***** DRAFT *****

IOSCO MULTILATERAL MoU

REPORT TO THE SCREENING GROUP

OF VERIFICATION TEAM 6

Re: REAPPLICATION OF THE COMMISSION FOR

THE FINANCIAL MARKET, CHILE (“CMF”)

18 SEPTEMBER 2018

I - DATE OF APPLICATION AND VERIFICATION PROCESS

Initial application:

The COMMISSION FOR THE FINANCIAL MARKET, CHILE (“CMF”), former SUPERINTENDENCIA DE
VALORES Y SEGUROS (SVS) - for ease of reading, throughout this document “CMF” is used to also include
the period when it was SVS, unless the context required otherwise - filed its initial application with the
IOSCO General Secretariat to become a full signatory of the IOSCO MMoU on 8 April 2003.

Verification Team 6 (VT6), consisting at the time of the US-SEC, Swiss FINMA and the CMVM Portugal
(pen-holder) did not assess the SVS as able to comply with the IOSCO MMoU, thus did not recommend
acceptance of the SVS to become a signatory to the IOSCO MMoU, on the following grounds (as per the
Screening Group Recommendation), having the SVS agreed to be listed on Appendix B on 26 October
2004:
- SVS does not have the power to obtain bank records; (Question 1a)
- SVS has not the ability to share information and records pertaining to bank accounts with
foreign authorities, which the collection for or the provision to are also prevented by the
domestic banking secrecy law; (Questions 3 and 7)
- SVS has not full ability to provide to foreign authorities information and records pertaining
to bank accounts, in response to requests concerning the purposes referred to in Question
4a) to 4d) of the Questionnaire.

Preliminary Assessment 2012-2013 of amended draft Securities Law

On 17 December 2012, the SVS submitted a draft Law for preliminary assessment by VT6, intended to
create the new Securities and Insurance Commission and to include specific provisions for accessing
banking records.

VT 6 submitted to the SVS several rounds of comments and questions on the proposed draft Law. The
preliminary assessment report was presented by the pen-holder and discussed by the Screening Group at
its meetings in Mumbai, in May 2013, in Tel Aviv, in July 2013 and in Istanbul, in November 2013. Following
these rounds of discussions, the Screening Group approved the report by written procedure in December
2013.

On 4 July 2014, the SVS was notified by IOSCO of approval of the MMoU graduated additional measures.

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 The CMF MMoU reapplication

The CMF filed a reapplication with the IOSCO General Secretariat on 8 July 2017, which was sent to VT 6
on 10 July. The CMVM Portugal was the penholder for this application.

The CMF MMoU reapplication received by the VT included the CMF responses to the MMoU
Questionnaire and relevant laws and regulations (In Spanish and parts of the legislation translated into
English). The CMVM Portugal is the pen-holder for this reapplication.

On 26 September 2017, the VT sent a set of detailed comments and follow-up questions to the CMF, to
which the CMF responded on 30 October 2017.

A preliminary draft report was sent for the Screening Group’s information and update at its meeting in
New Zealand, in December 2017.

In early 2018, a conference call was held to further clarify a set of issues stemming from the CMF’s
additional responses to follow-up questions from the VT. The VT sent to the CMF additional questions for
clarification and update, following the call, to which the CMF responded in late February and in early
March. Several rounds of additional comments and questions followed between 8 and 16 March.

Following the discussion by the Screening Group of the CMF VT Draft report at its meeting in Singapore,
on 20-21 March 2018, additional information and clarifications were requested from the applicant by the
VT.

Following the submission by the CMF to the VT of additional materials (as listed below) and the respective
analysis by the VT, the corresponding amendments have been made to this report.

1. CMF’s answers to the VT’s additional questions

2. Complementary note to the Legal Opinion issued by the Head of the Legal Department of the CMF
3. Official Communication N°946 from the Chilean Tax Authority to the CMF (in Spanish and English)
4. Official Communication N°361 from the Chilean Public Prosecutor’s Office to the CMF (in Spanish
and English)
5. Official Communication N°518 from the Chilean Financial Analysis Unit to the CMF (In Spanish and
English)
6. Official Communication N° 15397 from the CMF to the Chilean Ministry of Finance (In Spanish and
English)
7. Official Communication N° 1233 from the Chilean Ministry of Finance to the Chilean State Defence
Council (In Spanish and English)
8. Legal opinion issued by the Chilean State Defense Council (in Spanish and in English).

In addition, in early August 2018, the CMF reported to the VT that is had its first case of use of the
proceeding to lift bank secrecy under article 5.5 with a successful outcome. Additional information in this
regard is provided further ahead in the report.

On 9 August 2018, the pen-holder had a call with the CMF to further clarify a few minor issues to finalise
the redrafted report, which was submitted for the CMF’s consideration on 14 August 2018.

The Applicant has no further comment, this being considered the final draft report.

II - LIST OF SUPPORTING MATERIAL PRESENTED BY THE APPLICANT

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 Responses to the MMoU Questionnaire, setting out the CMF’s Reapplication.
 Relevant laws, rules and regulations in support of the application:

 Law 21000 - Creating the Financial Markets Commission (Spanish)

 Securities Market Law 18045 (Spanish)

 Law 18876 – Custodian and Depositary Entities (Spanish)

 Law 20345 – Clearing and Settlement (Spanish)

 General Rule 380– Financial intermediaries (Conduct of business rules and record keeping
(Spanish)

 Articles 93 and 94 - Tax Code (Spanish; English translation)

 Resolution 55, Duty of entities to provide information to the Tax Authority (Spanish)

 General Law on Banks (Spanish); Article 155 - Record keeping (English translation)

 Corporations Law 18046 (Spanish)

 Code of Commerce (Spanish)

 Funds Law 20712 (Spanish)

 SVS General Rule 30 – Information/Issuers (Spanish)

 SVS General Rule 271 – Registration of Instructions (Spanish)

 SVS General Rule 314 – Information Disclosure System (Spanish)

 CMF Resolution approved on 2 March 2018 - Policies and procedures to protect the
confidentiality of the information received from or sent to foreign regulators and
international organizations under a memorandum of understanding (English translation)

 Article 246 of the Criminal Code - Confidentiality – penalties for non-compliance (English
translation)

 Legal opinion issued by the Head of the Legal Department of the CMF

 Background information of the History of Law 21.000

 The proceeding and communication to the Judge that will be made by the Prosecutor of
the CMF

III - LIST OF MEMBERS OF VERIFICATION TEAM 6

(1) PORTUGUESE SECURITIES MARKET COMMISSION (CMVM)

 RITA CUNHA: anaritacunha@cmvm.pt

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(2) U.S. SECURITIES AND EXCHANGE COMMISSION (US SEC)
 MARIANNE OLSON: olsonm@sec.gov

(3) SWISS FINANCIAL MARKET SUPERVISORY AUTHORITY (FINMA)

 ANNEMARIE NUSSBAUMER: annemarie.nussbaumer@finma.ch
 OLIVIER PRISI: olivier.prisi@finma.ch

(4) SRI LANKA SECURITIES AND EXCHANGE COMMISSION (SEC SRI LANKA)
 TUSHARA JAYARATNE: tushara@sec.gov.lk
 SHEENA GOONARATNA: sheena@sec.gov.lk

(5) ISRAEL SECURITIES AUTHORITY (ISA)

 GALYA LEVY: GALYAL@ISA.GOV.IL

IV – CONTACT PERSON AT THE CMF

Claudia Reyes
Head - International Affairs Area
Telephone: (56-2) 2617 4513
E-mail: creyes@cmfchile.cl ; internacional@cmfchile.cl

V - PRELIMINARY REMARKS AND OVERALL RECOMMENDATION

After reviewing the CMF’s answers to the Questionnaire of Appendix B of the MMoU and responses to
additional questions posed by Verification Team 6, as well as the supporting materials, Verification Team
6 concludes that the CMF is able to comply with all of the provisions of the MMoU.

VI – MMoU BACKGROUND

1.1. The IOSCO MMoU was adopted in 2002 to expand cooperation and information sharing among
securities regulators and, since its inception, has been the international benchmark for cross-
border cooperation in the enforcement of securities and derivatives laws. The MMoU represents
a common understanding and commitment amongst its signatories about how they will consult,
cooperate, and exchange information for securities regulatory enforcement purposes.
1.2. To be eligible to sign the MMoU, a regulator must have the power, authority and willingness to
assist another MMoU signatory, upon request, in enforcing the securities laws it administers in
its own jurisdiction. Broadly speaking, a signatory must be able to do the following in response
to a proper MMoU request from another signatory:
1.2.1. Send the requesting signatory such information and documents already held in the
requested signatory’s files regarding the matters set forth in the request.
1.2.2. Obtain, by compulsion if necessary, information and documents from any person,
irrespective of whether that person is licensed or registered (which may include records in
the files of other governmental or quasi-governmental agencies) regarding the matters set
forth in the request including, but are not limited to:
1.2.2.1. Records made in the course of securities and derivatives transactions that contain
sufficient detail to allow the transactions to be reconstructed including, without
limitation, documents and electronic data of broker/dealers and banks that record the
movement of funds and assets, and records that identify the details of each
transaction;

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 1.2.2.2. Records that identify beneficial owners of securities and derivatives; persons who
control holdings in securities and derivatives; the named holders of broker/dealer and
bank accounts; the names of the individuals, brokers, broker/dealers, and banks that
participated either directly or indirectly in transactions, and the persons who
beneficially own or control non-natural persons.
1.2.2.3. Voluntary or compelled statements from individuals, including, where domestic
law permits, statements under oath.
1.2.3. Provide to requesting signatories all of the above information and documents without any
restriction or limitation arising from domestic banking secrecy or blocking laws and
regulations, and fulfil the request independently of any domestic interest or purpose.
1.2.4. Keep the request confidential.
The MMoU also requires the requesting signatory to keep the information and documents it receives
confidential, unless disclosure is in accordance with a permitted use under the MMoU, including to
conduct a civil or administrative enforcement proceeding or to assist in a criminal prosecution.

VII – BACKGROUND SUMMARY INFORMATION ON THE APPLICANT

The Chilean financial supervision structure comprises three financial regulators:

1) the CMF, overseeing the securities and insurance markets - from 16 January 2018, the SVS was
replaced by the CMF, created under Law 21.000 of 23 February 2017 -;
2) the Superintendence of Banks and Financial Institutions (SBIF), mainly supervising banks and
financing-related institutions; and
3) the Superintendence of Pension Funds (SP), which oversees Pension Funds Administrators.

The SBIF powers will be transferred to the CMF once the new General Law of Banks enters into force,
currently under discussion in the Chilean Congress. (On 9 January 2018, the Chamber of Representatives
approved the bill, being under review by the Senate). The CMF clarified that despite being granted these
additional powers, it will still need to require the lifting of bank secrecy to the Judge of the Court of
Appeals (as further explained in the report and appended documents).

Article 1 of Law 21.000 provides that the CMF shall ensure the proper functioning, development and
stability of the financial market, in carrying out its powers. The CMF is the legal successor of the SVS, this
succession not entailing fundamental changes in the relationship with foreign regulators or international
bodies other than updating the regulator’s designation in agreements already in force.

The CMF will maintain the powers already vested in the SVS (e.g. to issue rules, to interpret applicable law
on administrative grounds, to investigate complaints or claims, to examine all operations, assets, books,
accounts, archives and documents of persons, entities or activities under its supervision, among other
powers).

The three financial regulators (CMF, SBIF and SP) cooperate with the Ministry of Finance and with the
Central Bank of Chile through the Financial Stability Council (Spanish acronym CEF), formally created in
2014 under Law 20.789. Its main goal consists of facilitating the technical coordination and exchange of
information on matters related to the prevention and management of issues that may pose a risk to the
financial system, seeking to ensure financial stability of the Chilean financial system.

Regarding anti-money laundering and terrorism financing legislation, the Financial Intelligence Unit
(Spanish acronym UAF) is in charge of preventing the use of the financial system and of other sectors of
the Chilean economic activity for money laundering and terrorist financing offences. Its goals and
attributions are governed by Organic Law 19.913.

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As general information on the Chilean financial market, in 2017, banks had a total stock colocation of 257
billion US dollars (equivalent to 98% of the Chilean GDP of 262 billion US dollars), Pensions Funds' Assets
were equivalent to almost 211 billion US dollars, the market cap was equivalent to approximately 294
billion of US dollars, while the traded amounts in 2017 reached a total of 482 billion US dollars. Assets
under management for Mutual Funds were around 55 billion US dollars, while Assets managed by
Insurance Companies add up to 71 billion, as at September 2017.

VIII. EVALUATION OF THE CMF’S RESPONSES

VT6 has considered in detail the responses submitted by the CMF, together with the supporting laws and
regulations. This report summarizes the pertinent information intended to provide an understanding of
CMF’s powers and to support VT6’s conclusions.

QUESTIONNAIRE RESPONSES:

1. Please identify and explain the general or specific provisions of your laws, rules and regulations (and
provide copies of these provisions) that enable you, or a separate governmental body in your
jurisdiction, to obtain:

(a) Contemporaneous records sufficient to reconstruct all securities and derivatives

transactions, including records of all funds and assets transferred into and out of bank and
brokerage accounts relating to those transactions.

Summary of the applicable Regulatory Framework

- The CMF is able to require information from supervised entities on the basis of article
5.4 of Law 21.000 (CMF Law).
- The CMF can compel information and testimony from regulated and non-regulated
persons according to articles 5.9, 5.27, 23, 24.1 and 24.2 of CMF Law.
- The CMF can obtain information subject to bank secrecy according to the provided
for in article 5.5. of CMF Law.
- The CMF can request information to supervised entities regarding derivatives
transactions executed by them according to article 5.4 of CMF Law.
- The CMF can request information to other public bodies according to article 5.31 and
article 5.27 (e) of CMF Law (including information on derivatives not under direct supervision of the CMF)

Summary of CMF’s Response

Law 21.000, published on 23 February 2017 in the Chilean Official Gazette, created the CMF as the
Authority in charge of the supervision of the securities market in Chile (replacing the SVS).

With regard to derivatives markets, although they are not under the direct supervision of the CMF, it may
require information on derivatives and futures suspected violations on behalf of one of its counterparts
and share information with this counterpart, under the IOSCO MMoU. This power is enabled through the
CMF’s general powers provided under article 5.4 of Law 21.000 (as described in the following paragraph),
and also through the general power of the CMF to require information from other public bodies (articles
5.31 and 5.27 of Law 21.000), and in accordance with articles 5.22 and 5.23 of Law 21.000, both
establishing the sharing of information with foreign counterparts with which the CMF has signed a MoU,
in accordance with the requirements established in the relevant cooperation agreement.

According to article 5.4 of Law 21.000, setting out the CMF’s general powers, the CMF can review all
operations, assets, books, accounts, files pertaining to regulated individuals, entities, activities, or its
subsidiaries or affiliates, and require from them or their managers, advisors or staff, background

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information and explanations the CMF deems necessary. Furthermore, the CMF may require the
preparation and presentation of balance sheets and financial statements for periods considered necessary
to examine the accuracy and investment of capital and funds.

Furthermore, inIn response to a follow-up question from one member of the Screening Group on how the
CMF obtains information on derivative transactions from other Chilean public bodies and whether there
are MoUs in place between these bodies and the CMF, the applicant clarified that article 5.31 of Law
21.000 establishes the general power to require information from other public bodies. In practice, the
CMF issues an official communication to the corresponding public body requiring the information without
the need to have a specific MoU in place for that purpose. The CMF confirmed that the corresponding
body will have no reasons for denial and that the CMF will receive the requested information in any case,
having further explained that article 5.31 of Law 21.000 is clear in this regard: the CMF has the power to
request information held by other Chilean public bodies, including information on derivative transactions.
In this respect, the CMF has already used this new power by requesting information to the Chilean Tax
Authority under reserve obligations, having this Authority provided the information accordingly.

Therefore, the CMF is able to have access to information on derivative transactions held by other public
bodies, such as the Central Bank of Chile or other financial supervisors.

The CMF has the ability to obtain information from non-regulated persons by using the following powers:

- Power to summon any person: under the CMF enforcement powers set forth in articles 23 and
24.1 and 24.2 of Law 21.000, within the scope of investigations it carries out it can summon any
person, regardless of whether subject to the CMF supervision or not, to provide information or
testimony related to a case of suspected securities laws’ violations. The process used by the CMF
to exercise these powers is the same as the one used to obtain bank records, under article 5.5.,
which is explained in detail in the paragraphs below.

- Power to seize documents: under article 5.27 of Law 21.000, with the assistance of the Chilean
police, the CMF Prosecutor can seize documents and objects from any person undertaking an
activity which is required to be regulated by the CMF;

- Power to obtain information from any person in connection with securities transactions: iIn
accordance with article 5.9 of Law 21.000, the CMF has the power to compel information from
non-regulated persons, as far as the latter have engaged in an operation involving securities, or
keep information thereon. A non-regulated person who/which uses information that came to that
person’s knowledge about a specific operation on securities will be subject to the CMF’s
supervision. Furthermore, if a non-regulated person engages in an operation with a third party,
the latter will also fall under the CMF’s supervision regarding any information this person could
have regarding the referred operations.

Formatted: List Paragraph

Article 24.5 of Law 21.000 provides that these powers can be exercised by the CMF for the purpose of a
Commented [MO1]: Rita – I don’t think this information
foreign regulator’s investigation, being the corresponding assistance provided within the scope of the is necessary. This is confusing and it may raise unnecessary
relevant MoU entered into with a foreign counterpart, in accordance with article 5.22 of Law 21.000. questions on whether the CMF will in fact proceed to an
investigation for bank records, etc. The more important
expresslyIn accordance with article 5.9 of Law 21.000, the CMF has the power to compel information from regulation is the article 24.1 which is cited above to initiate
non-regulated persons, as far as the latter have engaged in an operation involving securities, or keep an investigation. So I would delete this bullet.
information thereon. A non-regulated person who/which uses information that came to that person’s Formatted: List Paragraph, Bulleted + Level: 1 +
knowledge about a specific operation on securities will be subject to the CMF’s supervision. Furthermore, Aligned at: 0.25" + Indent at: 0.5"
if a non-regulated person engages in an operation with a third party, the latter will also fall under the CMF’s
supervision regarding any information this person could have regarding the referred operations.

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 Furthermore, in response to a follow-up question from one Screening Group member on whether the
CMF can go directly to unsupervised entities for information (or if it needs to go through other bodies),
the CMF explained that pursuant to article 5.9 of Law 21.000, the CMF can require the testimony and
information from unsupervised entities that have entered into transactions involving securities issued by
supervised persons or entities.

In response to an additional follow-up question from one Screening Group member on whether a link
with a transaction is mandatory for the CMF to be able to compel information from non-regulated
persons, the CMF clarified that the information can also be obtained regarding a case, as detailed below.

Regarding the CMF´s ability to compel information in possession of a non-regulated person, as a general
rule, and according to article 5.4. of Law 21.000, the CMF has the power to require information from
supervised persons and entities and their activities. In addition, according to article 5.27 of the same law,
the CMF has the power to register and seize any objects and documents from any person which may be
related to a case in accordance with the procedure set forth in article 5.27 and in article 5.5 of Law 21.000.
This power can be used within the scope of a foreign regulator’s request according to article 24.5 of Law
21.000 in connection to the CMF’s ability to collaborate with foreign regulators under a MoU in force in
accordance with article 5.22 of the same law.

Concerning the CMF’s ability to compel statements from non-regulated-persons, according to article 5.9
of Law 21.000, the CMF has the power to compel statements from regulated and non-regulated persons
that have entered into transactions involving securities issued by supervised persons and entities.
Furthermore, the CMF Prosecutor has the power to request statements from any person - voluntary
statements - that may be in possession of information on a specific case, according to article 25 of the
Law 21.000.

In case of obstruction to providing the required information or testimony in article 5.4 and 5.9 of Law
21.000, article 35 of the same law establishes that the CMF can request the Civil Court to apply the
sanctioning procedure established in articles 93 and 94 of Chilean Tax Code1, in order to obtain compliance
with CMF’s orders. Article 93 states that Chilean Courts may order the arrest of the offender for a term of
up to 15 days as a measure of constraint to achieve compliance with the required information. However,
it is required that the offender has been previously and expressly summoned to comply with the order
within a reasonable term. The Judge will summon the offender to a hearing, and based on the statements
provided, or in absentia, will make a decision concerning the constraint. The decision issued by the Judge
cannot be appealed. Under article 94, these measures of constraint may be renewed if the same
circumstances remain.

Specifically on the connection between the Chilean Tax Code and the CMF’s powers vis a vis the IOSCO
MMoU requirements, the CMF explained that it consists of a direct application of the Tax Code but limited
to the application of the sanctioning procedure established by said Code for the purpose set forth in article
5.4. of Law 21.000. The CMF further added that tribunals are the ones called to assess and apply the
measure of constraint. So far, the CMF has not experienced a case which required application of this
procedure.

With regard to the CMF’s power to obtain information on bank records, article 5.5 of Law 21.000
establishes that the CMF, in the context of domestic investigations or sanctioning procedures, has the
power to authorize the CMF Prosecutor (Fiscal)2 to require information on bank operations subject to

1
Decree N° 830, 1974.
2
The role and functions of the Prosecutor of the CMF are set forth under Law 21.000, article 22. The Prosecutor is the Head of the Enforcement
Unit being nominated through a selection process regulated by Law 19.882 (on Selection of High Public Officers). The Prosecutor remains in
functions for a 6-years period, renewable for another 6 years. According to article 23 of Law 21.000, the Prosecutor shall be responsible for

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bank secrecy. This power is subject to three favourable votes by the CMF Commissioners (being the CMF
Board composed by the Chairman and four Commissioners) and to prior authorization by a Judge of the
Court of Appeals of Santiago grounded on a resolution to lift bank secrecy. This power covers all
operations subject to bank secrecy or confidentiality considered indispensable for verifying the conduct
of natural or legal persons which consist of violations of the legal provisions applicable to the persons or
entities supervised by the CMF, and which are typified in the law as infractions under the laws and
regulations subject to the CMF’s supervision.

Furthermore, the lifting of bank secrecy is set forth under article 5.5 of Law 21.000 within the scope of
requests from foreign regulators made to the CMF under an international agreement (MoU):

 Article 5.5., paragraph 2. establishes that the CMF Prosecutor will request authorisation from the
CMF Board to comply with requests from foreign regulators made under the scope of an
International MoU signed by the CMF, as provided in article 5.23, in accordance with the terms
and reciprocity laid down in the MoU. Where such requests involve obtaining information on
banking operations subject to bank secrecy or confidentiality, prior authorization from the Judge
of the Court of Appeals of Santiago will be required.
 Article 5.5, paragraph 3 establishes that the CMF Prosecutor will identify the foreign requesting
authority and attach background information supporting the request.
 Both the request made by the CMF Prosecutor and the corresponding resolution from the Judge
shall be based on serious and specific facts complying with the terms of the international
agreement for the exchange of information signed or ratified by the CMF in accordance with the
powers granted in this regard in article 5.23 of Law 21.000, these powers being expressly stated
in both documents.
The CMF confirmed that the lifting of bank secrecy refers to all kinds of operations and documents related
to a client, on the grounds of article 5.5 of Law 21.000.

The specific steps to be followed in the process of lifting bank secrecy (provided for under article 5.5 of
Law 21.000) are described below - from the moment the request is received by the CMF and filed with
the Judge until the moment the records are provided by the bank, including specific timelines and which
information is disclosed to the Court/confidentiality, the assessment of the request by the Judge to grant
authorisation, and the CMF’s ability to appeal in case the request is denied by the Judge and how this
process is managed -:
(i) a foreign regulator sends a request to the CMF under the IOSCO MMoU; (ii) the request is forwarded
to the CMF Prosecutor, who will request the CMF Board authorization by at least three Commissioners,
out of 5 Board members (Chairman and four Commissioners) to require banking information subject to
secrecy. The criteria for the CMF Board to give its authorization are based in article 5.5. of Law 21.000,
paragraphs 2, 3, 4, which state that the Board may grant its authorization in order to comply with requests
from foreign regulators under an MoU; (iii) the request is sent by the CMF Prosecutor to a Judge of the
Court of Appeals (ministro de la Corte de Apelaciones), which includes the identification of the foreign
regulator (requesting authority), attaching relevant background information on which the request is
grounded. The CMF clarified that it does not necessarily need to provide a copy of the foreign regulator’s
request: article 5.5., paragraph 3 of Law 21.000 establishes that the CMF Prosecutor will have to identify
the requesting authority, attaching the information in which the request for lifting bank secrecy is
grounded (not necessarily attaching the request from the foreign regulator). In case the Judge would

carrying out or conducting the necessary or appropriate investigations in relation to infringements of laws and regulations subject to the CMF’s
remit in respect of the persons or entities it supervises; and for contributing to the identification of those responsible for infringements under
investigation; and for compliance with the sanctions imposed by the CMF for infringements of the laws and regulations under its jurisdiction.

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require disclosure of confidential documents, the CMF will request the prior consent from the foreign
regulator as provided in the IOSCO MMoU, thus ensuring due coordination with the foreign regulator
before disclosing non-public information to the court. In addition, as described below, the procedure
before the Judge and the Court of Appeal is completely secret. In practical terms, the Prosecutor shall
submit to the Judge a confidential request explaining the reasons for granting the lifting of bank secrecy,
together with the resolution from the CMF Board authorizing the Prosecutor to require the lifting of the
bank secrecy on behalf of a foreign authority. The judicial procedure is secret (as per article 5.5., paragraph
7 of Law 21.000), being the Judges participating in the process forbidden to disclose information to third
parties. Furthermore, the Chilean Criminal Code, article 246, provides that public officials (including
judges) disclosing secrets which they become aware of in the performance of their duties, or to deliver
documents or copies thereof which are under their custody and are not meant to be published, will be
sanctioned with the suspension of their position (from 60 days to 2 years) or with a fine ranging from USD
470 to USD 1570, or both. Moreover, in case the disclosure or delivery of the information entails a major
harm to the public interest, sanctions of imprisonment will be applied (from 5 to 20 years) and a fine
ranging from approx. USD 1650 to USD 2350; (iv) a decision by the Judge of the Court of Appeals shall be
issued no later than 3 days following the request, without a hearing or third-party intervention. As set out
in article 5.5 of Law 21.000, the decision shall be based on serious and specific facts complying with the
requirements set forth in the MoU signed between the CMF and a foreign counterpart, the international
agreement being specifically mentioned in the decision. The CMF clarified that Law 21.000 does not
specify what should be understood as serious and specific facts, and that at the time of the submission of
the VT report to the Screening Group in March 2018 no examples could be provided given that Law 21.000
entered in force very recently. The CMF considers that a request fulfilling Paragraphs 7 b) and 8 b) of the
IOSCO MMoU shall be deemed to include serious and specific facts. Please refer to additional information
included at the end of this Section regarding a recent judicial authorization granted to the CMF to lift bank
secrecy within the scope of a domestic investigation, where the Court deemed that the serious and specific
facts standard was met by the request filed by the CMF.

Furthermore, in response to a follow-up question from one Screening Group member on whether serious
and specific facts is a criminal standard (giving the following example: “If an investigation is in the early
stages and the foreign regulator doesn’t have all of the facts yet (e.g., only have details based on a
newspaper article), how will the requirement of serious and specific facts be met? “), the CMF clarified
that “serious and specific facts” is not a criminal standard, being the requirement of serious and specific
facts met to the extent that the foreign regulator’s request meets the standard of Section 8 of the IOSCO
MMoU, this being valid for the specific example given in the question above.

With regard to possible assurances that could be obtained from a Judge exercising his/her discretion in
favour of issuing a requirement for bank records under the IOSCO MMoU, the CMF explained that by
complying with all the requirements set forth in Law 21.000 the request is bound to be approved by the
Judge/ Paragraph 5.5.3 of Law 21000, which states that requests made by foreign regulators, both the
Prosecutor’s request and the Judge’s resolution shall be based in serious and specific facts which comply
with the terms of the MoU entered into by the CMF by virtue of the powers set forth in article 5/23, which
shall be expressly mentioned in both documents.

Additional information in this regard is further elaborated below and in the following documents provided
by the CMF, which are enclosed to this report:

1. CMF Legal Opinion, 15 March 2018

2. Complementary note to the Legal Opinion issued by the Head of the Legal
Department of the CMF, 11 July3

3
CMF answer: In representation #1 of our legal opinion, we stated that a request of a signatory of the IOSCO MMOU
to the CMF to obtain bank records according to the scope of assistance set by section 7. Letter (b) and fulfilling the

10
 3. Legal Opinion of the Chilean State Defense Council
4. Official Communication N°946 from the Chilean Tax Authority to the CMF (In Spanish
and in English)
5. Official Communication N°361 from the Chilean Public Prosecutor’s Office to the CMF
(In Spanish and in English)
6. Official Communication N°518 from the Chilean Financial Analysis Unit to the CMF (In
Spanish and in English)
7. Official Communication N° 15397 from the CMF to the Chilean Ministry of Finance (In
Spanish and in English)
8. Official Communication N° 1233 from the Chilean Ministry of Finance to the Chilean
State Defense Council (In Spanish and in English)

The CMF explained that the entity issuing the Independent Legal Opinion - the Chilean State Defense
Council (CDE) is a decentralized and independent public agency which defends, represents, and provides
legal advice to the Chilean state as regards its proprietary and non-proprietary interests. The CDE is,
according to its Organic Law, entitled to issue legal opinions either requested by the President of the
Republic or the Ministers of State on specific legal matters (article 3 N° 10 of D.F.L. Nº1 of 1993).

On the basis of the CMF’s request (Official Communication N° 15397, as enclosed) the Minister of Finance
of Chile has required to the CDE, through Official Communication N° 1233 (as enclosed), to issue an
opinion regarding the adequacy of article 5.5 of the CMF Organic Law in order for the CMF to share
information under banking secrecy with foreign regulators according to paragraphs 7 and 8 of the IOSCO
MMoU.

The CDE Legal Opinion, issued on 16 August 2018, concludes that “(…) the current legal framework which
regulates the CMF allows such institution to fully comply with the fundamental requirements that IOSCO
imposes to its members, including the requirements to share information with foreign regulators which
are signatories of the IOSCO’s MMoU, and to have access to information subject to banking secrecy or
reserve. Consequently, and in view of the new powers in matters of access to banking information and

standard established by section 8. Letter (b) of the IOSCO MMOU shall be deemed to comply with the requirements
of paragraph 5 of article 5 of the CMF Organic Law. The legal basis for the former representation is based on the
following logical legal sequence:
- According to article 5.23 of CMF Organic Law, the CMF is entitled to conclude MoUs with foreign regulators
regarding the exchange of information.
- Moreover, article 5.22 of CMF Organic Law, states that the CMF has the power to collaborate with foreign
regulators that are carrying on investigations by sharing information with these entities
- In this context, article 5.5. of the referred CMF Organic Law specifically grants power for the CMF to share
information on banking records with foreign regulators to the extent that there is:
- (i) a request from a foreign regulator under an international agreement such as the IOSCO MMOU;
- (ii) that such request is based on serious and specific facts according to the requirements set forth in such
international agreement as the IOSCO MMOU.
- Therefore, the request of a foreign regulator shall be deemed to comply with the requirements of article 5.5.
of CMF Law to the extent that such request complies with the requisites set by the IOSCO MMOU for the request
for assistance (article 8), which are mainly: (i) description of the facts underlying the investigation subject of the
request; (ii) purpose for which the assistance is sought; (iii) description of why the information sought will be of
assistance; (iv) information of the Requesting Authority that might assist the Requested Authority to fulfil the
request; (v) indication of special precaution to collect the information; and (vi) laws and regulation that may have
been violated and that relate to the subject matter of the request.
- Hence, the request shall be deemed to comply with the requirement set by article 5.5. of CMF Law about
seriousness and specificity as long it includes requirements (ii), (iv), (v), (vi) and requirements (i) and (iii) respectively.
In this respect, the Head of the Legal Department of the CMF has issued a complementary note to its former legal
opinion that includes the above-mentioned explanation.

11
powers to share background information with regulators granted to the CMF by the Law No. 21,000, this
State Defense Council concludes that the regulation contained in the of the No. 5 of the article 5 of the
Decree Law No. 3,538 (modified by the Law No. 21,000) is concordant, observes and fully complies with
the requirements of the IOSCO’S Multilateral Memorandum of Understanding Concerning Consultation
and Cooperation and the Exchange of Information, in matters regarding access to banking information
subject to secrecy or reserve.”

Regarding the CDE’s interpretation of what should be considered clear, specific and serious facts in
accordance with article 5.5 of Law 21,000, the CDE Opinion clarifies, on page 12, the following:

In order to share such information in accordance with this rule it is required, therefore:
1. That there is a request from a foreign financial authority performed within the framework of an
international agreement entered into by the CMF, such as the existing Memoranda of Understanding on
Cooperation and Technical Assistance and Consultation currently in place among Securities Regulators of
more than 25 countries, as could be the IOSCO MMoU.

2. According to this rule, the request of a foreign regulatory authority shall comply with requirements
identical to those required from national authorities, which are: 1) They shall be based on clear, specific
and serious facts with respect to the performance of the conduct subject to the investigation or ongoing
sanctioning proceeding; 2) To establish the necessary character of the requested measure for the
determination of the infringement; 3) The background information that substantiate the request and that
justified the necessity of relying on said information in order to verify the existence of the infringements
subject to the investigation or sanctioning procedure shall be attached; and 4) Identify the entity
requesting the information and attach further background information that substantiate the respective
request.
These requirements coincide with the ones provided in the Section 8 of the IOSCO MMoU, which are
mainly: i) a description of the facts underlying the investigation that are the subject of the request, and
the purpose for which the assistance is sought; ii) a description of the assistance sought by the requesting
authority and why the information sought will be of assistance; iii) any information known to, or in the
possession of, the requesting authority that might assist the requested authority in complying with the
request; iv) indication of any special precautions that should be taken in collecting the information,
including the sensitivity of the information; and v) the Laws and Regulations that may have been violated
and that relate to the subject matter of the request.
With respect to the requirement that the request is founded on clear, specific and serious background facts
regarding the acts subject to the investigation, these requirements will be complied with if they satisfy
essentially the requisites i) description of the facts underlying the investigation; ii) about the purpose of
the requested information and (v) the Laws and Regulations that could have been breached and that refer
to the subject matter of the request.

This interpretation is shared by the CMF and the State Defense Council, as elaborated in both of the
Opinions.

(v) once the request is approved by the Judge, the CMF Prosecutor notifies the entity from which the
information is required, including the judicial resolution, which shall do so no later than 5 days, as required
under article 5.5 of Law 21,000. Failure to comply with this requirement (omission or delay) shall be
sanctioned in accordance with the procedure set out under article 37 of Law 21.000 - 1) censure; 2) fine
(15.000 Unidades de Fomento (Approx. USD 630.000) and 3) cancellation of authorization. (vi) In case the
request is denied by the Judge of the Court, the CMF Prosecutor may appeal to the Court of Appeals. The
CMF explained that, technically, the Court of Appeals that will review and decide the appeal is a different
court from the one of the Judge of the Court Appeals who ruled on the first stage. The following consists

12
of the legal provisions in the Chilean Law regulating the Court of Appeal and the Judge of the Court of
Appeal.

Article 5 of the Organic Code of Courts (“Código Organico de Tribunales”, in Spanish and COT hereinafter)
sets forth the courts responsible for hearing all judicial matters within Chile. In this regard, article 5
additionally states that the Judicial Branch, as ordinary courts of justice, comprise the Supreme Court, the
Courts of Appeals, the Presidents and Judge of Court (Ministro, in Spanish), the courts of oral trial in
criminal matters, the courts of letters and the courts of guarantee.
Moreover, Title IV of the COT regulates the functions of the Presidents and Judge of the Supreme Court
and the Court of Appeal as unipersonal tribunals. In this regard, article 50 of the COT establishes the cases
that will be known by a Judge of the Court of Appeal as first stage, including in its numeral those one
mandated by other laws, which includes the circumstance established in paragraph 3 of article 5.5 of Law
N° 21.000. On the other instance, the Courts of Appeal (17 in all the country, including one in Santiago)
are regulated in Title V (article 54 and following ones) of the COT. According to article 57 of the COT, the
Courts of Appeals shall be governed by a President. The other members of the Courts of Appeals shall be
called Judge of the Court of Appeal. Moreover, article 63 N° 3 letter a) of the COT allows to appeal to the
Court of Appeals regarding decisions of one of its Judges (“Ministro”), which corresponds to the situation
established in paragraph 7 of article 5.5. of Law N° 21.000.

Regarding the procedure before the Court of Appeal in 2nd instance, the following information was
provided by the CMF.
Pursuant to article 189 of the Chilean Civil Procedure Code (hereinafter “CPC”), the appeal shall be filed
within a term of five days, counting from the notification to the Prosecutor of the resolution of first
instance. This appeal shall contain the legal and factual grounds on which it is based and the specific
requests made to the Court.
Then, according to paragraph 7 of article 5.5. of Law 21.000, the Court of Appeal of Santiago will take
cognizance of this appeal “en cuenta” and without further formalities. “En cuenta” and without further
formalities means that the Court of Appeals will review the appeal without following a specific procedure,
without hearings nor the participation of third parties. The purpose of this proceeding is to review rapidly
the appeal by the Court of Appeal. In this regard, article 104 of the COT establishes that within the ordinary
hours of its operation and prior to the hearing of cases, the court shall give priority, in the order
established by the President, to cases to be decided “en cuenta” […]. Moreover, final paragraph of article
199 of the Chilean Civil Procedure Code (CPC, hereinafter) establishes that Courts shall establish additional
hours of operation for the review and adjudication of appeals proceeded “en cuenta”.
Once the Court of Appeal has rendered its decision, which must be grounded on the facts and laws claimed
by the Prosecutor, all the background information will be returned to the latter. The decision of the Court
of Appeal is final and no further appeal is allowed.
The information shall be kept confidential by the Court and by the CMF throughout the proceeding, hence
the confidentiality of the request made by the foreign authority will be duly maintained. Furthermore, all
the information related to the proceeding is returned by the Judge to the CMF Prosecutor, once it has
been concluded before the Court of Appeals.
Furthermore, in response to a question from one member of the Screening Group, regarding the judicial
process, on whether any filed court documents to obtain bank records are made public or whether the
public can request access to them, the CMF clarified that, according to paragraph 7 of article 5.5. of Law
21.000, all documents related to the process of court authorization of a request to lift of bank secrecy are
non-public and shall be returned to the CMF once the authorization is granted.

The above conditions allow for the CMF to compel bank records on behalf of foreign counterparts in
relation to breaches of securities laws in force in foreign jurisdictions, including requests related to non-
regulated persons, subject to due compliance of the request with the IOSCO MMoU requirements.

13
The CMF had assured that other entities in Chile which have used this process (namely the FIU in AML
proceedings) had not experienced to date a case where the request has been denied by the Court.

At the time of the submission of the VT report to the Screening Group in March 2018, the CMF was not
able, at that juncture, to provide examples of its application. However, the CMF very recently reported
that it had its first case of application of the process to lift bank secrecy within the scope of a domestic
investigation carried on by the CMF’s Investigation Unit, thus being now able to gather evidence that the
power granted to the CMF under article 5.5 of the CMF Organic Law did work in practice. In this regard,
the VT obtained additional information from the CMF on the timing and confidentiality regime, having the
CMF reported that the procedure for obtaining the lift of the bank secrecy submitted to the Court took 1
working day (Law 21.000 /article 5.5 establishes a maximum of 3 working days for the Court to issue its
decision). The CMF confirmed that the procedure duly complied with the requirements of effectiveness,
speed and confidentiality provided in the CMF Organic Law.

With regard to the experience reported by Chilean other bodies at the CMF’s request, in order to further
assure the Screening Group in this regard, and at the Screening Group’s request, provided relevant
information regarding their experience on requesting the lifting of bank secrecy before the Court.
As a result, the respective data were provided as follows (as per the respective official letters addressed
to the CMF listed above), with a total of 14 cases (foreign requests), covering a 5-year-period:

- The Chilean Tax Authority (Servicio de Impuestos Internos (SII), Official Communication Nº 946,
dated 11 May 2018, as enclosed): the SII reported that it received 1 request from a foreign public
organization involving the lifting of a person’s bank secrecy. This request was approved by the
relevant court.
- The Chilean Public Prosecutor’s Office (Ministerio Público (MP), Official Communication N°361
dated 4 May 2018, as enclosed): the MP reported that in the past 5 years up to date, 4 requests
of information from foreign counterparts involving the request to lift of a person’s bank secrecy
subject to previous Court approval. Authorization was granted by the court in all 4 cases.
- The Financial Intelligence Unit (Unidad de Análisis Financiero (UAF), Official Communication
N°518 dated 18 April 2018, as enclosed) reported that 9 requests to lift of bank secrecy were
submitted to court decision. Authorization was granted by the court in all 9 cases.

These numbers show that the court approved the lifting of bank secrecy in 100% of the cases under legal
frameworks which are analogous to that of the CMF Organic Law (article 5.5 of Law 21.000).

Following additional information requested from the CMF on how long these procedures took in average,
the CMF informed that, according to the information provided by the three public bodies, the
authorization from the Court was issued in a timely manner and in accordance with the applicable laws,
for the purpose of investigations carried out by these entities.

The CMF further stated that among these bodies, the UAF is the only entity ruled by a law establishing
identical requirements set forth in Law 21.000, article 5.5 to access information subject to bank secrecy.
In this respect, the UAF informed the CMF that the Court procedure for the lifting of bank secrecy took
between 24 and 48 hours, on average.

Regarding the timeframe for obtaining records from banks, this may vary according to the scope and
extent of the required information (number of accounts, time period, etc.).

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 1a).

14
 (b) records for securities and derivatives transactions that identify:
(1) the client:
i. name of the account holder; and
ii. person authorized to transact business;
(2) the amount purchased or sold;
(3) the time of the transaction;
(4) the price of the transaction; and
(5) the individual and the bank or broker and brokerage house that handled the transaction

Summary of the applicable Regulatory Framework

- The CMF can require information to its supervised entities based on article 5.4 of Law 21.000 (CMF
Law)
- The CMF can have access to specific information held in books and registers of intermediaries
according to article 32 of Law 18.045 (Securities Market Law, SML)
- The CMF has established guidelines for this purpose: NCG N° 380
- Non-compliance will be sanctioned according to articles 35 to 39 of CMF Law
- The CMF can request information to other public organisms according to article 5.31 and article
5.27 (e) of CMF Law

Article 32 of Law 18,045 (Securities Market Law) requires financial intermediaries to:
i) Maintain books and registers required by the law and to prepare them in accordance with the CMF
guidelines. The CMF guidelines - Section IV of General Rule 380, 2015 - establish that all orders,
instructions, operations and acts that the intermediary receives, provides or performs, and all contracts
entered into with its clients, shall be duly preserved, registered, documented, backed-up, and made
available to the CMF.

ii) Information regarding details of operations carried out by financial intermediaries shall be submitted
to the CMF on a periodic basis. According to the Annex of General Rule 380, financial intermediaries must
keep updated: 1) Registration of Clients (information that allows the identification of the client); 2)
Registration of persons authorized to issue orders on behalf of clients; 3) Registration of orders (which
includes all orders, both for own account and for third parties’ account, regardless if executed or not); 4)
Registration of details of operations (which includes all operations, both for own account and for third
parties’ account); 5) Registration of operations’ allocation; 6) Registration of billing (including all invoices
issued for each order); 7) Registration of third parties’ assets kept in deposit or under custody (being
mandatory to mention all assets’ incomes and expenses, and instruments, products and currencies’
balance of the client); 8) Registration of executives and staff (the intermediary must keep the register by
identifying all individuals performing functions for the latter, regardless of the contractual relationship);
9) Registration of renegotiations (which must include all renegotiations regarding obligations of clients
and counterparties towards the intermediary) and 10) Registration of instructions (in accordance with
article 179 of Law 18.045 (Securities Market Law) and with General Rule 271, 2009).

In case of non-compliance with the obligation to keep these registers, entities may be sanctioned
according to the provided for in articles 35 to 39 of Law 21.000: 1) censure; 2) fine and 3) cancellation of
authorization.

Furthermore, in case of non-compliance with orders issued by the CMF, the following sanctions can be
applied to corporations under the CMF’s supervision (article 36 of Law 21.000) or other entities or
individuals (article 37), according to the following options, alternatively:

a. 15.000 Unidades de Fomento (Approx. USD 630.000). In case the offender has already been sanctioned
for breaches of the same nature, the CMF may impose a fine up to five times this amount.

15
b. 30% of the value of the issuance, accounting record, or forbidden operation.

c. The equivalent to the double of the profits obtained from the issuance, accounting record, or forbidden
operation.

In addition, in case of obstruction to the CMF power to review all operations, assets, books, accounts, files
pertaining to regulated individuals, entities, activities, subsidiaries or affiliates, and require from them or
their managers, advisors or staff, background information and explanations the CMF deems necessary, in
accordance with article 5.4. of Law 21.000, article 35 of the same Law establishes that the CMF may
request to the Civil Court application of the sanctioning procedure established in articles 93 and 94 of
Chilean Tax Code against the offender, in order to obtain compliance with CMF’s orders., as explained
above, in the response to Question 1 a).

Information on derivatives transactions can be obtained either directly by the CMF when carried out by
supervised entities, and on request to other public bodies in Chile, on the basis of articles 5.27 e) and 5.31
of Law 21.000 (as explained under Question 1.a), above).

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 1b).

(c) information located in your jurisdiction identifying persons who beneficially own or control
non-natural persons organized in your jurisdiction.
(as required by Paragraph 7(b)(ii) of the MMoU)

Summary of the applicable Regulatory Framework

- The CMF can request information to its supervised entities based on article 5.4 of Law 21.000
(CMF Law).
- CMF can request information from all individuals and entities that are part of the same company
group, information enabling the determination or identification of relationships of ownership or control
and operations between them (art. 5.4 of CMF Law)
- The CMF can request information to other public organisms according to article 5.31 and article
5.27 (e) of CMF Law
- Information identifying persons who beneficially own or control non-natural persons
incorporated in Chile is available in the public Register of Commerce (full name of the shareholders /
partners (owners), article 5 of Law 18.046 and in article 426 of the Code of Commerce.
- Information regarding ownership of stock companies must be written down in the Registry of
Shareholders of each company (article 7 of Law 18.046 on Corporations, and article 431 of the Code of
Commerce for joint stock companies).
- Companies registered in the Securities Registry of CMF must keep an updated list of shareholders
and partners (article 7 of Law 18.046 and CMF Circular 1481)
- Information on identification of controller of securities issuers to be included in Annual Report
(CMF Rule 30)
Duty to report the Tax Authority about shareholders or partners of companies and any relevant changes
(art 68 Tax Code).

The following legal entities can be established in Chile: Corporations, Joint Stock Company (Sociedad por
Acciones), Limited Partnerships (Sociedad en Comandita), Limited Liability Companies (SRL), EIRL (single-
member company), cooperative society, non-profit organizations, branch of a foreign entity and unlimited
liability companies.

16
Shareholders’ information of entities regulated and supervised by the SMV is kept in its files.

The Chilean Law does not recognize trusts as an entity to be incorporated in Chile, and does not admit
bearer shares.

Information identifying persons who beneficially own or control non-natural persons incorporated in Chile
is available in the public Register of Commerce that each Property Register (Conservador de Bienes Raíces)
keeps. The information is permanently available, either physically or through their respective Website
(https://www.conservador.cl/portal/indice_comercio ) for companies incorporated in Chile.

According to the Code of Commerce, with the Law on Corporations (Law 18.046), and with the Law on
Limited Liability Companies (Law 3.918, 1923), registration in the Register of Commerce must include the
full name of the shareholders / partners (owners), as prescribed in article 5 of Law 18.046 and in article
426 of the Code of Commerce.

Information regarding the ownership of corporations and joint stock companies, does not have to be
provided to the Registry of Commerce, after their incorporation. Nevertheless, changes in ownership must
be written down in the Registry of Shareholders maintained by the respective company, according to
article 7 of Law 18.046 on Corporations, and article 431 of the Code of Commerce for joint stock
companies.

Changes in ownership of corporations, joint stock companies and limited partnerships must be carried out
through a contract in case of the selling of shares (before a notary, or two witnesses of legal age, or a
stockbroker, according to article 38 of the Corporations Regulation – Law 18.046), and through a public
deed if the capital of the company is not divided in shares.

Moreover, article 5.4 of Law 21,000 grants the CMF supervision of company groups and allows it to require
from all individuals and entities that are part of the same company group, information enabling the
determination or identification of relationships of ownership or control and operations between them.

According to article 7 of Law 18.046 and with Circular 1481, all companies registered in the Securities
Registry must keep an updated list of their shareholders or partners, as the case may be, made available
to shareholders in the respective headquarters and their agencies or branches, which shall contain the
following information
Information regarding the shareholders (or partners):
1. Full name in case of being a natural person, or complete corporate name in case of a legal entity.
2. Address (street, number, department or office).
3. City corresponding to the address.
4. Total amount of subscribed shares owned by each shareholder, or percentage in the subscribed capital
owned by each partner in the case of entities other than corporations.
5. Number of paid shares owned by each shareholder or percentage in the paid capital owned by each
partner in the case of entities other than corporations (to be organised in alphabetical order).

Entities which capital is divided into shares must include at the end of the list the total amount of shares
subscribed, the total amount of shares paid and the total number of shareholders. Likewise, at the end of
the list of shareholders, the percentage of participation (both subscribed and paid shares) corresponding
to each type of shareholder should be summarized according to the following typology:
- National natural persons
- Foreign natural persons
- National legal entities
- Foreign legal entities

17
Entities which have issued shares in two or more series with different social rights between them, must
keep the information required separately for each series of shares.

Furthermore, entities shall send to the CMF, within 5 days following the expiration of each calendar
quarter, through the online system available on its Website, an updated file until the last day of each
quarter. This file shall include information on the shareholders or partners, and depositors and funds
behind the former.

Moreover, according to article 97 of Law 18.045 (Securities Market Law), the controller of a company
means any person or group of people linked by a joint action agreement that, directly or through other
individuals or legal entities, participate in the ownership and have the power to carry out any of the
following actions:
a) To ensure the majority of votes in the shareholders meetings and elect the majority of the board
members in corporations, or to ensure the majority of votes in the assemblies or meetings of its members
and to appoint the manager or legal representative or the majority of them, in other types of companies,
or
b) To decisively influence the management of the company.

When a group of persons is linked by a joint action agreement to exercise any of the powers indicated
above paragraphs, each of them will be deemed as member of the controller.
The managing partner shall be understood to be the controller in limited partnerships.
Furthermore, according to article 86 of Law 18.046 on Corporations, an affiliate company of a corporation
(parent company), is a company in which the latter directly or through another individual or legal entity
controls more than 50% of its capital with voting rights or its capital, if it is not a corporation, or can choose
or designate or make elect the majority of its board members and managers.

The legal requirement for identification of the controller is set out under General Rule 30, which provides
that this information shall be included in annual reports, where applicable.

The limited partnership shall also be considered as an affiliate of a corporation when the latter has the
power to direct or guide the manager’s administration. The CMF is able to obtain beneficial ownership
information on limited partnerships under article 5.4. of Law 21.000

Article 87 states that a company is related to a corporation (coligada) when the latter without controlling
the former holds directly or through another individual or corporation 10% or more of the capital with
voting rights or its capital, if it is not a shareholding company, or can choose or designate or make elect
at least one member of the board or the management. The CMF is able to obtain beneficial ownership
information from a related company in accordance with article 5.4, paragraph 1 of Law 21,000.

The limited partnership shall also be related to a corporation when the latter can participate in the
appointment of the manager or in guiding the corporation’s management.

In addition, article 34 of Law 18,045 states that stock brokers and securities agents (intermediaries in
Chile) are liable for the identity and legal capacity of individuals they contract. Also, the Annex of General
Rule 380 establishes the minimum requirements to identify the owners of publicly offered securities, as
mentioned in the response to question 1.b.

Information held by the Chilean Tax Authority (SII) concerning beneficial ownership of entities not
supervised by the CMF

18
According to article 68 of the Chilean Tax Code, taxpayers, which includes all legal entities incorporated
in Chile, shall inform the SII of relevant changes regarding data and background contained in the Initiation
of Activity form required for obtaining the Chilean TAX ID (RUT).

Moreover, according to Resolution 55, 30 September 2003 issued by the SII, taxpayers shall inform the SII
of changes provided under in paragraph 1 of the referred resolution which includes the change of partners
or shareholders, the modification of the capital share and/or participation regarding benefits.

This information must be provided to the SII within 15 working days following the date of the change or
the date of registration in the Registry of Commerce, as the case may be.

Article 97 of the Chilean Tax Code establishes that the delay or omission of statements, reports or
submission for registration will be sanctioned with a fine ranging from 1 Tax Monthly Unit (approx. US$
80) to 1 Tax Annual Unit (approx. US$ 950).

In turn, the CMF, according to article 5.31 of Law 21.000 may require information from other public
bodies, namely the Tax Authority, including confidential information. This provision further establishes
that in the case the required public body denies the provision of information, the CMF can proceed
according to the established under article 5.27, paragraph e). This rule allows the CMF to submit such
denial to a Judge, who will require the corresponding public body to comply with the information
requirement issued by the CMF. In case the public body does not comply with the judicial order, it will
incur in contempt of court according to the provided for under article 240 of the Civil Procedure Code
(from 541 days to 5 years imprisonment)

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 1c).

Question 2

Please identify and explain the general or specific provisions of your laws, rules and regulations (and
provide copies of these provisions) that enable you, or a separate governmental body in your
jurisdiction, to take or compel a person’s statement, or, where permissible, testimony under oath.

Summary of Regulatory Framework

- The CMF can compel information and testimony from regulated and non-regulated persons
according to articles 5.9, 5.27, 23 and 24.2 of the CMF Law.
- Non-supervised individuals who are not related to supervised entities but carry out any activity
which involves instruments or securities issued by supervised entities or individuals can also be
summoned by CMF for statements
- CMF Prosecutor (Fiscal) is empowered to summon persons and entities to take statements within
the scope of ongoing investigations or proceedings (Articles art. 5.9 and Article 24.2 of CMF Law).
- CMF may request application of constraining procedure If a person does not appear to make a
statement without a justified cause (article 35 of CMF Law, by reference to articles 93 and 94 of the
Chilean Tax Code).

Summary of the CMF’s response

The CMF has the power to summon and take compelled statements from partners, board members,
managers, representatives, employees and individuals, who provide or have provided services to

19
supervised individuals or entities, as well as to summon and take statements from any person, both
regulated and non-regulated) in accordance with article 5.9 of Law 21.000, as described in the response
to Question 1.a).

In response to a question from one Screening Group member on whether “summon” mean “compel” and
on whether the CMF has the ability to obtain statements on a voluntary basis, the CMF clarified that, in
addition to the answer to the previous question and to the provisions of article 5. 9 of Law 21.000, the
CMF has sufficient powers to directly require that supervised and certain unsupervised persons present
statements. Furthermore, the CMF would also have the ability to obtain statements made by supervised
and unsupervised persons on a voluntary basis, e.g. in case of self- report or claim of a possible securities
law violation. In turn, in case a person subpoenaed by the CMF to present statements unjustifiably fails
to appear before the CMF, it is possible to request measures to the court in order to compel the provision
of statements by such person, pursuant to article 35 of Law 21.000.

In addition, non-supervised individuals who are not related to supervised entities but carry out any activity
which involves instruments or securities issued by supervised entities or individuals can also be
summoned for statements. The CMF confirmed it can summon any person in Chile to ensure compliance
with the laws and regulations under its supervision/ enforcement.

The following persons can be summoned by the CMF in accordance with Article 5.9 of Law 21.000:
- All employees or any person who provide or have provided services to a supervised entity or person;
- Any other person which has concluded and executed agreements of any nature with a supervised entity
or person, regarding any fact which knowledge is deemed necessary by the CMF.
- Any person not supervised or related to a supervised entity that has concluded and executed agreements
which refer to instruments or securities issued by supervised entities or persons.

Article 24.2 of Law 21.000 setting out the duties and powers of the CMF Prosecutor (Fiscal) specifically
empowers the latter to summon and take statements in the manner prescribed under article 5.9 within
the scope of ongoing investigations or proceedings. These statements can be taken through tape
recording or/and in writing. In addition, this power can be exercised in relation to foreign authorities’
requests for assistance under the IOSCO MMoU, in accordance with the CMF’s duty to collaborate with
foreign regulators under an MoU it has signed with a foreign counterpart (article 5.23), as provided in
article 24.5.

If a person does not appear to make a statement without a justified cause, article 35 of Law 21.000 grants
the CMF the power to request application of articles 93 and 94 of the Chilean Tax Code, as described in
the response to Question 1 a), above.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 2.

Question 3

Please identify and explain the general or specific provisions of your laws, rules and regulations (and
provide copies of these provisions) that enable you to provide to foreign authorities:

(a) the information identified in 1(a) above;

(b) the information identified in 1(b) above;
(c) the information identified in 1(c) above;
(d) the information obtained through the powers described in 2 above; and
(e) information and documents held in your files.

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Summary of the applicable Regulatory Framework
- The CMF can share information with foreign counterparts, as well as with domestic authorities,
self-regulatory organizations and international bodies, under MOUs executed by the CMF
- The CMF can engage into MOUs regarding include technical cooperation, training, mutual
assistance, joint investigations into potential violations of the respective laws, exchange of information,
interconnection of online information exchange systems, or any other topic deemed necessary. (Article
5.22 and 5.23 of CMF Law)
- CMF Prosecutor has the power and duty to collaborate in investigations carried out by a foreign
counterpart (article 24.5 of CMF Law)
- CMF has the ability to share bank records and request the lifting of bank secrecy on behalf of
foreign regulators. article 5.5. paragraph 2 of CMF Law)
- CMF Internal procedures to handle the information sent and received to foreign regulators and
international organizations under MOUs – Approved March 2. 2018

Summary of the CMF’s response

Article 5.22 of Law 21,000 enables the CMF to share information with foreign counterparts, as well as with
domestic authorities, self-regulatory organisations and international bodies, subject to the CMF and the
other party having signed an MoU. The ability of the CMF to sign MoUs is set forth under article 5.23,
which scope may include technical cooperation, training, mutual assistance, joint investigations into
potential violations of the respective laws, exchange of information, interconnection of online
information exchange systems, or any other topic deemed necessary to carry out its powers and
responsibilities.

Furthermore, in accordance with article 24.5 of Law 21.000, the CMF Prosecutor has the power and duty
to collaborate in investigations carried out by a foreign counterpart, thereby ensuring compliance with
the CMF’s duties in relation to information sharing (article 5.22) stemming from the entering into of an
MoU with a foreign counterpart (article 5.23).

Specifically on the CMF’s ability to share bank records and the lifting of bank secrecy (article 5.5. paragraph
2 of Law 21.000), in relation to requests from foreign regulators, made under an MoU signed with the
CMF under article 5.23, it is required that both the request from the CMF Prosecutor and the
corresponding resolution from the Judge be based on serious and specific facts which comply with the
requirements of the international agreement for the exchange of information signed or ratified by the
Commission by virtue of the powers conferred in article 5.23 of Law N° 21.000.
The CMF clarified that Law 21.000 does not specify what should be understood as serious and specific
facts, and that no examples can be provided given that Law 21.000 entered into force very recently. The
CMF considers that a request fulfilling Paragraphs 7 b) and 8 b) of the IOSCO MMoU shall be deemed to
include serious and specific facts.
With regard to possible assurances that could be obtained from a Judge exercising his/her discretion in
favour of issuing a requirement for bank records under the IOSCO MMoU, the CMF explained that by
complying with all the requirements set forth in Law 21.000 the request is bound to be approved by the
Judge, more specifically with Paragraph 5.5. of Law 21000, which states that requests made by foreign
regulators, both the Prosecutor’s request and the Judge’s resolution shall be based in serious and specific
facts which comply with the terms of the MoU entered into by the CMF by virtue of the powers set forth
in article 5/23, which shall be expressly mentioned in both documents. For additional background in this
regard, reference is made to the attached CMF “Legal Opinion”, “The proceeding and communication to
the Judge that will be made by the Prosecutor of the CMF”, and “Background information of the History
of Law 21.000”.

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The CMF approved, on 2 March 2018, a Resolution on procedures to handle the information sent and
received to foreign regulators and international organizations under a memorandum of understanding
(attached to this Report). The internal procedure specifies the way confidential requests and documents
received from foreign regulators under a MoU are handled by the CMF, including procedures of
confirmation of receipt of the request and the setting up of internal timelines and procedures to analyse
the request as to its formal content, as well as procedures to respond to the request in a swift manner,
including a reference to strict compliance with the deadline indicated in the request. The CMF
International Department shall be the central contact point for all request for assistance made and
received by the CMF under an MoU.

Furthermore, the CMF new Internal Procedure includes a special procedure for requests for assistance
which require the lifting of the bank secrecy, according to Section C), paragraphs 1 to 12, as described in
more detail under Question 9. (for a more detailed description, please refer to the CMF Internal
Procedure, as attached, English version).

The CMF can thus share with foreign counterparts the categories of information identified in Question 3.
above, in accordance with the requirements set forth in the IOSCO MMoU.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 3.

Question 4

Please identify and explain the general or specific provisions of your laws, rules and regulations (and
provide copies of these provisions) that enable you to provide the information and documents
referenced in 3 above to foreign authorities in response to requests concerning the following:

(a) insider dealing, market manipulation, misrepresentation of material information and other
fraudulent or manipulative practices relating to securities and derivatives, including
solicitation practices, handling of investor funds and customer orders;

(b) the registration, issuance, offer, or sale of securities and derivatives, and reporting
requirements related thereto;

(c) market intermediaries, including investment and trading advisers who are required to be
licensed or registered, collective investment schemes, brokers, dealers, and transfer agents;

(d) markets, exchanges, and clearing and settlement entities.

Summary of the applicable Regulatory Framework

- CMF is responsible for the supervision of persons issuing or intermediating publicly offered
securities, stock exchanges (securities and commodities), market intermediaries, collective investment
schemes and their managing companies, corporations and limited partnerships under its supervision
(article 3 of CMF Law)
- CMF is in charge of supervision of public offerings of securities and of the respective markets and
intermediaries, and monitoring compliance with the Securities Law (Law 18045 on Securities Market).
- The CMF can compel information from regulated and non-regulated persons according to article
5.9 of CMF Law.

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- The CMF can share information with foreign counterparts, as well as with domestic authorities,
self-regulatory organizations and international bodies, under MOUs executed by the CMF
- The CMF can request information to other public organisms according to article 5.31 and article
5.27 (e) of CMF Law (for instance in the case of derivatives not under direct supervision of the CMF)

Summary of the CMF’s response

The CMF is the entity in charge of the supervision in Chile of the matters listed from (a) to (d) above. under
the CMF’s Organic Law (Law 21,000) and the Securities Market Law (SML - Law 18.045).

According to Law 21.000, article 3, the CMF is responsible for the supervision of persons issuing or
intermediating publicly offered securities, stock exchanges (securities and commodities), market
intermediaries, collective investment schemes and their managing companies, corporations and limited
partnerships under its supervision, insurance companies, insurance brokers, and any other person as
required by law. In addition, Law 18.045, Article 1 defines its scope and purpose, which includes
supervision of public offerings of securities and of the respective markets and intermediaries, being the
CMF responsible for monitoring compliance with this Law (in accordance with Law 21,000 and with Law
18.045 itself).

In particular:

- Insider dealing (SML, Articles 164 to 172) and market manipulation (SML, Article 52;
- Registration, issuance, offer, or sale of securities and derivatives, and reporting requirements related
thereto: SML Article 5/a) to d) (CMF’s duty to keep the registration of securities made available to the
public); SML, Article 10 (provision of information required by law to the CMF and the general public by
entities included in the register; General Rule 30 (periodicity, and format of publication of the
information); General Rule 314, 2011 (presentation and format of legal, economic and financial
information through the Internet).
- Market intermediaries’ securities operations, registration, solvency requirements and information to be
disclosed to the CMF: SML, Title VI, Articles 24 to 37; duty to keep books and records and information
on operations and duty to provide information deemed necessary by the CMF to keep the register
updated (article 32),
- Collective investment schemes and management companies / supervision by the CMF: Law 20712 (Funds
Law), Article 1;
- Markets, exchanges, and clearing and settlement entities: SML, article 2, provides that the CMF is
empowered to supervise compliance with this Law, according to the mandates granted by Law 21.000
and by the SML itself; Exchanges (SML, article 40); Settlement entities (Law 20.345, article 2 on clearing
and settlement systems of financial instruments, management companies and their participants);
securities custodians (Law 18.876, article 1/3).

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 4.

Question 5

Please identify and explain the general or specific provisions of your laws, rules and regulations (and
provide copies of these provisions) that enable you to provide assistance referenced in 4 above to a
foreign authority, regardless of whether you have an independent interest in the matter.

Summary of the applicable Regulatory Framework

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- CMF can to share information with foreign and domestic regulators, self-regulatory or
international bodies, under an MoU. The CMF does not need to have an independent interest regarding
the matter of the assistance required by a foreign authority in order to proceed with the exchange of
information, as long as there is an MoU in place (articles 5.22 and 5.23 of CMF law)
The CMF Prosecutor has the power and duty to collaborate in investigations carried out by a foreign
counterpart (article 24.5 of CMF Law)

Summary of the CMF’s response

Article 5.22 of Law 21,000 empowers the CMF to share information with foreign and domestic regulators,
self-regulatory or international bodies, subject to the CMF and the other entity signing an MoU, which
scope may cover technical cooperation, exchange of information, training or mutual assistance, joint
investigations into potential violations of the respective laws, exchange of information, interconnection
of online information exchange systems, or any other topic the CMF deems convenient for the exercise
of its attributions and for the achievement of its goals, as specified in article 5.23 of the same Law.

Furthermore, in accordance with article 24.5 of Law 21.000, the CMF Prosecutor has the power and duty
to collaborate in investigations carried out by a foreign counterpart, thereby ensuring compliance with
the CMF’s duties in relation to information sharing (article 5.22) stemming from the entering into of an
MoU with a foreign counterpart (article 5.23).

The CMF confirmed that the it does not have to have an independent interest regarding the matter of the
assistance required by a foreign authority in order to proceed with the exchange of information, being
the only requirement (according to article 5.22 of Law 21,000) is to have an MoU in place.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 5.

Question 6

Please identify and explain the general or specific provisions of your laws, rules and regulations
(and provide copies of these provisions) that require maintenance of the following information
and documents (including the period of time for which such information or documents are
required to be maintained):

(a) information identified in 1(a) above;

(b) information identified in 1(b) above; and
(c) information identified in 1(c) above.

Summary of the applicable Regulatory Framework

- Supervised entities are obliged to maintain their records available for CMF supervision. CMF may
exceptionally authorized supervised entities to keep records in a place different from their headquarters
(Article 5.4 of CMF Law).
- Back-up documents of orders, instructions, operations and acts performed by intermediaries,
must be maintained for a period of no less than 10 years. Contracts with clients must be maintained for
at least six years. Upon termination of activities of an intermediary, records for the last six years shall be
delivered to the relevant stock exchange (CMF General Rule 380)
- Banks and other financial institutions subject to the banking supervisor shall keep their books,
forms, mailing, documents and tickets for a period of six years. (article 155 of the Chilean General Law of
Banks)

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Summary of the CMF’s response

Article 5.4 of Law 21.000 provides that, excluding exceptions authorized by the Commission all books, files
and records pertaining to supervised persons or entities must be permanently available for examination by
the CMF at their headquarters.

Section IV of General Rule 380 establishes that all back-up documents of orders, instructions, operations
and acts performed by intermediaries, must be maintained for a period of no less than 10 years.
In addition, contracts concluded by intermediaries with their clients must be maintained for at least six
years from the date of termination of the contractual relation between them.
If and when the registration of an intermediary is revoked by the Commission, the intermediary, according
to General Rule 380, is required to submit all records they have maintained for a six-year period to the
stock exchange of which they were member.

According to article 155 of the Chilean General Law of Banks, institutions under the supervision of the
SBIF shall keep their books, forms, mailing, documents and tickets for a period of six years. The
Superintendent of the SBIF may authorize the elimination of part of the records before this date and order
that specific documents or books be kept for a longer term. However, under no circumstance books and
documents can be destroyed if they relate directly or indirectly with a matter in discussion or a dispute.

Regarding entities which are not supervised by the CMF, information regarding ownership of companies
is permanently kept by the Register of Commerce, which is the public register gathering information on
ownership (partners) / name of the company / corporate purpose, among other data. The information is
always available either physically or through their respective website
((https://www.conservador.cl/portal/indice_comercio) for companies incorporated in Chile).
Since it is a requirement to deliver this information for the incorporation of a company or for modifying
its by-laws, non-compliance may lead to the cancelation of the company.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 6.

Question 7

Please identify and explain (and provide copies of) any domestic secrecy or blocking laws, rules and
regulations that relate to the collection for, or provision to, foreign authorities of:

(a) the information identified in 1(a) above;

(b) the information identified in 1(b) above;
(c) the information identified in 1(c) above;
(d) the information identified in 2 above; and
(e) the information identified in 3(e) above.

Summary of the applicable Regulatory Framework

- Bank secrecy rule provided in Article 154 of the General Law of Banks with regard to deposits and
operations of any nature received by banks. The same article establishes exceptions to this rule, allowing
access to civil, criminal and military courts, and public prosecutors
- CMF can obtain information under bank secrecy according to the provided for in article 5.5. of
CMF Law.

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- CMF Resolution on internal procedures to handle information received from or sent to foreign
regulators under an MoU, sets forth specific procedures and requirements regarding the request for lifting
bank secrecy on behalf of a foreign regulator.

Summary of the CMF’s response

Article 154 of the General Law of Banks establishes, as general rule, that deposits and operations of any
nature received by banks are subject to bank secrecy and are not allowed to be disclosed to anyone other
than the owner, or to individuals expressly authorized by the former, or to their legal representative. The
same article establishes exceptions (civil, criminal and military courts, and public prosecutors) to this rule.

Notwithstanding the above, according to article 5.5, the CMF has the power to authorize the CMF’s
Prosecutor (Fiscal) to obtain information related to bank operations of specific individuals or entities, in
accordance with the procedure prescribed in said article to lift bank secrecy (authorisation request sent
by the CMF Prosecutor to a Judge of the Court of Appeals, as described in detail under Question 1.a)) and
Question 3., above,, and provide such information in response to requests for assistance from foreign
authorities, for the purpose of their investigations, under agreements or MoUs entered into with the CMF.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 7.

Question 8

Please identify and explain (and provide copies of) any specific or general provisions of your laws,
rules and regulations which restrict or limit the following uses by foreign authorities of information
and documents identified above in 1(a)-(c), 2 and 3(e) provided by you:

(a) for the purpose of ensuring compliance with (including investigation of potential violations
of) laws and regulations related to:
(1) 4(a) above;
(2) 4(b) above;
(3) 4(c) above; and
(4) 4(d) above.

(b) for the purpose of conducting a civil or administrative enforcement proceeding, assisting in
a self-regulatory organization's surveillance or enforcement activities or assisting in a criminal
prosecution.

Summary of the CMF’s response

There are no limitations to the use of the information identified above, provided that the information is
used in accordance with paragraph 10 of the IOSCO MMoU.

Verification’s Team Assessment

It is VT6’s understanding that the CMF is able to comply with the MMoU provision cited in question 8.

Question 9

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 Please identify and explain (and provide copies of) any general or specific provisions of your
laws, rules and regulations that provide for the confidentiality of:

(a) requests for assistance made to you by foreign authorities, the contents of such requests,
and any matters arising under such requests, including consultations between or among
the authorities, and unsolicited assistance; and
(As required by Paragraph 11(a) of the MOU)

(b) documents and information received from foreign authorities.

Summary of the applicable Regulatory Framework

- The CMF staff is subject to a strict duty of confidentiality under article 28 of CMF Organic Law
- Internal procedures approved by CMF for handling foreign regulators requests for assistance
specify procedures and requirements to protect the confidentiality of this information.
- Pursuant to CMF Internal Procedure, confidential Information received by the CMF pursuant to a
MoU shall not be passed on to third parties, without requesting the prior and explicit consent from the
foreign regulator.
- Process of judicial authorization to lift bank secrecy at the request from foreign regulators is
secret pursuant to article 5.5., paragraph 7 of CMF Law
The CMF is allowed to deny access to information requested under the Chilean Transparency Law, when
its communication would affect international relations

Summary of the CMF’s response

According to article 28 of Law 21,000, commissioners, public officials and individuals who provide services
to the CMF are bound to keep confidential all documents and background information which they become
aware in the performance of their duties. Non-compliance with this obligation will be punished with
imprisonment ranging from 61 days to 5 years and a fine ranging from approx. US$ 780 to US$ 2350.-
Furthermore, this infringement will carry on administrative liability and will be sanctioned with dismissal
from the position.

In addition, the CMF Resolution recently approved (Resolution 760, 2 March 2018) on internal procedures
to handle information received from or sent to foreign regulators under an MoU, sets forth specific
procedures and requirements to protect the confidentiality of this information (a copy translated into
English was provided by the CMF). This Resolution applies to current staff and former employees.
According to Section III, paragraph 3) current and former employees, and persons providing or having
provided services to the CMF in any capacity, must keep confidential all the information they manage, or
used to manage, in the performance of their duties.

Regarding persons providing services to the CMF, Section III, paragraph 5 states that the duty of
confidentiality also applies to any person who directly or indirectly had access to confidential information
by virtue of a contract entered into with the CMF, which must include a clause requiring compliance with
this duty prevailing during and after the cessation of the contract.

Thus, CMF Commissioners, officials, former officials, and persons providing or having provided services to
the CMF in any capacity, must take all the measures required and available to comply with this
confidentiality duty. The sanctions provided in article 28 of Law 21,000, as described above, will apply in
case of non-compliance, this provision being expressly mentioned in the CMF’s Resolution (Section V.
Enforcement).

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Also in accordance with this CMF Internal Procedure, confidential Information received by the CMF
pursuant to a MoU shall not be passed on to third parties, without requesting the prior and explicit
consent from the foreign regulator or international organization from which the information was
received.

In case the CMF were required to pass on such information upon a legally enforceable demand and did
not receive the prior consent from such regulator, the CMF, according to the Law, shall: (a) exercise all
legal exemptions and privileges defined in the law to defend the confidentiality of the information, if they
exist; (ii) to keep informed the foreign regulator or international organism, establishing a bilateral
coordination mechanism, and (iii) communicate to the entity requiring the information that it was
received as confidential or reserved, and that its disclosure may harm international cooperation with
foreign regulators and international bodies.

In all cases, no confidential information received under the terms of a MoU shall be passed on to third
parties without the written approval of the Chairman of the CMF, with prior approval by the CMF Board.

The CMF Resolution further established that information received from or sent to a foreign regulator or
organization must be kept in a physical and/or electronic file which will remain with the CMF International
Department. If the file is in electronic format, it will be protected with a password assigned by said
department. Access to the physical and electronic file will be restricted and controlled by the Chief of the
International Department. Only the Chairman of the CMF, and the personnel appointed by the President
or Intendent, Area or Chief that requested or sent the information will have access to such information.

Article 21 of the Chilean Transparency Law establishes that a public body, including the CMF, may deny
totally or partially access to information in its possession in case its publicity, communication or
knowledge would affect the national interest, especially if it refers to public health or international
relations and to economic and commercial interests of the country.

With regard to requests from foreign regulators and the confidentiality of the process, as explained under
Question 1a), the judicial procedure is secret (article 5.5., paragraph 7 of Law 21,000), being the Judges
participating in the process forbidden to disclose information to third parties. Furthermore, the Chilean
Criminal Code, article 246, provides that public officials (including judges) disclosing secrets which they
become aware of in the performance of their duties, or to deliver documents or copies thereof which are
under their custody and are not meant to be published, will be sanctioned with the suspension of their
position (from 60 days to 2 years) or with a fine ranging from US$ 470 to US$ 1570, or both. Moreover, in
case the disclosure or delivery of the information entails a major harm to the public interest, sanctions of
imprisonment will be applied (from 5 to 20 years) and a fine ranging from approx. US$1650 to US$2350.
In this regard, reference is also made to the clarification added under question 1, namely that according
to paragraph 7 of article 5.5. of Law 21.000, all documents related to the process of court authorization
of a request to lift of bank secrecy are reserved and shall be returned to the CMF once the authorization
is granted. It was further confirmed by the CMF within the context of the process to lift bank secrecy
established under article 5.5, within the scope of a CMF investigation, that the procedure complied with
the requirements of effectiveness, speed and confidentiality provided in the CMF Organic Law.

Furthermore, the new CMF internal procedure, establishes in Section IV. C), paragraphs 1 to 12 a Special
procedure applicable to a request for information made by a foreign regulator or international
organization that requires information regarding banking operations of specific persons subject to secrecy
or subject to reservation. This procedure has been set out to restrict disclosure of these type of requests
at the level of the CMF staff. It also establishes mechanisms, both physical and technological, to safeguard
the confidentiality of the information from the moment the information is received by the CMF,
throughout completion of the process.

28
Verification Team Assessment
It is the VT6’s understanding that the CMF is able to comply with the MMoU provisions cited in question
9).

***

Attachments:

 CMF Legal Opinion, 15 March 2018 and complementary note to the Legal Opinion issued by the
Head of the Legal Department of the CMF, 11 July
 Independent Legal Opinion of the Chilean State Defense Council
 Official Communication N°946 from the Chilean Tax Authority to the CMF (In Spanish and in
English)
 Official Communication N°361 from the Chilean Public Prosecutor’s Office to the CMF (In
Spanish and in English)
 Official Communication N°518 from the Chilean Financial Analysis Unit to the CMF (In Spanish
and in English)
 Official Communication N° 15397 from the CMF to the Chilean Ministry of Finance (In Spanish
and in English)
 Official Communication N° 1233 from the Chilean Ministry of Finance to the Chilean State
Defense Council (In Spanish and in English)
 Legal Opinion issued by the Chilean State of Defense (in Spanish and in English)

 Background information of the History of Law 21.000

 The proceeding and communication to the Judge that will be made by the Prosecutor of the
CMF

 CMF Resolution approved on 2 March 2018 - Policies and procedures to protect the
confidentiality of the information received from or sent to foreign regulators and international
organizations under a memorandum of understanding (English translation)

 Preliminary Assessment, December 2013

29