Financial Crime World

Financial Crime Reporting Requirements Tighten in Chile

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Chile’s financial regulatory framework has been strengthened to combat money laundering and terrorism financing. Financial institutions and other entities are now required to implement strict customer due diligence measures to prevent and detect financial crimes.

Anti-Money Laundering Regulations

The Financial Analysis Unit (UAF) is the primary authority responsible for monitoring and preventing financial crimes in Chile. The UAF was established by Law No. 19,913 in 2003 and has since issued various regulations to guide the implementation of anti-money laundering (AML) controls.

  • Laws and regulations enacted to combat financial crimes include:
    • Law No. 20,393: sets forth criminal responsibility for legal entities
    • Law No. 20,730: regulates lobbying activities

Customer Due Diligence Requirements

Financial institutions and other entities subject to AML regulations must conduct a thorough customer due diligence process, known as Know Your Customer (KYC). This involves collecting specific information about customers, including:

  • Background information
  • Financial transactions
  • Business activities

The KYC process is mandatory for certain entities, including:

  • Banks
  • Financial institutions
  • Factoring companies
  • Others listed in article 3 of Law No. 19,913

Entities must also report suspicious transactions to the UAF and maintain detailed records of customer transactions.

Record Keeping and Reporting Requirements

Financial institutions must keep detailed records of customer transactions and maintain a Customer Due Diligence and Customer Knowledge Register. If suspicions arise regarding money laundering or terrorism financing, entities must inform the UAF of such activities.

Outsourcing AML Services

While Chilean law does not prohibit outsourcing customer due diligence services to third-party providers, any such arrangement would not exempt financial institutions from their legal responsibility to comply with AML regulations.

Strengthening Financial Integrity

The strengthening of AML regulations in Chile is aimed at:

  • Preventing and detecting financial crimes
  • Protecting the integrity of the financial system
  • Ensuring transparency and accountability in business dealings