Principal laws and regulations governing the banking sector are as follows.

• Law No 18.840 – the Constitutional Organic Law of the Central Bank of Chile (Ley Orgánica Constitucional del Banco Central de Chile). This regulates the organisation, operation, objectives and powers of the Central Bank of Chile as an autonomous entity responsible for ensuring currency stability and the proper functioning of internal and external payments.
• DFL No 3 of 1997 – the General Banking Law (Ley General de Bancos). This establishes the legal framework for the creation, operation, supervision and dissolution of banking institutions in Chile.
• Law No 18.046 – the Stock Corporations Law (Ley de Sociedades Anónimas). This regulates the incorporation, operation, dissolution and liquidation of corporations, establishing rights and duties for shareholders, directors and administrators.
• Decree Law No 3,538 – the Organic Law of the Financial Market Commission (Ley Orgánica de la Comisión para el Mercado Financiero). This defines the organisation, powers and functions of the Financial Market Commission (CMF), tasked with supervising and regulating financial markets in Chile.
• Law No 18.010 on credit transactions and other monetary obligations (operaciones de crédito y otras obligaciones de dinero). This regulates the conditions and characteristics of credit contracts and other monetary obligations, setting interest rate caps and provisions to protect debtors.
• Law No 18.092 on bills of exchange and promissory notes (letra de cambio y pagaré). This governs the issuance, use and collection of bills of exchange and promissory notes as instruments of credit and payment in Chile.
• DFL No 707 – the Law on Bank Checking Accounts and Checks (Ley sobre cuentas corrientes bancarias y cheques). This establishes the legal framework for the use of bank checking accounts and checks, regulating rights, obligations and penalties.
• Law No 21.521 – the Fintech Law (Ley Fintec – promueve la competencia e inclusión financiera a través de la innovación y tecnología en la prestación de servicios financieros). This promotes competition and financial inclusion through the regulation of financial services based on innovation and technology, fostering the development of the fintech ecosystem.
• Law No 21.680 – creates a Consolidated Debt Registry (crea un Registro de Deuda Consolidada). This establishes a centralised registry that collects and manages information on the debts of individuals and companies to improve transparency and facilitate access to credit.
• Law No 21.236 – the Financial Portability Law (regula la portabilidad financiera). This facilitates the process for consumers and businesses to switch financial service providers, promoting competition and simplifying administrative procedures.
• Decree No 1154 – Regulations for Law No 21,236 on Financial Portability (Aprueba Reglamento de la Ley No 21.236, que regula la Portabilidad Financiera). This details the provisions of the Financial Portability Law, setting forth the procedures and requirements for its implementation.
• Law No 20.950 on means of payment with prepaid funds (autoriza emisión y operación de medios de pago con provisión de fondo por entidades no bancarias). This authorises the issuance and operation of means of payment by non-banking entities, regulating their use and oversight to ensure security and reliability.
• Law No 20.009 on liability limitation in cases of fraud (establece un régimen de limitación de responsabilidad para titulares o usuarios de tarjetas de pago y transacciones electrónicas en caso de extravío, hurto, robo o fraude).This establishes a protection regime for holders or users of payment cards and electronic transaction systems in cases of loss, theft, robbery or fraud.
• Law No 19.913 – creates the Financial Analysis Unit (crea la Unidad de Análisis Financiero y modifica diversas disposiciones en materia de lavado y blanqueo de activos). This establishes the Financial Analysis Unit (UAF) to prevent and combat money laundering, introducing rules and sanctions for such crimes.
• Law No 21.595 – the Economic Crimes Law (Ley de Delitos Económicos). This updates the regulation of economic crimes, including the classification of new offences and establishing stricter penalties for corruption and corporate fraud.

The number of secondary regulations derived from the above-mentioned laws is extensive, and one or more authorities may participate in their issuance. However, the principal banking regulations are as follows.

The Recopilación Actualizada de Normas (RAN) is a regulatory compendium maintained by the Chilean Financial Market Commission (CMF). It consolidates, organises and updates the regulations applicable to the banking system, ensuring compliance with standards in areas such as:

• risk management;
• solvency;
• liquidity;
• financial reporting;
• corporate governance; and
• consumer protection.

The RAN is organised thematically and updated regularly to reflect regulatory changes, in alignment with banking legislation (including the General Banking Law).

The Compendium of Financial Regulations, issued by the Central Bank of Chile, is a further regulatory compilation and is organised into four main areas:

• financing systems;
• rules for financial system and capital market operations, intermediation and oversight;
• Central Bank operations with financial instruments; and
• banking operations in foreign currency.

The Compendium of Monetary and Financial Regulations is also issued by the Central Bank of Chile; it governs the supply of money and credit in circulation.

In accordance with Article 27 and subsequent provisions of the General Banking Law (LGB), banks must be established as special purpose stock corporation (sociedades anónimas especiales), as they are required to meet certain criteria set forth by the LGB and to obtain authorisation from the CMF for their legal existence.

At this stage, the founding shareholders must submit a prospectus to the CMF, accompanied by the bank’s business development plan and documentation demonstrating compliance with the solvency and integrity requirements outlined in Article 28 of the LGB. The receipt of the application will be publicly disclosed.

The CMF has 180 days to review the documentation and may either issue a provisional authorisation certificate or reject the prospectus through a reasoned decision. This period may be extended by an additional 180 days in specific cases.

Upon issuance of the provisional authorisation certificate, the shareholders must establish a guarantee equivalent to 10% of the projected capital. The minimum capital for a bank is the equivalent of 800,000 units of account (unidades de fomento).

The provisional authorisation certificate is valid for ten months and grants legal personality to the company in formation.

Within the ten-month period from the issuance of the provisional certificate, the company must execute the public deed of incorporation along with the bank’s by-laws, which must be approved by the CMF. These by-laws must incorporate the provisions of Article 42 of the LGB and those relevant to the Stock Corporations Law (LSA).

After obtaining authorisation for existence, the company may apply to the CMF for operational authorisation.

The CMF will, within 90 days, assess whether the new entity is prepared to commence operations. This process includes evaluating the professional and technological resources, as well as the procedures and controls in place to ensure adequate performance. Furthermore, the CMF will conduct a final review of the business development plan for the first three years of operation. Once these conditions are met, the CMF will issue an operating authorisation within 30 days and set a maximum period of one year for the institution to commence operations. With the operating authorisation granted, the institution will be permitted to begin its activities.

Article 40 of the LGB defines banking operations as activities related to the regular collection or receipt of money or funds from the public, for the purpose of:

• lending;
• discounting documents;
• making investments;
• engaging in financial intermediation;
• generating returns from such funds; and
• generally, conducting any other operation permitted by law.

In turn, Article 69 of the LGB specifies the particular operations that banks are authorised to undertake, including (among many others):

• receiving deposits;
• executing transactions;
• granting loans;
• providing safe deposit boxes; and
• offering financial advisory services.

All these operations must be carried out in strict compliance with the sectoral regulations issued by the CMF and the Central Bank.

Banks are permitted to operate only within the scope explicitly outlined by the LGB, and any activity outside this scope is prohibited. Additionally, the legislation imposes specific obligations and restrictions in areas such as:

• information disclosure;
• banking secrecy;
• investment and capital limits;
• executive and managerial conduct; and
• shares and credits.

The LGB also regulates the subsidiaries of banks and support companies for banking activities. To establish these entities, banks must obtain authorisation from the CMF and must comply with the requirements outlined in the RAN.

Bank subsidiaries must be incorporated as either:

• publicly traded companies (sociedad anónima abierta);
• closed stock corporation (sociedad anónima cerrada); or
• limited liability companies.

They are only authorised to engage in activities such as:

• securities brokerage;
• share brokerage;
• real estate leasing;
• general fund management;
• securitisation;
• insurance brokerage; and
• similar services.

All this is subject to compliance with applicable regulations.

Furthermore, and always within the legal framework or under CMF regulation, these subsidiaries may also engage in:

• leasing;
• factoring;
• financial advisory services;
• securities custody and transportation;
• credit collection;
• payment card operations; and
• other financial services that complement banking activities.

To establish a subsidiary or engage in the aforementioned activities, banks must:

• meet capital requirements;
• be free from negative management and solvency classifications; and
• submit an economic and financial feasibility study.

The authorisation request is submitted to the CMF, which has 90 days to review it (extendable to 120 days if additional documentation is needed). For consolidation purposes with their subsidiaries, the CMF may request the subsidiaries’ financial statements and may review all their operations to assess their solvency.

Article 74 of the LGB permits banks to be shareholders in or to participate in support companies whose sole purpose is to provide services that support banking operations, excluding the collection of money. These companies must be incorporated as stock corporations or limited liability companies, and their incorporation, modification of by-laws, and inclusion of new partners or shareholders requires CMF authorisation.

In Chile, the acquisition or increase in control of a bank is regulated by various legal provisions and requires prior authorisation from the CMF and, in certain cases, from the Central Bank of Chile. This is subject to the competition laws governing concentration transactions, as set forth in Decree-Law 211, which regulates antitrust law.

According to Article 35 bis of the LGB, to acquire control of a bank or to increase existing control (whether through a merger, acquisition of all or a substantial portion of the assets and liabilities of another bank, or a takeover) such that the acquiring bank or the resulting group of banks reaches systemic importance (as defined in Article 66 quáter of the LGB), the parties involved in the acquisition or control increase must obtain prior authorisation from the CMF.

In accordance with this, and as expressly outlined in the LGB, the CMF issued Chapter 21-11 of the updated compilation of regulations, which establishes the factors and methodologies for identifying banks or groups of banks deemed to be of systemic importance.

Prior authorisation from the CMF is required to proceed with the acquisition or merger of banks, or to assume control over one or more banks. Under Article 35 bis, if the acquisition or merger results in the acquiring bank or banking group achieving systemic importance, additional requirements may be imposed under Article 66 quáter of the same law. The CMF may deny authorisation through a reasoned decision (subject to the favourable agreement of the Central Bank’s board), which must be issued within ten banking business days.

Furthermore, Article 36 stipulates that any individual wishing to acquire shares representing more than 10% of the capital of a bank must obtain prior authorisation from the CMF. This 10% threshold applies both to direct and to indirect acquisitions. Shares acquired without authorisation will lose their voting rights, and any transfer of more than 10% of the rights in a company holding bank shares is also subject to CMF approval.

To obtain such authorisation, the interested party must comply with the requirements established in Article 28 of the LGB. The CMF will assess compliance with these requirements and will issue its decision within 15 banking business days in the case of acquisitions exceeding 10% of a bank’s shares under Article 36.

Controlling shareholders must maintain adequate solvency to support their stake in the bank, and they must inform the CMF if their net worth falls below the required threshold (Article 28). The CMF may request additional information to verify compliance with these requirements. In the event of serious non-compliance, shareholders may be required to divest their stake.

Finally, Article 49 No 5 of the LGB provides that a bank may acquire shares in another bank solely for the purpose of effecting a merger between the two institutions. The provision sets forth several requirements, including the following.

• Prior authorisation must be obtained from the CMF, and may only be granted if it is demonstrated to the CMF’s satisfaction that the acquiring entity holds control over two thirds of the voting shares of the target company.
• The acquiring bank must make a firm public offer to purchase all the shares of the target institution at a price of no less than the average of those it has committed to acquiring as per the previous provision. After making this offer, the acquiring bank is obligated to purchase all shares that are offered for sale.
• The basic capital and effective equity of the merged institution must be no less than the amount required to qualify for an A-level solvency rating, according to Article 61.

The legal and regulatory corporate governance requirements for Chilean banks focus on the structure and functioning of:

• the board of directors;
• the general manager (gerente general);
• board-established committees; and
• external auditors.

The board of directors is responsible for the administration of the bank, alongside senior management. Its duties include:

• approving institutional values;
• defining strategic guidelines; and
• overseeing activities aimed at achieving these objectives.

Additionally, the board establishes necessary control mechanisms to ensure compliance with internal and external regulations, with their implementation being entrusted to the general manager and other key executives.

Bank boards must consist of a minimum of five and a maximum of 11 directors, with the total number being odd. They may also appoint up to two alternate directors. In banks with a market equity equal to or exceeding the equivalent of 1.5 million unidades de fomento (UF) and where at least 12.5% of the voting shares are held by shareholders individually owning or controlling less than 10% of such shares, one director must be independent, as required under Article 50 bis of the LSA.

Directors serve a term of three years, with the possibility of re-election. To reduce the number of directors specified in the by-laws, the bank must obtain prior authorisation from the CMF. The CMF evaluates such requests considering the entity’s shareholding structure and the protection of minority shareholders’ rights.

The board must hold regular meetings at least once a month and may convene extraordinary sessions at the request of the chairperson or one or more directors. In such cases, the chairperson will determine the necessity of the meeting unless requested by an absolute majority of the directors, in which case the meeting must be held without prior justification.

The board is required to adopt measures and to issue instructions to remain fully and promptly informed, with appropriate documentation, about the management, operations and overall situation of the bank under its oversight.

The audit committee is responsible for overseeing internal controls, regulatory compliance and risk management, covering both the parent company and its subsidiaries. This committee reports directly to the board of directors, of which at least two members must join and maintain conditions of independence. Its functions include:

• co-ordinating internal and external audits;
• reinforcing the independence of internal controllers; and
• acting as a link with the board of directors.

The audit committees and directors’ committees have distinct roles; however, in some cases, with prior authorisation from the board, the directors’ committee may assume the responsibilities of the audit committee.

The committee must include professionals with relevant experience, avoiding conflicts with administrative roles. Additionally, members must not receive additional income that compromises their independence. The presidency is held by a board member, who reports on the committee’s activities.

Foreign banking institutions operating in Chile are not required to have a board of directors for their local operations. However, they must appoint a broadly authorised agent to represent them with full legal authority.

All board elections must be published in a newspaper within the bank’s jurisdiction and must be communicated to the CMF.

The position of a bank director is incompatible with serving as a director or employee of another financial institution, as well as with any presidentially appointed roles. Additionally, a person cannot simultaneously serve as both director and employee within the same bank, although a director may temporarily assume the role of manager for a period not exceeding 90 days.

Additionally, General Regulation No 461 issued by the CMF requires public securities issuers, including banks, to disclose the following information about their boards of directors and key executives.

• Regarding the board of directors or equivalent administrative body, the identification of each member, including their appointment or most recent re-election date, and, where applicable, the date of termination of their position. Their profession or occupation must also be included, along with:
1. whether they hold the position of chairperson or vice-chairperson;
2. whether they qualify as an independent director; and
3. if applicable, whether they serve as a principal or alternate director.
• Regarding key executives, the position, name, identification number (RUT), profession and date on which they assumed their role must be reported for each executive.

No legal remuneration requirements are applicable to banks in Chile.

Notwithstanding the foregoing, General Regulation No 461, issued by the CMF, requires public securities issuers (including banks) to disclose information about their board of directors’ and key executives’ remuneration system, as detailed below.

Regarding the board of directors or equivalent administrative body, the following must be reported.

• Members’ earnings derived from their board activities, identifying the source of these earnings and presenting them in a comparative format with the previous fiscal year. Earnings must be categorised into fixed income (eg, attendance fees) and variable income, which may originate from roles or employment within the same entity outside their board duties, as well as representation expenses, travel allowances, royalties or any other stipend.
• Gender pay gap, calculated based on the mean and median (as specified in Section 5.4.2), in cases where differentiated compensation exists among board members, or if royalties, fees or other types of compensation are not uniformly applicable to all members.

Regarding key executives, the following must be reported.

• Aggregate compensation, presented in a comparative format with the prior fiscal year, showing the total remuneration received by key executives.
• Compensation or special benefits plans – if the entity offers such plans to key executives, the compensation must be broken down into fixed and variable components, where applicable. A detailed description of these plans or benefits must also be provided.

If the plan involves stock-based compensation, additional details are required, including:

• Whether stock options are allocated or not.
• For allocated options:
1. the number of key executives receiving them;
2. the percentage of total shares granted; and
3. the percentage of shares remaining to be allocated.
• For exercised options, the total number of shares granted.

The Chilean legal framework for combating money laundering, terrorism financing and the proliferation of weapons of mass destruction is primarily contained in Law No 19,913, which established the Financial Analysis Unit (UAF). This agency issues regulations that banks must comply with to fulfil their objectives.

Law No 19,913 mandates that certain natural and legal persons, including banks and other entities supervised by the CMF, are obligated to report suspicious transactions detected during their activities.

Under this law, banks are required to:

• report suspicious transactions;
• maintain special records for a minimum period of five years; and
• provide information to the FAU upon request regarding any cash transaction exceeding the equivalent of USD10,000 (or its equivalent in Chilean pesos), based on the observed exchange rate on the transaction date.

Additionally, banks must report all acts, transactions or operations specified in Article 38 of Law No 19,913 involving natural or legal persons listed in the resolutions issued by the United Nations Security Council.

It is also important to consider Article 154 of the General Banking Law regarding banking secrecy and confidentiality, as well as Article 6 of Law No 19,913, which prohibits informing the affected party or third parties about information sent to the FAU or related matters.

The main components of this system include:

• the existence of a framework of policies and procedures;
• the appointment of a compliance officer;
• the creation of a prevention committee;
• the implementation of tools for detecting, monitoring and reporting unusual transactions;
• the establishment of personnel selection and training policies;
• the adoption of an internal code of conduct; and
• the existence of an independent audit function.

Paragraph 3, Title XV of the LGB provides for a State guarantee covering obligations arising from fixed-term deposits and savings, whether in domestic or foreign currency, through savings accounts or through nominative or bearer instruments issued by a bank or a credit union supervised by the CMF. This guarantee benefits only natural persons and becomes enforceable upon the declaration of a bank’s forced liquidation.

The guarantee covers 100% of the total obligations that such an institution has with a natural person, including adjustments and interest accrued up to the payment date, with an annual cap of 200 UF per calendar year. It also covers 100% of the total obligations of the entire banking system to a single person, with an annual cap of 400 UF per calendar year.

It is important to note that the State guarantee does not cover fixed-term deposits, savings account balances, or nominative or bearer instruments held by legal entities, including both profit and non-profit institutions.

On the other hand, sight deposits and obligations (eg, deposits in checking accounts or sight accounts, deposits in demand savings accounts, or term savings accounts with unconditional withdrawal) are fully covered in the event of a bank’s forced liquidation, regardless of whether the depositor is a natural or legal person.

The capital, liquidity and risk management requirements applicable to banks in Chile are primarily set forth in Titles VI and VII of the LGB. Title VI addresses the reserve and technical provisions that all banks in Chile must maintain and comply with, while Title VII focuses on the relationship between assets and equity in banking institutions. These sections of the LGB adopt international standards established by Basel III.

A bank’s effective equity must not be less than 8% of its risk-weighted assets, net of required provisions, or the minimum required under Articles 51, 66 quater and 66 quinquies.

Basic capital must be at least 4.5% of its risk-weighted assets and 3% of total assets, both net of required provisions. Common Equity Tier 1 (CET1) is the most robust component for immediate loss absorption, and includes the following items as defined in the Compendium of Accounting Standards (CNC):

• paid-up capital from subscribed and paid common shares;
• premiums paid on instruments included in this capital;
• reserves (from profits or otherwise), depreciation and expiry of perpetual bonds;
• items in “other comprehensive income”;
• retained earnings, current-year results (net of provisions for minimum dividends), and revaluation of perpetual bonds and dividends on regulatory capital instruments; and
• non-controlling interest, compliant with CNC and IFRS standards, under specific conditions for domestic or foreign subsidiaries.

CET1, adjusted for additional regulatory provisions, constitutes the basic capital used for limits set in the LGB and other relevant regulations.

Banks must maintain an additional basic capital equivalent to 2.5% of their risk-weighted assets, net of required provisions, above the minimum effective equity requirement.

The LGB establishes the following additional capital regimes:

• conservation buffer – a fixed charge equivalent to 2.5% of risk-weighted assets, net of required provisions, built with CET1, per Article 66 bis of the LGB; and
• countercyclical buffer – a variable charge between 0% and 2.5% of risk-weighted assets, also built with CET1, as outlined in Article 66 ter of the LGB.

The Central Bank will set the countercyclical buffer requirement after consulting the relevant commission, granting a minimum six-month implementation period. Oversight will commence upon full implementation, with no proportional requirements during the transition period.

Regarding effective equity, basic capital and additional capital, Chapter 21-1 of the RAN defines prudential regulatory adjustments and exclusions for assets and liabilities included in the calculation of a bank’s effective equity, as per Article 66 of the LGB. This regulation incorporates recommendations and methodologies proposed by the Basel Committee on Banking Supervision (BCBS).

Article 66 quater governs the classification of systemically important banks. The commission, with the Central Bank’s agreement, will define factors and methodologies for this classification, considering criteria such as size, market share and financial interconnection. Once classified, the commission may impose the following requirements while the bank retains this status:

• an increase of 1.0 to 3.5 percentage points in basic capital on risk-weighted assets;
• an increase of up to 2.0 percentage points in basic capital on total assets;
• early application of the technical reserve if deposits exceed 1.5 times effective equity; and
• a reduction in the interbank lending margin to 20% of effective equity.

Banking companies must immediately inform the CMF of any situation indicating financial instability or non-compliance with requirements, such as sustained losses, regulatory violations or liquidity issues. If such a situation arises, they must submit a remediation plan within five days (extendable to ten) to address the issue. This plan must be approved by the board of directors and sent to the CMF, which may request adjustments. The company must periodically report on the plan’s progress.

If the plan involves a capital increase, the board must call a shareholders’ meeting within 15 days, subject to the commission’s approval. If the plan is rejected or not fulfilled, sanctions will apply. Additionally, banks may secure loans of up to three years as part of their remediation plan under specific conditions, provided they are authorised by the commission. These loans may be converted into equity in cases of mergers or capital increases, subject to restrictions on payments and share sales.

The rules regarding insolvency and forced liquidation of banks are set out in paragraph I, Title XV of the LGB. The LGB distinguishes two scenarios:

• voluntary liquidation, which is governed by Law No 20,720 (the “Bankruptcy Law”); and
• all other insolvency situations, which are regulated by the provisions of the LGB.

The CMF is responsible for determining the solvency of banks. If a bank defaults on an obligation, the manager must immediately notify the CMF, which will assess the bank’s solvency. If solvency is deemed insufficient, the CMF will take appropriate measures under the LGB.

If the CMF determines that a bank lacks the solvency to continue operating or that the security of depositors or other creditors requires its liquidation, the LGB mandates the revocation of the bank’s licence and declaring it subject to forced liquidation. This decision requires prior approval from the Central Bank of Chile.

The LGB outlines several legal presumptions under which the CMF may conclude that a bank lacks the solvency to continue operating or that depositors’ or creditors’ security demands its liquidation:

• insufficient basic capital – if basic capital, minus accumulated losses reported in financial statements, is less than 3% of risk-weighted assets or 2% of total assets, both net of required provisions, as per Article 67;
• insufficient effective equity – if effective equity, minus accumulated losses reported in financial statements, is less than 5% of risk-weighted assets, net of required provisions, as per Article 67 of the LGB;
• projected critical losses – if accumulated losses in two consecutive financial statements suggest that, if proportional losses continue over the next six months, the company will fall into one of the situations described in the preceding two points;
• rejection of emergency credits – if the company holds overdue emergency credits with the Central Bank and their renewal is denied, provided the commission has issued a substantiated report opposing renewal; and
• payment suspension – if the bank suspends payments on its obligations, including those to clearing houses.

The CMF’s resolution must be substantiated and must designate a liquidator, who must complete the process within three years. The liquidator will have the powers, duties and responsibilities specified under the LSA and must comply with the obligations imposed by the LGB.

Currently, no specific legal requirements are applicable to banking activities concerning environmental, social and governance (ESG) matters.

However, from a regulatory perspective, General Regulation No 461, issued by the CMF, establishes certain requirements that issuers of publicly offered securities must include in their annual reports – a framework that is also applicable to banks.

Accordingly, banks must report how they integrate a sustainability approach into their operations. This includes explaining how the entity incorporates environmental matters (particularly climate change), social considerations and respect for human rights into various evaluation processes and strategic definitions, as well as identifying the units or individuals responsible for these matters.

Additionally, banks are required to describe how, and with what frequency, the board of directors is informed about environmental and social issues – especially climate change – and whether these matters are considered when debating and making strategic, business or budgetary decisions (among others).

The entity must outline how it incorporates a risk management and internal control framework into its activities, particularly by detailing the general guidelines established by the board of directors or governing body regarding risk management policies. This includes addressing:

• operational risks;
• financial risks;
• labour risks;
• environmental risks (notably climate-related physical and transition risks); and
• social and human rights risks.

The entity should specify whether these efforts are guided by national or international principles, guidelines or recommendations, and should name such references.

Banks must disclose whether they have procedures in place to prevent and detect regulatory non-compliance related to the rights of their clients, especially under Law No 19,496 on Consumer Rights Protection or equivalent legislation in foreign jurisdictions where the bank operates. Furthermore, they must report the number of finalised sanctions in this area and their monetary value in local currency.

Regarding employees, banks must disclose whether they have procedures to prevent and detect regulatory non-compliance related to workers’ rights. They must also report the number of finalised sanctions in this regard, their monetary value and whether they have faced labour-protection actions.

Banks must report compliance models or programmes including details about:

• the definition of their environmental obligations;
• the chosen compliance methods;
• implementation timelines;
• responsible units;
• environmental risk matrices; and
• any other relevant information concerning the understanding and fulfilment of these obligations.

If such models or programmes are not in place, this fact must be clearly specified, along with the reasons therefor.

Additionally, banks must report:

• the number of finalised sanctions registered in the Public Sanctions Registry of the Environmental Superintendence (or equivalent bodies in foreign jurisdictions);
• the total amount of fines;
• the number of approved compliance programmes;
• the compliance programmes executed successfully; and
• the environmental damage repair plans submitted and executed satisfactorily.

No legal DORA requirements are applicable to banks in Chile.

The most significant regulatory development in Chile’s banking and financial sector is the implementation of the Open Finance System (SFA), introduced through the Fintech Law of 2023. This legal framework establishes the foundational principles and guidelines for promoting innovation, financial inclusion and competition in the sector, in alignment with international standards.

The execution of the SFA was entrusted to the CMF, which, to fulfil this mandate, issued General Regulation No 541. This regulation not only sets deadlines for implementation but also defines key milestones to ensure the proper and secure operation of the system. It includes technical and governance measures aimed at protecting market integrity and consumer rights.

However, the implementation of the SFA is taking place within a complex regulatory landscape. First, Chile is preparing for the enactment of a new personal data protection law, expected to come into force before the end of 2024. This legislation, inspired by standards such as the European Union’s General Data Protection Regulation (GDPR), will require SFA participants to adopt robust measures to safeguard the privacy and security of data shared within the open finance framework.

In addition, the recently enacted Cybersecurity Framework Law, also passed in 2023, imposes further requirements regarding technological infrastructure and resilience against cyberattacks. This means that financial institutions must simultaneously adapt to three interconnected regulatory frameworks, presenting a significant operational challenge for the industry.

Nevertheless, this scenario, while challenging, offers a unique opportunity for Chile’s banking and financial system. If sector participants can effectively meet these demands, the country could undergo an unprecedented modernisation process over the next five years. This progress would not only foster greater competition among traditional and emerging players (such as fintech companies) but would also drive financial inclusion, bringing new consumers into the formal financial system.

In conclusion, the implementation of the SFA, together with complementary regulations, could position Chile as a regional leader in financial innovation – provided the sector rises to the regulatory and technological challenges that this structural transformation entails.