Chile’s Banking Regulations on Financial Transactions Under Scrutiny
In an effort to boost economic growth, the Chilean government has been reviewing its banking regulations on financial transactions, particularly in the area of foreign trade financing and money exchange operations. As one of the most developed economies in Latin America, Chile’s banking system is well-positioned for growth.
Regulatory Bodies
The Commission for the Financial Market (CFM), an agency under the Ministry of Finance, regulates the financial sector and oversees the actions of other financial-related agencies. The CFM ensures that banks and other financial institutions operate in a fair and transparent manner.
- Chilean Pensions Superintendency: Responsible for supervising and controlling institutions involved in the country’s pension system.
- Bureau of Consumer Protection: Protects consumers in various industries, including financial services.
Monetary Policy and Foreign Capital Movements
The Central Bank of Chile, an autonomous entity, conducts monetary policy and regulates foreign capital movements to maintain the stability of the currency and keep inflation low. The bank also regulates the amount of currency and credit in circulation.
Foreign Trade Finance
Chile’s foreign trade finance system is well-developed, with most payments sent to foreign suppliers submitted through irrevocable letters of credit from Chilean commercial banks. Other methods of payment include cash against documents and open account. Credit insurance is also widely available, with major private agencies having local offices in Santiago.
- US Export-Import Bank (EXIM): Offers credit insurance products to US exporters.
- Western Union: Provides wire transfer services and payment options through its website or app.
Capital Controls
Chile has no restrictions on incoming and outgoing foreign capital, allowing for the free flow of funds. Reserve requirements for external capital and prior authorization requirements for entering funds associated with external loans, investment, working capital, bonds, and American depositary receipts (ADRs) have been eliminated.
Currency Trading
Currency can be freely traded in two markets: the informal and interbank market. However, prior to receiving authorization, Chile’s Central Bank requires confirmation that trade finance transactions, foreign loans, capital flows, and profit repatriation will be executed through a commercial bank in the formal market.
Foreign Exchange Requirements
- Customs Declaration: Foreigners entering Chile must declare at Customs if they are bringing more than $10,000.
- Commercial Banks: US banks operating in Chile include JP Morgan Chase and Wells Fargo, while local correspondent banks include Banco de Crédito e Inversiones (BCI), Banco Estado, Banco de Chile, and Banco Itaú.