Beneficial ownership in Chile's public procurement reform
Introduction
Since its launch in 2003, Chile’s public procurement system, commonly known as ChileCompra, has been recognised as one of the pioneers in South America and beyond. [1] As part of a major reform of the system to enhance integrity and efficiency in 2023, Chile incorporated beneficial ownership transparency (BOT) measures into its procurement system and processes. While recognising the value of BOT in supporting a variety of procurement integrity goals, such as promoting fair competition, this case study focuses on exploring BOT’s impact on the prevention and detection of potential conflicts of interest. It documents the challenges faced by ChileCompra and the actions taken to overcome these, and draws key lessons and recommendations that can support other countries pursuing similar reforms to advance the use of beneficial ownership (BO) data in procurement.
Summary
In December 2023, Chile undertook the most significant reform of its Public Procurement Law (Law No. 19886) in two decades, reshaping a market that accounts for over 5% of the national GDP and includes more than 110,000 suppliers yearly. [2] The reform introduced changes across all major chapters of the Procurement Law, aiming to enhance transparency, strengthen competition, and improve efficiency in public procurement, while ensuring broader participation from micro, small, and medium enterprises (MSMEs) and raising integrity standards.
A key innovation of the reform is the integration of BOT measures into the procurement system. As of 12 December 2024, domestic and foreign legal entities are required to disclose their ultimate beneficial owners and administrators as part of the registration process. Currently, the data is disclosed and validated through web-services connections, drawing on data from the Chilean Internal Revenue Service (Servicio de Impuestos Internos, SII) and providing system users with a pre-filled declaration form. This data is now available at ChileCompra in a structured format for a wide range of institutional and analytical uses.
The reform also strengthened the institutional role of ChileCompra by granting it the authority to require information from other public entities and to report potential violations to oversight bodies, such as the Public Prosecutor’s Office (Ministerio Público), the Office of the Comptroller General (Contraloría General de la República, CGR), and the National Economic Prosecutor’s Office (Fiscalía Nacional Económica).
After careful consultation, ChileCompra adopted a strategic and pragmatic approach to policy implementation and compliance. Rather than relying solely on deterrent measures, ChileCompra used business process incentives to drive compliance. All suppliers – whether domestic or foreign, individuals or legal entities – must register in the Supplier Registry to access business opportunities on Chile’s public procurement platform, Mercado Público. [3] One particularly effective approach has been to require disclosure from existing suppliers whenever they transact on the platform (i.e., submit bids, send quotes, or receive purchase orders). This incentive-based mechanism has proven effective: within just three months, 59% of the 66,000 targeted companies complied, resulting in the registration of over 100,000 beneficial owners from 39,039 firms. [4]
Indicators of the potential impact on integrity outcomes are also measurable. Following the enactment of the reform, the Observatory of ChileCompra established a proactive system of conflict-of-interest warnings, using BO information in three main business processes to detect potential conflicts. Their assessment found that the number of conflicts of interest detected by their unit dropped by 69%, from a monthly average of 18.7 to 5.8 cases.
While various factors may have contributed to the decline in detected conflicts of interest, it can reasonably be assumed that the reform, together with accompanying sanctions and strategic communications, played a key role in signalling a shift away from impunity. The integration of BO information enabled more systematic identification of potential conflicts, such as individuals exercising control in both supplier companies and contracting entities. Combined with increased transparency and institutional powers, these measures helped foster a broader culture of accountability. This success was underpinned by clear leadership; a willingness to innovate, adapt, and communicate openly; as well as a holistic implementation strategy. ChileCompra combined strategic communication, regulatory guidance, and technological enhancements with a bold decision to publicly release observatory findings on assessments of policy implementation, effectiveness, and challenges on its website and social media platforms. [5] This transparency increased the cost of noncompliance and helped normalise adherence to the new rules.
Chile’s experience serves as a compelling example of how embedding BOT into public procurement systems can produce measurable improvements in integrity and oversight, even in large and open markets. Its approach offers valuable lessons for countries pursuing similar reforms, particularly in changing the culture, aligning incentives, building institutional capacity, and leveraging technology to enhance accountability.
Footnotes
[1] ChileCompra (legally, Dirección de Compras y Contratación Pública) is a public agency under the executive branch of the Government of Chile. It operates under the Ministry of Finance and is responsible for managing and overseeing the country’s public procurement system, including the platform Mercado Público (see: Mercado Público, home page, n.d., www.mercadopublico.cl). N.B. Since 2009, Chile has been part of the Procurement G6, known as the Multilateral Meeting on Government Procurement. This is an informal group of six national central purchasing bodies which includes, besides ChileCompra, the Public Services and Procurement Canada (Canada), Consip (Italy), Public Procurement Service (South Korea), Crown Commercial Service (United Kingdom), and the General Services Administration (United States of America). Since 2013, ChileCompra has been part of the Organisation for Economic Co-operation and Development (OECD) Working Party of Leading Practitioners on Public Procurement, a platform for public procurement organisations to exchange best practices and address emerging challenges in the field.
[2] ChileCompra, Open Data Portal, and the Central Bank of Chile. See: ChileCompra, home page, https://chilecompra.cl/; “Datos Abiertos de las compras públicas de Chile”, ChileCompra, updated 2025, https://datos-abiertos.chilecompra.cl/; “Cuentas Nacionales – Base de Datos Estadísticos (BDE)”, Banco Central Chile, n.d., https://si3.bcentral.cl/Siete/ES/Siete/Cuadro/CAP_CCNN/MN_CCNN76/CCNN2018_P0_V2/637801082315858005?cbFechaInicio=2013&cbFechaTermino=2024&cbFrecuencia=ANNUAL&cbCalculo=NONE&cbFechaBase=.
[3] “Registro de Proveedores”, ChileCompra, n.d., https://www.chilecompra.cl/registro-de-proveedores/; Mercado Público, home page.
[4] Source: Interview with executives of ChileCompra, data from January to March 2025.
[5] “Informes Observatorio de Compras Públicas”, ChileCompra, updated October 2024, https://www.chilecompra.cl/informes-observatorio-de-compras-publicas/; ChileCompra (@ChileCompra), “#AltoalaCorrupción. Ministerio Público investiga 10 casos denunciados por el Observatorio #ChileCompra por presunta falsificación y adulteración de documentos”, X, 16 January 2025, https://x.com/ChileCompra/status/1879975417706422466.