Financial Crime World

Chile’s Stricter AML Regulations: What Financial Institutions Need to Know

Santiago, Chile - In a bid to combat money laundering and terrorist financing, Chile has strengthened its anti-money laundering (AML) regulations. The country’s financial institutions must now adhere to a risk-based approach, conducting proper due diligence measures for new customers and implementing enhanced procedures for high-risk clients.

What’s Changing?

The Chilean Financial Analysis Unit (UAF) has issued various circulars and guidelines that require financial and legal entities to understand, analyze, and assess the risks of money laundering and terrorist financing. These regulations are mandatory for all affected institutions, which must conduct customer due diligence (CDD) measures before or during the establishment of a permanent legal or contractual relationship.

Customer Due Diligence Requirements

  • For individuals:
    • Providing identification documents such as name, ID number or passport number, citizenship, profession or degree/occupation, country of residence, address in Chile or in country of origin or permanent residence, email or phone number, and purpose of the legal or contractual relationship.
  • For legal entities:
    • Providing the following information: name of the legal entity, RUT or similar company number for foreign legal entities, proof of its constitution, form, and legal status, description of the entity’s economic activities, country of residence, address in Chile or in a country of origin or permanent residence, email/phone number, and purpose of the legal or contractual relationship.

Enhanced Due Diligence Measures

  • When ML/TF risks are high, institutions must apply enhanced CDD measures, which include:
    • Obtaining information on the intended nature of the relationship
    • Origin of client’s funds
    • Origin of client’s assets
  • Institutions must also establish risk management systems to determine if a prospective client or final beneficiary is a Politically Exposed Person (PEP).

Record Keeping and Suspicious Activity Reports

  • Affected institutions must keep records of CDD measures for at least five years.
  • Inform the UAF when required of any cash operation greater than USD 10,000.
  • If a customer refuses to provide required information or submits false documents, it should be considered as an alert and sent to the UAF via suspicious activity report (SAR).

Penalties

  • Hiding or disguising the origin of illicit funds in Chile is punishable by five years and one day to fifteen years in prison, as well as a fine of two hundred to one thousand monthly tax units.
  • The final penalty will depend on the amounts involved in the crime.

Q&A

  • Is Chile a high-risk country for money laundering?
    • No, Chile is not on the FATF list of countries with strategic AML deficiencies and has one of the lowest corruption levels in Latin America.
  • Is Chile a FATF country?
    • Yes, Chile is a member of the FATF-style regional body—GAFILAT—and adheres to FATF standards.

The new regulations aim to strengthen Chile’s efforts against money laundering and terrorist financing. Financial institutions must ensure compliance with these stricter AML regulations to avoid penalties and maintain their reputation in the market.