Opening a Bank Account in Chile

After a company is established in Chile, the next step is to open a bank account. However, many companies are taken aback when they realize that it is time consuming and frustrating to open a bank account in Chile.

In fact, often companies overlook this step, assuming that opening a bank account will be as effortless as it is in North America, Europe, or Australia. Unfortunately, this assumption couldn’t be further from the truth. Chilean banks are very conservitive, requiring companies to go through an application process and then only providing accounts to companies who have been approved. 

Opening a bank account in Chile can take several weeks. If the timing is not anticipated, it can often lead to delay in critical business tasks such as paying staff, invoicing clients, paying suppliers, etc. We have provided some practical tips to help you navigate opening a bank account. 

Evaluate the Different Banks

The major banks in Chile are recognized globally and offer comparable services to those found in any other country. However, each bank operates differently. Companies need to understand the procedures of each financial institution for day-to-day banking tasks and have a chance to see the online banking platforms. The ease of working with the bank will greatly influence whether the relationship is succesful or not.  Unfortunately, some banks have restrictive policies that make common banking tasks more complicated than they should be. 

Here are some important details you need to check for when selecting a bank:

• Details such as whether you can make international payments online without visiting a branch. Some banks require you to bring a signed document to your local branch each time an international transfer is made. 
• Details as to whether the bank will allow you to buy and sell dollars online. It is even important to ask whether you can call the executive to negotiate a better exchange rate which is important for foreign companies who are often selling or buying large quantities of dollars on a regular basis.
• It is important to understand whether foreigners who are outside Chile can have access to the online bank accounts, what type of permissions can be added for users, whether it is standard to provide both a USD and Peso accounts, etc.

Practical Tips – Because the application process is so strenuous, it is best to spend time evaluating the bank and its online platform before going through the application process. It is important to know that it takes around 3 weeks for a Chilean bank to approve a new application. Often with recently incorporated companies, particularly foreign companies, the banks will only open an account if the legal representative has a relationship with that bank. Feel free to reach out if you need a recomendation on which bank may work best. 

Steps to Open a New Account 

Opening a new bank account for a company with no previous operations in Chile can be difficult. The banks are extremely conservative in Chile. It is not uncommon for them to decline an application for a simple checking account. The process of opening a new account is by far the biggest inconvenience foreign companies will face after they incorporate a new company in Chile.

• The most important consideration is that the legal representative of the newly established company has a pre-existing relationship with the bank.  
• The bank will often ask for the legal representative’s personal financial documents to support the company’s applications. They will also ask for all the corporate documentation of the company. These documents will then be reviewed by the bank’s legal department who will in some cases have observations that will need to be addressed.   
• The bank will then ask for a letter of recommendation from the parent company’s home bank and the financial reports from the last 2 years.
• The whole process will take  approx. 3 weeks depending on the bank being applied to, whether there are observations by their legal department, and how fast you respond to the various inquiries.  

Practical Tips   – There is very little that a company can do to influence the bank’s process or timing. The banks will take whatever time they need. The banks legal teams will often make observations that sometimes do not make sense and need to be refuted. It is crucial for companies to carefully consider the time it takes to open an account, ensuring it does not hinder other aspects of the business.

Access to Online Banking for Foreigners and Staff 

Once the bank account is open, it is important to consider what is needed for head office to have access to the account. The initial account will be set up with the legal representative having full access. It can be difficult to get foreign managers access to the account because log-in credentials are based on a local Tax ID (RUT), which only residents will have.  

• The process for getting a foreigner access to the account generally involves the bank creating a “fictitious” Tax ID for the person, banking powers provided to each person who will need access, and then sending the digital passes to the person by mail.  This process can take up to 2 months.  
• The process for getting local managers or staff acesss is relatively straightforward and access can be granted in about one week. 
• When providing banking powers to local staff, it is important to have a “check and balance” system. This means ensuring that there are limits to what employees can do, double signatures for transactions over a certain size, and that there are clear policies and procedures for employees to follow.  

Practical Tips – Companies need to have proper checks and balances for local staff who will have banking powers.  There are examples of managers who have taken credit in the company’s name without any authorization or paid/transferred for things that were not approved. With this in mind, we always recommend foreign companies ensure there is good banking procedures in place for local staff. 

Credit Cards 

Obtaining credit cards for a newly incorporated company can be difficult. In most cases, the banks will only provide a credit card if the company puts a guarantee for the same amount. In other cases, they will not even do that until the company has history and can show it has revenues after the first 12 months. This can be very frustrating for a recently incorporated company that has new staff who need credit cards for travelling. 

• In some countries, you can have debit cards that have limits or are prepaid. These are not available in Chile, so a credit card is generally the only option.  
• Staff will need to be trained on proper expensing. Rejected expenses can carry a 40% fine from the tax office so it is important that each expense purchased on the credit card is supported by a receipt and is properly accounted for each month.  
• Credit cards can take approx. one to two months to be issued so it is best to keep this in mind when starting the process. They are often rejected completely for new established companies. 

Practical Tips – Credit cards are very complicated for new companies. Either the bank requires a guarantee for each credit card, or they will decline any credit card application until the company can provide financial statements that demonstrate the company has revenues. Some companies find it easier to have credit cards issued from a banking institution in their home country. 

Conclusion

Chile is advanced in many areas, but the banking industry is still very conservative. It is very frustrating and sometimes even leaves foreigners scratching their head trying to understand how the banks operate in Chile. It is by far the most difficult part of getting your company operational. Even when you have found a bank that you like, many tasks are still dependent on the account executive. The result is that if you happen to have a bad executive, which is not uncommon, your relationship with the bank will be not be positive.

Our last piece of advice is that it is important to work with a Legal Representative and General Managers that understands how the banks in Chile operate. They will have the ability to advocate effectively, push the executive when needed, offer realistic timelines for various banking processes, and be able to clearly explain to the head office what can or cannot be done.  Although banking in Chile can be frustrating, foreign companies can manage their Chilean operations properly if they understand the time frames and processes of the banks. 

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our legal and commercial advisors team has a distinguished track record of helping foreign technology and services companies grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal