Chile – CM PB

Country Manual Private Banking

Chile

BRP has updated its Country Manual Private Banking for Chile out of Bank’s Country of Establishment (DEF, RS, BT & RT)

Regulatory Template, Regulatory Summary and Behaviour Template

Material changes

With the enactment of the Fintech Law (Law No. 21,521), which regulates financial services involving fintech providers, including investment advisory and custody services, foreign banks must adopt a conservative approach for banking and investment services due to the new regulation scrutiny.

With regards to banking services, activities like prospecting, presenting the bank’s services, and negotiation are now only possible on a reverse solicitation basis and preferably via remote means of communication.

When it comes to investment services, the Fintech Law regulates – among other services – brokerage and provision of investment advice:

• Brokerage and execution-only services: brokerage activity is regulated under 2 different regulatory bodies, depending on the type of instrument that is being traded. In case the relevant instrument refers to publicly offered securities, the applicable regulation is the Securities Market Law. If not, such instruments are deemed as “financial instruments” and their intermediation is regulated by the Fintech Law (i.e., derivatives or cryptocurrencies are not considered securities in Chile).
• Brokerage services may be provided offshore if the client approaches the Bank on their own initiative (reverse solicitation). No active solicitation or advertising to Chilean residents is allowed. Banks must ensure that the services are not physically performed in Chile and does not involve targeted promotion;
• Investment advisory services: May only be provided via remote means of communication and upon reverse solicitation. It is also construed that this service may both actively and passively be provided based on an ongoing advisory agreement, if the client was onboarded on reverse solicitation and the agreement has been concluded in compliance with cross-border rules at large (including the Fintech Law). As for active provision of investment advisory services based on an ongoing advisory agreement pre-existing to the Fintech regulation, adopting a cautious approach is strongly recommended. Since the time to provide investment advisory without a license in Chile was due with the enactment of the Fintech law in 2024, and since there are no precedents or rulings yet that could serve as guidance for determining the boundaries of the Fintech regulation and such agreements, active provision of investment advisory services based on pre-existing agreements should be avoided/is not recommended. Spot advice is prohibited if actively provided, as it would be seen as targeting Chilean residents. Active provision of macroeconomic research, financial analysis, and market information is still possible if the advice is neutral, generic, and does not include personalized recommendations.

As for discretionary asset management services, services that do not fall withing the scope of the Fintech Law, the same licensing thresholds (no more than 500 clients and no more than 50 portfolios with a value exceeding UF 10,000) continue to apply.

In all cases when undertaking business with Chilean clients, foreign Banks should ensure compliance with the Fintech law.

It is important to emphasize that the Fintech regulation is very recent and the CMF has been exercising a stricter scrutiny of market participants lately. It is highly suggested adopting a cautious approach for any activity targeting Chile and its residents. Please note that there are no precedents or rulings yet that could serve as guidance for determining the boundaries of the regulation and interpretations given in our country manual.

Implications for business relations with third parties

Independent Portfolio Managers and Local Agents may still promote the Bank’s services on a strict one-to-one and occasional basis, but only within the scope of their local license. Cautious is advised and a case-by-case analysis is required before entering into business relations with third parties.

Regulatory Summary

This document has now a more user-friendly layout and reflects the changes contained in the RT.

BT Short Comparison

BRP has created a comparison document allowing users to quickly identify the modifications made compared to the previous version of the PB Manual (BT Short Comparison). The BT Short Comparison can be found on BRP’s platform (mybrponline) in the Search tab by entering in the Document Field “CM PB BT SHORT COMP” and “CHILE” in the Target Country Field.

The BT Short Comparison should be read as follows:

The first column contains a short description of the activity in question. The second column contains the answers of the previous version of the Country Manual (online until the day of the alert). The third column contains the new answers of the most recent version of the Country Manual. Only the modified answers are displayed (in color). If the answers in the new version are unchanged compared to the previous version, they are shaded in grey.

For more information, please contact us: info@brpsa.com

Geneva, January 27^th, 2025