Verification knowledge hub
Learn why you’d want to open a business in Chile and how to stay compliant with local regulations.
According to Statista, the number of fintech startups established in Chile has more than doubled in recent years, reaching more than 4 fintech companies per one million inhabitants. This makes Chile’s fintech density the highest in Latin America.
At the same time, Chile has one of the lowest corruption levels in Latin America (second only to Uruguay), which makes it a comfortable place to do business.
Moreover, in late October 2022, Chilean authorities approved a new fintech and open-banking bill. It reduces entry barriers for technology businesses while creating an open finance system. The bill also recognizes the use of crypto assets backed up by fiat as a means of payment.
While competition is growing, the country remains a comfortable place for fintech companies to enter the market. However, they need to be aware of how to comply with local anti-money laundering regulations. This guide will help.
The following obliged institutions (natural and legal persons) must comply with local AML laws:
It is worth mentioning that the new fintech and open-banking bill enables the Commission for the Financial Market (CMF) to oversee crypto platforms. According to the CMF, the Central Bank of Chile and CMF are working together on regulating digital assets that are used as a means of payment.
The key AML regulator in Chile is the Chilean Financial Intelligence Unit (Unidad de Análisis Financiero—“UAF”).
The UAF has the authority to request and analyze any financial information that raises suspicion of money laundering and forward it to criminal prosecution authorities. The UAF can provide information directly to courts that are dealing with cases of ML, but does not exercise the powers inherent to the Public Prosecutor’s office or the courts. When the UAF Director considers there to be signs of crimes specified in Chilean AML legislation, they request the immediate transfer of relevant materials to the Prosecutor’s office.
Among Chile’s other regulators are the Commission for the Financial Market (CMF) and the Central Bank of Chile.
The CMF is the main regulator of the banking industry and financial institutions. The CMF is responsible for supervision over the functioning, development and stability of the Chilean financial market. It also ensures that entities comply with relevant laws, rules, bylaws and other regulations.
The Central Bank of Chile oversees the flow of money and the operation of financial and capital markets. The Central Bank’s main mission is “to keep inflation under control and contribute to the stability of the financial system, thus playing a part in the country’s development and the progress of its inhabitants.”
In 1995, money laundering became a crime in Chile under Law No. 19,366 (this law is no longer in force).
Today, Law No. 19,913, known as the Chilean Anti-Money Laundering Act is the country’s main AML regulation. It requires banks and other financial institutions to report the following to the Financial Analysis Unit (Unidad de Análisis Financiero, or UAF):
Law No. 20,393 was passed in 2009, and establishes penal responsibility for legal entities relating to the crimes of money laundering, terrorist financing, and bribery.
In February 2015, Law No 20.818 was passed, improving the mechanisms for prevention, detection, control, investigation and prosecution of the crime of money laundering. In fact, this law just amends AML law 19,913—in particular, the investigation process.
There are also instructions given by regulators that are mandatory for institutions (non-exhaustive list):
Check out Sumsub’s detailed guide to Chilean regulations:
Since Chile is a member of the FATF-style regional body—El Grupo de Acción Financiera de Latinoamérica, or GAFILAT—it has largely adopted the FATF’s risk-based approach. This means that financial and legal entities must understand, analyze and assess the risks of money laundering and terrorist financing (ML/TF) which relate to their company, and take proportionate to these risks.
It is mandatory for all affected institutions (see “Who’s affected”) to conduct proper due diligence measures for all new customers.
Customer Due Diligence, or CDD, requirements for individuals include provision of the following:
CDD requirements for legal entities include provision of:
CDD must be conducted by institutions in the following circumstances:
When it is determined that ML/TF risks are high in relation to a client, product, or service or other circumstance, regulated entities must apply enhanced CDD measures.
In particular, Enhanced Due Diligence measures must be applied to:
Institutions subject to comply with Chilean AML regulations must implement enhanced due diligence procedures for PEPs. The requirements are to obtain:
Institutions must also:
Affected institutions must keep records of the above for a minimum period of five years,and inform the Financial Analysis Unit, when required, of any cash operation greater than ten thousand dollars USD or the equivalent in Chilean pesos (according to the value of the US dollar observed on the day the operation was carried out).
According to Recopilación Actualizada de Normas de Bancos (RAN) Chapters 1—14, institutions must have appropriate software to develop warning systems that identify and detect suspicious transactions.
If, during CDD, a customer refuses to provide all or part of the required information or documentation, or submits something false, it should be considered as alert and sent to the UAF by means of a suspicious activity report (SAR).
Cash transactions of over USD 10,000 or its equivalent in Chilean pesos must be also reported.
This UAF website should be used to submit SARs.
Hiding or disguising the origin of illicit funds in Chile is punishable by
The fine for transporting cash or bearer negotiable instruments exceeding USD 10,000 without declaration is up to 30% of the currency in cash or the value of such undeclared currencies or instruments, with particular attention paid to the amount of undeclared securities.
The final penalty will depend on the amounts involved in the crime of money laundering, the size and nature of the entity, its economic capacity, the extent of the harm caused, and the seriousness of the consequences in case of public enterprises.
Chile is not on the FATF list of countries with strategic AML deficiencies. Chile also has one of the lowest corruption levels in Latin America (second only to Uruguay).
Yes. Chile is a member of the FATF-style regional body—GAFILAT— an associate FATF-member that includes countries throughout the Americas and adheres to FATF standards.