/ Fintech Law: CMF Approves Regulation Governing Open Finance System

This regulation represents a milestone for the Chilean financial market and a central stage in the implementation of the Fintech Law, approved in early 2023, whose main objective is to promote competition, innovation, and inclusion in the financial system.

Vicente Guíñez
Associate Attorney

On July 3, 2024, the Financial Market Commission (CMF, for its Spanish acronym) published General Applicability Rule No. 514 (NCG 514), which governs the Open Finance System (OFS) created by Law 21.52, known as the Fintech Law. The regulation, which will come into effect 24 months from this date, regulates the general operation of the OFS, allowing individuals and companies to share their information in the financial system, thereby accessing better conditions or new products and services tailored to their needs.

The Open Finance System

The OFS allows users of the financial system to securely share their data to obtain greater benefits and better conditions for contracting financial services. Its implementation aims to generate greater competition, financial inclusion, and innovation. For example, it will allow a consumer to instruct Information Provider Institutions (IPI) to transfer data to Information-Based Service Providers (IBSP). This could occur when a bank user, interested in obtaining a loan from another bank at a favorable interest rate, accesses their transaction history to prove their creditworthiness and financial stability.

Additionally, once in effect, an interested party who holds an account with a financial institution that provides a prepaid card will be able to request a service provider to instruct the institution to transfer funds to a bank account. The first is referred to as an Account Provider Institution (API); the second, a Payment Initiation Service Provider (PISP).

The IPIs, IBSPs, APIs, and PISPs (Actors) are to be regulated by the CMF and must comply with obligations aimed at safeguarding financial stability, preventing money laundering and financing of drug trafficking and terrorism, and protecting financial customers. Additionally, the Actors must be registered and/or authorized by the CMF.

The Actors will operate in the OFS through remote and automated access interfaces or alternative mechanisms that ensure system continuity.

Content of NCG 514

Structurally, NCG 514 is divided into six sections that cover the scope of the OFS; the operation of the system; the security and protection of the system; system information; other provisions related to suspensions, sanctions, implementation, information requirements, and effective date; and regulatory annexes. These regulatory annexes will specifically regulate variables for sets of information; products; technical matters; and cost distribution specifications.

The NCG governs the following matters:

1. Requirements for registration and enrollment in the IBSP and PISP registers.
2. Enrollment of IPIs, APIs, and other OFS participant entities in special lists.
3. Minimum standards associated with means of delivering and exchanging information, information security, authentication and verification of customers and participating entities.
4. Requirements related to customer consent.
5. Thresholds for determining reimbursement of incremental costs for the use of interfaces.
6. Data to be shared and exchanged.
7. Gradual implementation.

The OFS regulation adds to the one already issued by the CMF on January 12, which governs the registration, authorization, and obligations that Fintech Financial Service Providers must comply with.

Find out the details of the Fintech Law implementation process on this CMF page.