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CMF Gains Authority to Regulate Bank Liquidity and Customer Relationships
Santiago, Chile - In a move aimed at strengthening the country’s banking system, the Central Bank of Chile (CMF) has been granted the authority to regulate bank liquidity positions and relationships with customers.
Regulations for Bank Liquidity Positions
Under the new regulations, banks will be required to maintain an adequate liquidity position in both local and foreign currency, allowing them to meet their payment obligations under normal conditions and during exceptional stress scenarios. Additionally, the CMF will have the power to require basic capital or additional effective equity for up to 4% of risk-weighted assets in cases where legal requirements are insufficient to cover specific risks faced by a determined entity.
Regulations for Bank-Customer Relationships
The regulations also aim to ensure that banks have sufficient liquidity to meet their financial obligations and maintain stability in the financial system. Banks will be required to observe lending limit regulations, anti-money laundering regulations, and specific rules governing leasing and factoring operations.
- Specific anti-money laundering systems must be put in place, based on the “know-your-customer” system, which includes features such as:
- Customer identification
- Transaction monitoring
- Suspicious activity reporting
Strengthening Chile’s Financial Regulatory Framework
The CMF’s new powers are seen as a major step towards strengthening Chile’s financial regulatory framework and ensuring the stability of the country’s banking system.
About Carey
Carey is one of Chile’s leading law firms, with a strong reputation for its expertise in banking and finance. The firm’s Banking and Finance Group has extensive experience in advising clients on a wide range of financial transactions and regulatory matters.
Contact Us
If you would like to learn more about the CMF’s new regulations or require expert advice on banking and finance matters, please contact:
- Diego Peralta, Partner, Banking and Finance Group: +56 2 2928 2216 | dperalta@carey.cl
- Fernando Noriega, Partner, Banking and Finance Group: +56 2 2928 2216 | fnoriega@carey.cl