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Chile’s Banking Regulators Tighten Screws on Outsourcing, Capital Requirements, and Liquidity
Santiago, Chile - The Chilean banking regulator, Superintendencia de Bancos y Seguros (SBIF), has introduced a series of measures aimed at strengthening the country’s financial system. The latest regulations focus on ensuring the safety of banks’ own information and client data, observance of banking secrecy, access to information by regulatory bodies, and mitigating political risk.
New Rules for Outsourcing Data Processing Services
The new rules, outlined in Chapter 20-7 of the Banking Regulation Code, set additional requirements for outsourcing data processing services and reinforced due diligence obligations when contracting cloud computing services. The regulations also require banks to conduct thorough risk assessments before outsourcing any activities.
Capital Requirements Updates
The Central Bank of Chile has updated its capital requirements in line with Basel III recommendations. The new rules aim to address the risks associated with banking activity by increasing the minimum required level of effective equity to 8% of risk-weighted assets. The Tier 1 minimum capital requirement has been increased from 4.5% to 6% of risk-weighted assets, and an additional Tier 1 capital requirement equivalent to 1.5% of risk-weighted assets has been introduced.
- Conservation buffer: A conservation buffer of 2.5% of risk-weighted assets above the minimum required level must be made up of basic capital.
- Authority to require additional equity: The Central Bank has granted itself the authority to require basic capital or additional effective equity for up to 4% of risk-weighted assets in cases where legal requirements are not sufficient to cover specific risks faced by a determined entity.
Banking Liquidity Requirements
The Central Bank has introduced rules aimed at ensuring banks maintain an adequate liquidity position. The regulations require banks to:
- Set a liquidity risk tolerance
- Adopt a liquidity management policy (Política de Administración de Liquidez) that ensures projected net cash outflows do not exceed equity capital
Anti-Money Laundering Regulations
The new rules also govern banks’ relationships with their customers, including anti-money laundering regulations. Banks are required to:
- Report suspicious transactions
- Cash transactions exceeding US$10,000
- Provide documents and antecedents related to previously reported suspicious transactions
Expert Opinion
“These measures demonstrate the Central Bank’s commitment to maintaining a stable and secure financial system in Chile,” said [Name], an economist at [Institution]. “By increasing capital requirements and strengthening liquidity standards, banks will be better equipped to withstand potential shocks and maintain confidence in the financial system.”
Implementation Date and Applicability
The new regulations are set to take effect on [Date] and apply to all commercial banks operating in Chile.