Name
Global FinTech Guide
Country _ Name
Chile
SectionTitle
KYC requirements
Body
The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.

Legal affairs

National regulatory framework regarding AML and effective date of the regulations

In Chile, AML is regulated primarily by a) Law No. 19,913, which creates the Financial Analysis Unit (UAF) and amends various provisions in money and other asset laundering, that became effective in 2003; and b) the corresponding regulations issued by UAF.

In addition, there are other laws and regulations that also deal with the matter, such as:
  • Law No. 20,393, which sets forth the Criminal Responsibility of Legal Entities, which became effective in 2009.
  • Law No. 20,730, which regulates the Lobby and the Management that Represents Particular Interests to Authorities and Officers, which became effective in 2014.

National regulator or relevant authority for AML controls

The relevant authority for AML controls in Chile is the UAF, which is a decentralised public service dependent of the Ministry of Finance. The purpose of the UAF is to prevent and impede the use of the financial system and other sectors of Chilean economic activity to commit crimes of money laundering and terrorism financing.

Customer Due Diligence

Conduct of a typical KYC identification process

A KYC is mandatory for certain entities described in article 3 of Law No. 19,913 . As per such provision, the following individuals and entities must inform about suspicious operations that they learn of in the exercise of their activities: banks and financial institutions; factoring companies; financial leasing companies; securitisation companies; general fund administrators and companies that manage private investment funds; foreign currency exchange offices and other entities that are authorised to receive foreign currency; issuers or operators of credit cards, payment cards with provision of funds or any other system similar to the aforementioned means of payment; companies that transfer and transport securities and money; stock exchanges and commodities exchanges, as well as any other exchange that in the future is subject to the supervision of the Commission for the Financial Market (CMF); stock brokers; securities brokers; insurance companies; mutual fund administrators; operators of futures and options markets; management companies and users of free zones; casinos, gambling halls and racetracks; holders of gambling operation permits in larger merchant ships, with capacity to stay on board, and which have among their functions the transportation of passengers for tourist purposes; customs agents; auction and hammer houses; property brokers and real estate management companies; notaries; conservatives; pension fund administrators; professional sports organisations, governed by Law No. 20,019; savings and credit cooperatives; representatives of foreign banks; and securities deposit companies governed by Law No. 18,876 (hereinafter the Informing Entities).

Notwithstanding the foregoing, this duty to inform shall also be applicable to any person who carries or transports currency in cash or negotiable instruments to the bearer, from and to Chile, for an amount exceeding USD 10,000 or its equivalent in other currencies. In these cases, the information shall be collected directly by the National Customs Service and forwarded by the latter to the UAF.

Given the duty of the Informing Entities to identify and know their customers in order to be able to recognise suspicious or unusual behaviour on their part, they must request certain information from their customers and use that information to prevent and d
etect money laundering and financing of terrorism.

To this end, the Informing Entities must keep certain special records, one of which is the Customer Due Diligence and Customer Knowledge Register, which must contain information on all transactions that would have required a Customer Due Diligence and Customer Knowledge system.

As defined by the UAF in CIRCULAR No. 49/2012 CIRCULAR No. 59/2019 and CIRCULAR No. 61/2021, the Informing Entities must inform and provide the UAF with all the information, background and documentation required for the review of a suspicious transaction.

Thus, the KYC and Due Diligence process (hereinafter DDC) should be initiated by the adoption of DDC measures by the Informing Entities in the following cases:

    a) Before or during the establishment of a permanent legal or contractual relationship between the respective customer and the Informing Entity;
    b) When one (1) or more occasional transactions are carried out with a customer with whom there is no permanent legal or contractual relationship, and the transaction is for an amount equal to or greater than USD 1,000, considering that the transaction is carried out in a single operation or in several operations that seem to be linked; and
    c) When there are suspicions of Money Laundering or of Terrorism Financing, regardless of the exemptions and thresholds defined.

These DDC measures result in the requirement by the Informing Entities of certain information and documentation from the customer, which may be verified through other legal sources of information. If the customer refuses to provide all or part of such information and/or documentation, or if it is false or untrue, it should be considered as a warning signal, and the information should be sent to the UAF by means of a suspicious transaction report.

The abovementioned information must be kept by the Informing Entities in a customer file, which must be updated annually or when there are relevant changes.

Possibility to meet customer due diligence requirements by relying on third parties who are obliged by law themselves to comply with AML regulations

No, it is not. Although an Informing Party may gather information regarding a customer from third parties, whether obliged by law or not to comply with AML regulations, the Informing Entity’s liability under AML regulations remains unchanged.

Possibility to outsource customer due diligence by contract to other third parties who are not obliged by law to meet AML regulations and rely on these (e.g., WebID, IDnow, PostIdent)

Chilean law does not expressly forbid such outsourcing of services. However, said outsourcing, if any, would not exempt the Informing Entity of its legal responsibility under applicable laws and regulations to comply with all KYC requirements.

Presence of a license or registration requirement for the third party in case of outsourcing customer due diligence

Third party due diligence KYC procedures service providers are not regulated.

Further questions

Entities that could be relied on specifically by law as a third party to comply with AML regulations (regardless of outsourcing)

N/A.

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