Preventing Money Laundering in Chile: Stringent KYC Regulations for Banks and Financial Institutions

Chile has implemented robust regulations to prevent money laundering and terrorism financing, requiring financial institutions to conduct thorough Know Your Customer (KYC) procedures. The Financial Analysis Unit (UAF), the country’s main anti-money laundering authority, oversees compliance with these regulations.

Key Requirements for Compliance

• Banks and other financial entities must identify their customers, assess their suitability, and monitor their transactions for suspicious activity.
• Financial institutions are required to maintain a Customer Due Diligence and Customer Knowledge Register, which includes information on all transactions exceeding $1,000 or equivalent.
• The UAF demands that these institutions report any suspicious transactions to prevent money laundering and terrorism financing.

Informing Entities: Who Must Comply

• Informing Entities include:
  • Banks
  • Financial institutions
  • Factoring companies
  • Other entities involved in financial activities

Compliance Measures for Informing Entities

• Adopt Customer Due Diligence measures when establishing a permanent relationship with a customer or conducting occasional transactions exceeding $1,000.
• Report suspicious transactions to the UAF.

Outsourcing Customer Due Diligence: A Gray Area

• Outsourcing Customer Due Diligence to third-party service providers is not explicitly prohibited by Chilean law; however, Informing Entities remain responsible for compliance under applicable laws and regulations.
• The absence of regulation for third-party due diligence KYC procedures service providers raises concerns about their reliability.

Conclusion

Chile’s anti-money laundering regulations demonstrate a commitment to preventing financial crimes and ensuring transparency in the financial system. Financial institutions must continue to comply with these strict requirements to maintain trust and stability in the market.