Financial Crime World

Financial Institution Due Diligence in Chile: A Comprehensive Overview

Introduction

Chile has made significant strides in implementing the Financial Action Task Force (FATF) Recommendations, a set of standards designed to combat money laundering and terrorist financing. However, despite its progress, there are still areas where improvement is needed.

FATF Ratings: Areas of Improvement

According to the FATF’s latest report, Chile has achieved ratings of “Compliant” or “Largely Compliant” in several key areas:

  • Customer Due Diligence (R.9): Chilean financial institutions are meeting the necessary standards to prevent money laundering and terrorist financing.
  • Record Keeping (R.11): Chile’s record keeping practices are adequate to support its anti-money laundering efforts.
  • Internal Controls (R.18): Chile’s internal controls are effective in preventing financial crimes.

However, there are areas where Chile has scored lower:

  • Targeted Financial Sanctions Related to Terrorism and Terrorist Financing (R.6): Chile’s implementation of targeted financial sanctions is partially compliant.
  • Terrorist Financing Offence (R.5): Chile’s regulation of terrorist financing offences is partially compliant.

Non-Compliance Areas

Chile’s performance in implementing the FATF Recommendations is also hindered by its non-compliance with certain areas:

  • Transparency and Beneficial Ownership of Legal Persons (R.24): Chile does not provide adequate transparency on beneficial ownership.
  • Legal Arrangements (R.25): Chile does not regulate legal arrangements adequately.

Additionally, Chile’s regulation and supervision of:

  • DNFBPs (R.28): Chile’s regulation and supervision of designated non-financial businesses and professions are lacking.
  • Financial Intelligence Units (R.29): Chile’s financial intelligence units are not effective in analyzing suspicious transactions.

Government Efforts to Enhance Anti-Money Laundering Framework

To address these shortcomings, the Chilean government has taken steps to enhance its anti-money laundering and combating terrorist financing framework:

  • Strengthening Customer Due Diligence Requirements: Chile is enhancing customer due diligence requirements to prevent financial crimes.
  • Improving Record Keeping Practices: Chile is improving record keeping practices to support its anti-money laundering efforts.
  • Enhancing Internal Controls: Chile is strengthening internal controls to prevent financial crimes.

Conclusion

Chile’s progress in implementing the FATF Recommendations is notable, but continued efforts are needed to address areas of non-compliance and ensure that Chilean financial institutions meet the highest standards. The success of Chile’s anti-money laundering and combating terrorist financing efforts will depend on the government’s ability to implement effective policies and regulations that prevent financial crimes while promoting a stable and secure financial system.