and bribery.
New Regulations Aim to Improve Mechanisms Against Financial Crimes
The amendments to Law No 20.818, passed in February 2015, aim to improve the mechanisms for prevention, detection, control, investigation, and prosecution of these crimes. The law specifically targets legal entities, such as banks and financial institutions, to prevent them from being used for illicit activities.
Risk-Based Approach Adopted
Chile has largely adopted the Financial Action Task Force’s (FATF) risk-based approach to combat money laundering and terrorist financing. This means that financial institutions must understand, analyze, and assess the risks related to their company and take proportionate measures to mitigate these risks.
Due Diligence Requirements
- For individuals, provide basic identification information such as:
- Name
- ID number or passport number
- Citizenship
- Profession
- Country of residence
- Address
- Phone number
- For legal entities, provide details such as:
- Company name
- RUT (similar to a company number)
- Proof of constitution
- Form
- Legal status
Enhanced Due Diligence Measures
In cases where the risk of money laundering or terrorist financing is deemed high, financial institutions must apply enhanced due diligence measures. These include:
- Obtaining additional information about the client’s source of funds
- Identifying final beneficiaries as Politically Exposed Persons (PEPs)
- Reason for operations
Record Keeping and Reporting
Affected institutions are required to keep records of all transactions for a minimum period of five years. They must also report any cash operation exceeding USD 10,000 or its equivalent in Chilean pesos to the Financial Analysis Unit (UAF).
- Suspicious activity reports must be submitted to the UAF if:
- A customer refuses to provide required information or documentation
- A customer submits false information
Penalties
Failure to comply with these regulations can result in severe penalties. Hiding or disguising the origin of illicit funds is punishable by:
- Five years and one day to fifteen years in prison
- A fine of two hundred to one thousand monthly tax units
The final penalty will depend on the amounts involved, the size and nature of the entity, its economic capacity, the extent of the harm caused, and the seriousness of the consequences.
FAQ
- Is Chile a high-risk country for money laundering?
- No, Chile is not on the FATF list of countries with strategic AML deficiencies and has one of the lowest corruption levels in Latin America.
- Is Chile a FATF country?
- Yes, Chile is a member of GAFILAT, an associate FATF-member that includes countries throughout the Americas and adheres to FATF standards.
By implementing these new regulations, Chile demonstrates its commitment to combating financial crimes and ensuring the integrity of its financial system.