Financial Crime World

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Chile’s Financial Institutions Must Comply with Mandatory Regulations to Prevent Money Laundering

Santiago, Chile - In a bid to combat money laundering and terrorist financing (ML/TF), Chilean financial institutions must adhere to a set of mandatory regulations issued by the country’s regulators.

Regulation Requirements

According to Circular UAF N° 49/2012, partially replaced by Circular UAF N° 59/2019, as well as other guidelines, institutions must conduct proper due diligence measures for all new customers. This includes:

  • Obtaining specific information about individuals and legal entities, such as:
    • Name
    • ID number or passport number
    • Citizenship
    • Profession or degree/occupation
    • Country of residence
    • Address
    • Email or phone number
    • Purpose of the legal or contractual relationship
  • Providing additional information for legal entities, including:
    • Name of the entity
    • RUT or similar company number for foreign legal entities
    • Description of economic activities
    • Country of residence
    • Address
    • Email or phone number
    • Purpose of the legal or contractual relationship

Enhanced Due Diligence

Enhanced due diligence measures are also required when ML/TF risks are high in relation to a client, product, or service. This includes:

  • Politically Exposed Persons (PEPs)
  • Electronic funds transfers considered “high-risk”
  • Individuals listed in UN sanctions resolutions
  • Countries under international monitoring

Compliance Requirements

To stay compliant with Chilean AML regulations, institutions must:

  • Implement enhanced due diligence procedures for PEPs
  • Obtain specific information about the intended nature of the relationship, origin of funds and assets, purpose of transactions, and approval from senior management to begin or continue the legal or contractual relationship
  • Keep records of customer due diligence measures for a minimum period of five years
  • Report suspicious activity and submit Suspicious Activity Reports (SARs) to the Financial Analysis Unit

Who’s Affected?

All financial institutions operating in Chile, including:

  • Banks
  • Insurance companies
  • Securities firms
  • Other financial entities

must adhere to these regulations.

How to Stay Compliant?

To stay compliant, institutions must:

  1. Conduct proper due diligence measures for all new customers.
  2. Implement enhanced due diligence procedures for PEPs.
  3. Keep records of customer due diligence measures for a minimum period of five years.
  4. Report suspicious activity and submit SARs to the Financial Analysis Unit.

Penalties

Hiding or disguising the origin of illicit funds in Chile 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 in the crime of money laundering, the size and nature of the entity, its economic capacity, the extent of the harm caused, and the seriousness of the consequences in case of public enterprises.