Carlos Pavez has been director of the Financial Analysis Unit (UAF) for three months, an organization created almost 20 years ago to prevent the use of the financial system or any economic activity for the commission of crimes of money laundering and financing of terrorism.
Appointed by President Gabriel Boric after a public contest carried out through the High Public Management System, this lawyer and commercial engineer has been close to the supervisory role. He served as legal director of the Superintendence of Banks and Financial Institutions, Superintendent of Securities and Insurance and Chairman of the Council of the Commission for the Financial Market. And perhaps, for the same reason, he is clear that one of the challenges of the UAF is to incorporate new subjects obliged to report suspicious operations.
“We need more inspectors, not only for intelligence, we need tools, software, equipment to improve this work and strengthen something that is already being done well.”
And this “strengthening” -as it says- of the people ordered to deliver information requires an update of the legal framework. But it is a step that has been recommended internationally to several countries in the region, she explains. In the case of Chile, it is from the idea of adding lawyers, accountants and corporate service providers, among others.
– Does the case of lawyers already apply in other countries?
– Probably, it is one of the activities that has generated the most discussion at an international level, because it has several aspects. The activities within the legal advisory profession that should be incorporated -obviously they are not all- are those related to these advisory services, provision of corporate services or legal advice and not defense. What has caused the most, at least from the public, some type of doubt would have to do, for example, if defense attorneys -in the exercise of these functions- should be incorporated into the obligation to deliver information. I would say that this is where there is more of a problem, but it is an activity that has been regulated for a long time.
– Are there other sectors that you hope to incorporate?
– We are in conversations to evaluate the incorporation of reporting entities in areas that we understand are relevant. And we have also raised and had a very good reception from the authority of the Ministry of Finance and from conversations that we have had with the Public Ministry as part of the permanent coordination that we have with them to define well if it makes sense to continue adding sectors as an obligated subject. or if, rather, it is necessary to focus on those areas that are most relevant.
In the field of what they contribute as a regulated entity, lawyers, accountants, professionals who provide corporate advisory services are relevant.
– At a regional level, what regulatory level are we at?
– We are at a high level of compliance, in a rather positive position in relation to the region. But without prejudice to that, we have an important challenge, the identification of having a centralized and easily accessible system for all competent authorities with information on the final beneficiaries of legal persons or arrangements. It is an issue on which work is being done and, in fact, today the project is part of the latest tax reform project. There are different looks and utilities that are given to the information that is going to be generated from that record.
“We need more inspectors”
Regarding various regulations that Congress has been analyzing since 2018 and that seek to incorporate automotive companies, leasing companies, arms sales, shooting, fishing and hunting clubs; and even purebred equine associations as subjects obliged to report -but that do not strengthen the institution-, Pavez affirms that there is “quite a conviction” about the need to strengthen the powers of the UAF: “Our work has to do with financial intelligence, as a super important input so that the Public Ministry can carry out the investigation and prosecution of the different crimes associated with the financing of terrorism. That is why when we raise this issue of strengthening we raise it as a comprehensive view. We need more inspectors, not only for intelligence, we need tools, software, equipment to improve this work, strengthen it, because it is trying to improve something that is already being done well.”
Currently, the entity has a workforce of 71 people.
– You have access to banking secrecy. Could that be improved?
– Indeed, we have access to bank secrecy with the authorization of a court, but that has a cost from the point of view of opportunity and wear also of the jurisdictional body, tribunals or courts, which are the ones that have to authorize. It remains to be seen to what extent we can exercise the power that the UAF has with greater flexibility, in this case of being able to request complementary information to that contained in the suspicious transaction reports in order to be able to do a more complete job. It is necessary to go a little further in this direction and we are working to see how we can also improve or strengthen the information exchange system, not only in the field of banking secrecy, but also from tax secrecy and other information that we can obtain from different public institutions.
10 thousand suspicious reports and
8 thousand subjects who report
The sectors that report the most are financial institutions, banks in particular.
The director of the UAF, Calos Pavez, explains at the end of the first semester the submission of suspicious transaction reports continues to rise. “We are almost at 10,000”, he specifies.
Of this “large number”, he explains, more or less the same percentage has remained – around 5% – of irregular suspicious transaction reports that are sent to the Public Ministry. Last year, of the 12,000 reports received, 5% were also referred to the prosecutor’s office.
Currently, the universe of subjects obliged to report exceeds eight thousand, which implies a 2% growth, and the expectation is that based on the legal initiatives in the pipeline, that figure will probably “increase considerably” , says Pavez, along with reinforcing the need to institutionally strengthen the UAF from the point of view of its human resources and support tools.
The sectors that report the most are financial institutions, banks in particular, from the point of view of the number of reporting entities and they represent a significant number of suspicious transaction reports. Another important area is related to real estate activity, both real estate managers and property brokers; while some 2,500 are Free Zone users.
Notaries and conservators, as well as gaming casinos, also “report a large number of suspicious operations,” says Pavez.