Chile’s Financial Action Task Force Guidelines Under Scrutiny

The Chilean government is facing criticism for its implementation of the Financial Action Task Force (FATF) guidelines, which assess a country’s efforts to combat money laundering and terrorist financing.

FATF Report Highlights Concerns

According to the latest report, Chile has been found to be largely compliant with 24 out of the 40 recommendations set forth by the FATF. However, the report highlights several areas where Chile needs to improve:

• National Cooperation and Coordination: Chile’s lack of coordination among its agencies and institutions hinders effective implementation of anti-money laundering (AML) and counter-terrorism financing (CFT) measures.
• Confiscation and Provisional Measures: Chile’s confiscation and provisional measures are not sufficient, allowing criminal assets to remain frozen or confiscated for extended periods.
• Regulation and Supervision of Financial Institutions: Chile’s regulation and supervision of financial institutions is inadequate, leading to concerns about the effectiveness of AML/CFT controls.

Consequences of Non-Compliance

Chile’s failure to meet these standards raises concerns about the country’s ability to effectively prevent money laundering and terrorist financing. The FATF guidelines are designed to ensure that countries have in place robust systems to identify and prevent illicit activities, and Chile’s shortcomings in this regard could have serious consequences for its economy and international reputation.

Key Areas for Improvement

The report identifies several key areas where Chile needs to improve:

• Risk Assessment and Risk-Based Approach: Chile’s risk assessment procedures are inadequate, and it lacks a risk-based approach to AML/CFT measures.
• Customer Due Diligence Procedures: Chile’s customer due diligence procedures do not meet international standards, leaving gaps in identifying suspicious transactions.
• Record Keeping Requirements: Chile’s record keeping requirements are insufficient, making it difficult to track and trace financial transactions.

Lack of Transparency and Beneficial Ownership

Chile has been criticized for its lack of transparency and beneficial ownership of legal persons and arrangements. This lack of transparency makes it difficult to identify the true beneficiaries of transactions and hinders effective AML/CFT measures.

Government Response

Chile’s government has vowed to address these concerns and implement the necessary reforms to meet the FATF guidelines. However, the country still has a long way to go before it can be considered fully compliant with international anti-money laundering and terrorist financing standards.