Chile’s Financial Institutions Under Scrutiny: FATF Mutual Evaluation Reveals Key Findings

Introduction

A recent mutual evaluation by the Financial Action Task Force (FATF) has shed light on Chile’s efforts to combat money laundering and terrorist financing. The assessment, which was conducted in 2021, aimed to evaluate the country’s compliance with the FATF Recommendations.

Key Findings

Positive Aspects

• Risk Assessment and Application of Risk-Based Approach: Chile scored “largely compliant” in the assessment of risk and application of a risk-based approach (R.1), indicating that it has put in place effective systems to identify, assess, and mitigate risks associated with money laundering and terrorist financing.
• Customer Due Diligence, Record Keeping, Politically Exposed Persons, and Correspondent Banking: Chile received high marks for its efforts in these areas, scoring “largely compliant” (R.10), “compliant” (R.11), “largely compliant” (R.12), and “largely compliant” (R.13) respectively.
• Combating Abuse of Wire Transfers and Internal Controls: Chile was also found to be “largely compliant” in areas such as combating the abuse of wire transfers (R.16) and internal controls and foreign branches and subsidiaries (R.18).

Areas for Improvement

• National Cooperation and Coordination: Chile faced challenges in this area, receiving a rating of “non-compliant” (R.2).
• Implementation of Targeted Financial Sanctions Related to Terrorism and Terrorist Financing: Chile struggled with the implementation of targeted financial sanctions related to terrorism and terrorist financing, scoring “partially compliant” (R.6).
• Regulation and Supervision of Financial Institutions: Chile was found to be “non-compliant” in this area (R.26).
• Customer Due Diligence Measures for DNFBPs and Other Measures to Prevent Money Laundering: Chile faced challenges in the implementation of these measures, scoring “partially compliant” (R.22) and “partially compliant” (R.23).

Conclusion

While Chile has made significant strides in combating money laundering and terrorist financing, there are areas that require improvement. The FATF recommendations serve as a framework for countries to strengthen their anti-money laundering and counter-terrorist financing regimes. By implementing these recommendations, Chile can further enhance its financial regulatory framework and maintain the trust of international partners.

Full Report

The full report from the Financial Action Task Force (FATF) is available on their website.