Flag

Chile Country Summary

70.81 Country Rating /100
View full Ratings Table
Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

Chile is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Chile was undertaken by the Financial Action Task Force (FATF) in 2021. According to that Evaluation, Chile was deemed Compliant for 12 and Largely Compliant for 18 of the FATF 40 Recommendations. It was deemed Highly effective for 0 and Substantially Effective for 3 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Chile was deemed a Jurisdiction of Concern by the US Department of State 2015 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Chile has a large and well developed banking and financial sector with an established AML/CFT regime. Chile’s economic stability makes it an attractive location for the financial operations of criminal groups. Recent legislation has addressed many of the systematic vulnerabilities of Chile’s past AML/CFT regime, to include deficiencies in detection and prevention of money laundering, easing of bank secrecy laws, and increase in oversight of public institutions. Some issues remain such as a lack of sufficient resources for investigators and prosecutors.

Given Chile’s extensive trading partnerships and long borders, its largely unregulated free trade zones (FTZs) are additional vulnerabilities. Chile has three FTZs, the Free Zone of Iquique (ZOFRI), the free port of Arica in northern Chile, and the Free Zone of Punta Arenas in the south. ZOFRI is a major entry point for products bound for Bolivia and has industrial, retail, and commercial areas. Punta Arenas also has a free port. Imports entering and remaining in Chile’s FTZs pay no duty or value added tax and entities established in the zones pay no corporate tax.

While the size of the market for illicit or smuggled goods is unknown, there have been seizures of counterfeit goods by Chilean Customs officials. There have been incidences of public corruption.

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           66

World Governance Indicator – Control of Corruption             81

Companies face very low risks of corruption in Chile, the least corrupt country in Latin America. Chile has strong and transparent institutions that promote business and that have effective mechanisms to investigate and punish corrupt practices. Risks stem mostly from a strong connection between politicians and the economy, which can affect public procurement. A series of corruption cases in 2015 raised concern about corruption, but Chile is actively investigating the issues. The Criminal Code and the Criminal Corporate Liability Law prohibit active and passive bribery of domestic and foreign public officials. Companies operating in Chile are advised to establish an effective compliance system. Facilitation payments and gifts are not explicitly mentioned in Chilean laws, but businesses are unlikely to encounter these in practice. The maximum penalty for bribery is imprisonment of up to five years and fines for individuals, and fines and a ban from government contracts and benefits for corporate entities. For further information - GAN Integrity Business Anti-Corruption Portal

Economy

With the second highest GDP per capita in Latin America below Uruguay, Chile has historically enjoyed levels of stability and prosperity among the highest in the region. Widespread civil unrest broke out in 2019, however, in response to what the Latinobarómetro Corporation opinion study reports as high perceived economic inequality. Pursuant to a political accord, Chile held a plebiscite in October 2020 in which citizens chose to redraft the constitution. Following several months in which elected constituents drafted a new constitution, Chileans voted by a significant margin to reject the new draft constitution in a September 2022 national plebiscite. As polls continue to show a strong majority of the public favors a new constitution, a renewed congressional effort on a new constitutional process will lead to another plebiscite in late 2023 on what many analysts estimate will be a more moderate document. Chile’s solid macroeconomic policy framework the country boasts one of the strongest sovereign bond ratings in Latin America has provided the fiscal space to respond to the economic contraction that followed the COVID-19 pandemic through stimulus packages and other measures. As a result, Chile’s economic growth in 2022 was, according to its Central Bank, 2.4 percent, and the same institution forecasts Chile’s economic growth in 2023 will be in the range of -.5 percent to .5 percent.

Chile has successfully attracted Foreign Direct Investment (FDI) despite its relatively small domestic market. The country’s market-oriented policies have created significant opportunities for foreign investors to participate in the country’s economic growth. Chile has a sound legal framework and there is general respect for private property rights. Sectors that attract significant FDI include mining, finance/insurance, energy, telecommunications, chemical manufacturing, and wholesale trade. Mineral, hydrocarbon, and fossil fuel deposits within Chilean territory are restricted from foreign ownership, but companies may sign resource extraction contracts with the government. Corruption exists in Chile but on a much smaller scale than in most Latin American countries, ranking 27 out of 180 countries worldwide and second in Latin America –below Uruguay- in Transparency International’s 2022 Corruption Perceptions Index.

Although Chile is an attractive destination for foreign investment, challenges remain. Legislative and constitutional reforms proposed in response to the social unrest and the pandemic have generated concern about the potential impact on investments in the mining, energy, healthcare, insurance, and pension sectors. Importantly, the legislation enabling the constitutional reform process requires that the new constitution must respect Chile’s character as a democratic republic, its judicial sentences, and its international treaties (including the U.S.-Chile Free Trade Agreement). Despite a general respect for intellectual property (IP) rights, Chile has not fully complied with its IP obligations set forth in the U.S.-Chile FTA. Environmental permitting processes, indigenous consultation requirements, and cumbersome court proceedings have made large project approvals increasingly time consuming and unpredictable, especially in cases with political sensitivities. The current administration prioritizes attracting foreign investment and continues to implement measures to streamline the process.

Country Links

Banking and Financial Institutions Supervisory Agency

Unidad de Análisis Financiero (UAF )

Santiago Chamber of Commerce

Floating Section Image

Buy Full Chile Report


$25 one time payment
The full report features:
  • Risk Analysis
  • Corruption
  • Economy
  • Sanctions
  • Narcotics
  • Executive Summaries
  • Investment Climates
  • FATF Status
  • Compliance
  • Key Findings
Buy Full Report
Floating Section Image

Unlimited Reports


$40 Monthly
Get Started