Banking and Treasury Services in Chile – Far from trivial.

Let us begin with a widely recognized premise: The banking system in Chile presents significant challenges, with numerous hurdles and unexpected complications for foreign companies seeking to enter any industry or sector.

Opening local bank accounts for companies owned by international individuals or entities is neither straightforward nor swift. Whether due to commercial risk mitigation, stringent compliance requirements, or a combination of both, banks impose considerable obstacles for foreign companies. While account openings are seldom denied outright, the process frequently extends over several weeks, impacting both operational and commercial timelines.

A crucial factor is the designation of a local legal representative. Only a Chile-based individual with a robust financial background can expedite the process. Furthermore, it is highly advantageous to engage someone well-regarded by the local bank and perceived as trustworthy and financially stable.

It is also essential for the foreign parent company to maintain a clear and well-defined ownership structure, as Chilean banks require identification of the Ultimate Beneficial Owner (UBO) in compliance with local legislation.

Regarding operational treasury workflows and account management, it is important to note that foreign individuals without a Chilean Tax ID can, in fact, control and authorize payments on behalf of the Chilean company. This is accomplished by adhering to the following steps:

1. The local company must grant banking powers to the foreign individual, either through provisions in the company’s bylaws or via a subsequent, separate Notary Public Deed.

   
   

2. These banking powers should be formally registered with the Commerce Custodian, or “Registro de Comercio.”

   
   

3. Copies of the relevant legal and registry documents must be submitted to the bank executive for review and subsequent approval by the bank’s legal department. Notably, most local banks outsource their legal review to external law firms rather than using in-house counsel.

   
   

4. The bank will assign a CIB or fictitious tax ID number to the foreign individual who has been granted banking powers.

   
   

5. The bank will then create the profile for that individual in their systems.

   
   

6. Finally, most banks continue to issue electronic token devices, which must be physically shipped to the foreign individual for payment authorization. Alternatively, some banks now provide mobile applications for international users to facilitate this process.

With respect to treasury workflows and processes, numerous options are available depending on the internal protocols and policies of each foreign company. Most local banks offer state-of-the-art banking systems, allowing organizations to assign various user roles with specific capabilities and limitations.

A recommended workflow involves local accountants or treasurers initiating and uploading payments, a local manager providing the initial approval, and the international CFO of the parent company granting final authorization.

Additional support can be provided through outsourced treasury teams based in third countries, which may help reduce costs and promote standardization across multiple jurisdictions. While this approach offers potential benefits when planned and executed properly, in practice, several challenges frequently arise during implementation. The most common issues include:

1. Language: Although modern tools and software updates enable instant translation of interfaces and web portals, certain menus or workflow sections remain exclusively in Spanish, hindering efficient execution by foreign users. Additionally, most medium to large international clients require an initial call-back verification, which typically must be conducted in Spanish.

   
   

2. Time zones: Many CFOs and Chief Treasurers located abroad often overlook that most steps in the treasury process are subject to stringent deadlines. This necessitates prompt, and sometimes off-hours, authorizations and actions from team members in different time zones, potentially creating significant operational challenges.

   
   

3. Lack of coordination with local teams: In practice, it is extremely challenging to execute the entire treasury process exclusively from abroad, partly due to the previously mentioned factors. Therefore, effective coordination with local teams is essential. Local teams must provide at least ancillary support to their foreign counterparts; however, this is often where miscommunications and inefficiencies arise. Inadequate training, insufficient understanding of the foreign team’s practices, and time zone differences contribute to these issues, which can significantly impact local operations.

While user-friendly COMEX platforms are widely available, some banks still require actual phone calls to lock in foreign exchange rates. This creates significant inconvenience and, in most cases, prevents the entire cycle from being managed remotely.

In accordance with local legislation, most banks require that UBO information be regularly updated and reported. Failure to comply may result in frozen accounts, making it imperative to maintain up-to-date records and promptly report any changes throughout the year.

In summary, banking matters, from account opening to securing foreign exchange rates for international payments, are far from straightforward. Proactive planning and diligent execution are essential to ensure that back-office operations run smoothly, resulting in significant savings of both time and costs.