Around the world, countries have been stepping up their anti-money laundering efforts in an attempt to keep citizens and businesses safe. One country who has recently stepped up its anti-money laundering efforts is Chile, who recently launched new KYC regulations set to take place by September 2019.
The Need For New KYC Regulations
The need for new KYC regulations in Chile stemmed from the showdown that was brewing between banks and cryptocurrency exchanges. In March 2018, numerous cryptocurrency exchanges accused Chilean banks of freezing their accounts. Examples of exchanges who claimed to be affected include:
Chile’s Minister of Finance announced at the time that he would immediately begin working on regulation as soon as possible to help clarify the country’s standing on the exchanges. This incident then led to a showdown between the exchanges and the banks that required a verdict from the country’s anti-monopoly court. The court ruled that it was illegal for the banks to freeze the accounts and that the accounts must remain open moving forward.
The argument from the banks was that Chilean law does not regulate cryptocurrency exchanges and that there’s a strong chance the exchanges could be used for fraudulent activity, including money laundering.
Progressive Thinking Further Helps Drive KYC Regulations
Another potential reason for the new Chilean KYC regulations is the Central Bank’s desire to make it easier for credit and debit card issuers worldwide to enter the marketplace. The Central Bank recently announced a plan that would make launching new payment card branches more “accessible.”
At the time of announcing this initiative, the Central Bank said that the rules currently in place could pose as an unwanted barrier to operation and entry. Thus, new KYC regulations would make sense. They would cut down on the barriers for entry and would have a direct impact on the accessibility of new payment card branches.
The Central Bank also stated that they hope to make their system more accessible for those companies who operated on a smaller scale. The Bank said that they wished to foster an atmosphere for micropayments, creating an environment of financial inclusion. This too would explain the need for new KYC regulation. KYC regulations should be accessible to all and should help simplify the process.
The Chilean Central Bank also demonstrated a commitment to financial security by announcing a new contingency protocol that would impact high-value transactions. The proposed legislation would require the two main clearing houses in Chile to share information with one another, allowing both to function even if one were to go down.
Doing so would require the sharing of information between private and public institutions. One of the clearing houses, the Real Time Gross Clearing System, LBTR, is run by the Central Bank. The other clearinghouse, the Clearing House for High-Value Payments, is run by a private company. By implementing new KYC regulations, a new standard should be set that would allow both of these agencies to share information seamlessly.
Part of the desire to create a stronger system stemmed after Mexico suffered an attack on its payment systems last year. Countries throughout Latin America, including Chile, have been searching for ways in which they could solidify their practices. At the time of announcing these initiatives, the Central Bank said that the goal was to make the system more resilient to threats because high-value transactions are incredibly vital to a functioning financial system.
Ways For Chile To Implement KYC Regulation
When implementing these new KYC regulations, financial institutions will want to make sure that they are working with reputable, trustworthy agencies. Otherwise, they will jeopardize the entirety of their financial systems. The whole point of KYC regulations is to cut back on the use of financial operations for terrorist and money laundering activity.
At AU10TIX, we provide our customers with the only 2nd-generation ID authentication and onboarding automation. We tailor our onboarding process to ensure that financial institutions meet the KYC regulations set forth by their local government. Not only does this protect a company’s sensitive information, but it also ensures compliance as well.
Our technology makes it easy to onboard customers onto your system. Our systems can scan an ID and process it in less than five seconds on average. One of the most significant complaints of high-value transactions is how long it takes for companies to verify IDs. We eliminate these hassles, streamlining the onboarding process down to a matter of seconds.
This technology could also be useful for cryptocurrency exchanges who need to identify who their users are. It could also help those who are looking to process micropayments. No matter what type of company you work for, we’ll make sure that we provide you with the technology needed to meet the new Chilean KYC regulations set to take place by September 2019.