It is more than banking secrecy

El Líbero, June 28, 2024

The issue is not whether to lift it or not, but rather access to information. If lifting it is straightforward but the information is provided in unstandardized formats, it still hinders investigation.

The lifting of banking secrecy has been politically utilized this week. Explanations have been requested from both sides, money laundering has been mentioned, but nothing has been said about the core of the problem: the organized crime.

Significant deficiencies are observed in the understanding of the phenomenon. While some have a well-rounded understanding of what organized crime means and how it operates, others do not fully grasp it or use definitions that are not applicable to the Chilean context.

The Palermo Convention defines it as a structure of more than three people that operates over time and organizes to commit one or more serious crimes in more than one state. This definition is correct for transnational organized crime; however, in the Chilean case, it is also necessary to consider national organized crime that grows around our raw materials.

The key to all this lies in the fact that organized crime is an illicit enterprise that seeks to maximize profits by exploiting all the weaknesses of the system to sell its product and launder illegally obtained money. Therefore, the essence of the debate on banking secrecy is not about politically confronting the other side, but rather understanding how this tool hinders or facilitates investigations into money laundering.

Money laundering uses a wide variety of resources; banking secrecy is an aspect that must be addressed in this matter. Moreover, whether to lift it or not is not the core issue; access to information is. Because, if lifting it is straightforward but the information is provided in unstandardized formats, it still hinders investigation.

Thus, what we need to discuss today relates to understanding the problem and the capabilities the state has to pursue it. For example, are there resources? Is there inter-institutional collaboration? Do we have a system updated to meet today’s challenges? It seems that the answer to these questions is no. That is the challenge.

Shell companies, false invoices and IDs, legal intermediaries whose activities are partly illicit, banking clients who cannot justify their income, remittances, and digital currencies, among other things, are some of the resources used by crime to launder assets. Therefore, the challenge lies in the system the state has to investigate and pursue the crime, in inter-institutional collaboration, and in understanding the problem where corruption is the cornerstone.

In the end, it seems that the criminal knows us better than we know them. We need to understand them, set aside naivety, and with the same enthusiasm that generates opportunities for economic development, create the controls that protect those opportunities. Updating the Chilean landscape is urgent as it is prepared to face the challenges of a decade ago and does not fully comprehend today’s challenges.

Pilar Lizana
Senior Researcher, AthenaLab

Source: El Líbero