The Financial Action Task Force (FATF) has recently published the Mutual Evaluation Report (MER) of the Republic of Chile. This report is based on the FATF’s on-site evaluation of Chile’s AML/CFT measures during January 6-17, 2020. It evaluates the country’s level of compliance with FATF Recommendations, identifies the deficiencies in the country’s AML/CFT framework, and provides suggestions on improving it.
Chile is largely compliant with 18 out of 40 FATF recommendations, partially compliant with 9, and completely compliant with 12. One of the recommendations is not applicable to the country. Overall, Chile has made significant progress in ML/TF risk identification and assessment by using National Risk Assessment (NRA) and sectoral risk studies. As per the NRA, drug trafficking, smuggling, human trafficking, and corruption are currently the most important ML/TF risks in Chile.
However, there are various limitations and deficiencies in Chile’s current AML/CFT framework. For example, the NRA did not identify the use of fraud-derived illegal assets as a risk, even though it is a clear red flag based on convictions. Additionally, the current AML/CFT law does not designate corporate service providers, lawyers, accountants, and dealers in precious metals and stones as Reporting Institutions. Further, the number of supervisory staff available is limited, as are the resources available for investigative work. There are also significant challenges in identifying, updating and providing access to beneficial ownership information.
Other major challenges come from the TF front. For example, several competent authorities only have a limited understanding of TF risks. Additionally, Reporting Institutions still struggle with reporting of TF. There are also challenges related to cooperation and coordination between the Financial Analysis Unit and some competent authorities in the TF domain.
Moving forward, Chile must work towards overcoming the deficiencies in its AML/CFT framework. It needs to improve the understanding of TF risks by competent authorities. Chilean authorities must also include lawyers, accountants, corporate service providers and dealers in precious metals and stones as Reporting Institutions. Moreover, the current regulations around beneficial ownership need to be updated. Furthermore, the country must take adequate measures to improve coordination and cooperation between competent authorities in relation to TF.
Source: FATF