Implementation of COSP Resolution 10/6 on Enhancing the Use of Beneficial Ownership Information to Strengthen Asset Recovery

Chile’s approach to beneficial ownership transparency implementation

Strengthening laws and institutions to tackle corruption in public procurement, and paving the way for more use cases

This case study largely draws on a publication developed by Open Contracting Partnership (OCP) and Open Ownership to summarize Chile’s approach to implementing the resolution 10/6 provision, which urges States parties to take measures to facilitate access to BO information for domestic public procurement authorities. It also highlights ongoing efforts of the Chilean government to build on lessons from applying BOT in procurement, to inform the creation of a BO register for the full economy in the near future.

Situation

The Government of Chile recognizes the importance of BOT to help reach its national priorities. Both its national public integrity and anti-money-laundering strategies highlight BOT’s role in tackling criminal activities and related money laundering, tax abuse and conflicts of interest, as well as a range of practices that hinder fair competition and affect consumer rights. In the Open Government National Action Plan (2018-2020), the government committed to developing a proposal for a national BOT reform, and Chile’s Mutual Evaluation Report (2021) by the Financial Action Task Force (FATF) of Latin America provided recommendations to support its effectiveness.

Addressing conflicts of interest, anticompetitive practices and fraudulent activities, which are particularly detrimental to public procurement integrity, has been at the top of Chile’s political agenda for decades. Conflicts of interest were targeted from the early 2000s, with legal provisions applying to senior executives and mandating companies participating in public procurement processes to disclose legal ownership information (shareholders) to the competent authority – ChileCompra. However, this approach provided a partial understanding of companies’ ownership and did not allow for identifying who ultimately owned, controlled and benefitted from companies taking part in Chile’s public procurement, especially where these companies were part of networks of multiple legal entities. As such, while authorities could easily see whether a bidding company was owned by another company, and understand who managed that company, it was harder to identify relationships between a bidding company and multiple layers of other legal vehicles that linked its ultimate beneficial owner. This partial picture limited the public procurement agency’s ability to prevent and detect potential conflicts of interest, where, due to the identity of its beneficial owner, a company may not have been legally allowed to take part in a bidding process. The use of BO information in procurement processes facilitates the detection of undisclosed or hidden conflicts of interest and helps identify red flags for collusion and bid rigging. This increases the likelihood of quality service delivery, helps manage risk effectively, ensures value for money and increases trust in government.

The reform of the public procurement law of 2023 addressed this issue by incorporating BOT provisions into Chile’s Public Procurement Law. The same year, the President of the Republic also announced a bill to establish a national BO register. This legislative progress towards establishing a national register is expected to unlock the benefits of BOT by applying ownership transparency provisions from approximately 90,000 companies in the public market to approximately 1.5 million companies nationwide. This expansion in coverage is expected to reach a broader set of domestic policy goals, including combating corruption and organized crime, preventing money laundering and terrorist financing, avoiding the misuse of legal entities to commit fraud, and supporting compliance with tax and other legal obligations.

Actions and results

Making beneficial ownership disclosure a mandatory incentive for business opportunities with the State

Chile reformed its public procurement law to expand the definition of conflict of interest and include under its scrutiny not only senior executives but also any public officer, their relatives and companies through which they hold interest. As such, under Law no. 21634, it became illegal for a company or other legal vehicle beneficially owned by a public official or close relatives to supply goods or services to the public agency where that individual held office during their tenure and for one year after leaving office. To enable authorities to enforce this law, any legal entity taking part in public procurement became legally required to register in ChileCompra’s Supplier Registry and to disclose information not only about its legal owners but also its beneficial owners.

To support compliance, ChileCompra followed a two-fold approach focused on favoring incentives over coercion:

• Before the law came into effect, ChileCompra organized a large awareness and training campaign to introduce the upcoming reform to those expected to be the most direct users of the Supplier Registry – that is, companies interested in getting public contracts and public officers tasked with using newly disclosed BO information to realize national strategies. The campaign also targeted a broader range of actors, widely communicating the government’s commitment to tackling corruption as an important component of the expected preventive effect of the new measures.
• ChileCompra aimed to design a process that was as user friendly as possible for companies taking part in procurement. For example, they collaborated with the national revenue authority to enable users to access a pre-filled declaration form based on information already disclosed via tax processes. When the information was inconsistent or outdated, ChileCompra directed suppliers to update their records with the national revenue authority. This enabled greater data reliability, benefiting both the authorities in charge of collecting accurate information and data users who require a high level of confidence in the data in order to control for any potential conflicts of interest. The user-friendly approach also included streamlining the BO declaration process into broader business processes on the public procurement platform Mercado Público – such as disclosing BO information when submitting a quotation – instead of keeping it only as a stand-alone formality.

Prospective suppliers were required to respect their obligations from late December 2024, and three months later, ChileCompra reported a 59 per cent rate of compliance with new BO disclosure measures.

Supporting beneficial ownership data use by public procurement authorities to detect potential conflicts of interest

As part of its digital strategy, ChileCompra adopted the Open Contracting Data Standard (OCDS), developed by OCP, to publish procurement data in a structured, standardized and open format, covering all stages of the public procurement process. This means that all procurement data – including information about companies involved in a tendering process, details of public contracts awarded, and payments related to the implementation of these contracts – can be accessed in a structured format. This approach enhances the ability of users to analyze this data and to link it with other datasets, especially if they also have well-structured data. The structured and machine-readable format of OCDS facilitates interoperability, making it easier to connect procurement data with other sources and to enable the development and use of tools for automated analysis and systems for red-flag detection in public procurement. In recognition of these efforts, ChileCompra received the Impact in Open Contracting award in 2020 from the World Commerce and Contracting Association and OCP.

The unit in charge of detecting irregularities in public procurement processes at ChileCompra – The Observatory – has been working to develop a red-flagging system, to which BO information proactively contributes. As of 2025, ChileCompra reported having developed a 24-month work plan to ensure data cross-checking across the systems of various government agencies to support this analysis.

Three main indicators of potential risks of conflict of interest were defined in the Chilean context:

• The beneficial owner(s) of a company bidding for a public contract holds an active “buyer” online account on the public procurement platform. The online account is associated with the procuring entity managing the same bid, and a purchase order has been issued to this applicant company.
• The beneficial owner(s) of a company bidding for a public contract is also a member of the evaluation committee in charge of overseeing the tendering process.
• The beneficial owner(s) of a company that was awarded a public contract is also in charge of the process, payment or contract execution.

Any of the above indicators triggers an alert to the person in charge of the process. As ChileCompra’s institutional powers were strengthened by Law no. 21634, its officers can then request information from the public institution involved, and, if unable to resolve the issue within five business days, forwards the case to The Observatory, which can then refer the case to relevant bodies, such as the Office of the Comptroller General, the Public Prosecutor’s Office, and the National Economic Prosecutor’s Office.

“What's interesting here is that we're not just talking about rules and regulations written into the new legislation, but that it has been implemented and is being applied immediately in a live electronic system, where business is being conducted between the state and the private sector for more than $17 billion,” reports Verónica Valle, the Director of ChileCompra.

The Observatory also adopted a complementary approach to proactive red-flag identification by acting upon confidential reporting from external actors who bring any irregularity to their attention. In addition, it monitors broader trends on the public procurement platform and publicly discloses its findings, demonstrating a commitment to transparency and reinforcing the government’s efforts to prevent and address misconduct. Although this does not directly relate to the use of BO information, it illustrates Chile’s intentional approach to embedding the use of BO information as part of a comprehensive set of anti-corruption tools to reach its objectives.

While a range of factors are at play, these provisions may have contributed to a reported 69 per cent decrease in conflicts of interest detected each month by The Observatory during the first few months following the procurement reform. While a decline in the number of detected conflicts of interest does not necessarily indicate a reduction in actual conflicts of interest, it may reflect a deterrent effect, signaling greater accountability and discouraging potential misconduct, as well as a broader shift away from impunity.

Opting for open dialogue to enable a wider range of use cases

In addition to its efforts to prevent and detect potential conflicts of interest, ChileCompra has opened dialogue, including with members of the nonprofit sector, to explore how to maximize the potential of BOT for additional use cases. For example, ChileCompra and the Global Legal Entity Identifier Foundation (GLEIF) have initiated conversations on leveraging Legal Entity Identifier (LEI) data to improve procurement oversight. With more than 1,500 Chilean companies currently holding an LEI according to GLEIF statistics, this potential collaboration aims to explore how integrating LEI data could strengthen transparency and support better risk assessment in public procurement.

The government of Chile has also convened a variety of actors, including the Financial Intelligence Unit or Unidad de Análisis Financiero (UAF), the Revenue Authority or Servicio de Impuestos Internos, ChileCompra and civil society actors such as Chile Transparente and the Fundación Observatorio Fiscal, to identify important provisions to prepare for the creation of a national BO register. The creation of this register has been mandated by the President of the Republic to prevent and tackle infractions and crimes, promote fair competition, support tax compliance and enable Chile to contribute to much needed international cooperation to tackle transnational crime. As part of this collaborative effort led by UAF, the Government of Chile sought to ground the future BOT reform into public opinion and ensure domestic drivers were strong. To do so, they carried out a public consultation which resulted in all participants confirming they would find it useful to have a BO register in Chile and a large majority agreeing with some more specific recommendations, such as the importance of retaining BO information for up to 10 years even if a legal entity is no longer in business. Although at the time of writing, the bill to move the reform forward is still in the Senate, UAF has been taking action that will likely accelerate BOT implementation when the law is ready. For example, with Circular no. 62, UAF has expanded BO disclosure obligations from the financial sector to 55 sectors of the economy.

Conclusion and next steps

By promoting a culture of transparency and impunity and showcasing how the use of BO information in public procurement processes can advance domestic goals, the Government of Chile is likely setting a favorable foundation for the planned expansion of BOT implementation across all sectors of the economy. Public consultation has been providing domestic buy-in from the national population, which may provide a solid basis for reform sustainability, and multi-stakeholder collaboration can provide key avenues to understand the variety of potential use cases that BO information can support. For example, BO information could help ensure that Chile’s commitment to gender equity in public procurement is effectively implemented by applying the concept of BO to support the participation of not only women-led but also women-owned businesses in public procurement. Given the prominence of Chilean mining and its strategic role in the energy transition, exploring how lessons from Chile’s BO data use in public procurement may be applied to the BO data use for an accountable energy transition also provides a range of possible aUnderstanding beneficial ownership data usevenues for BOT’s impact in the country.

As lawmakers in Chile take necessary steps to advance the BO register bill, it will be essential to ensure that pioneer efforts led by ChileCompra, including implementation challenges and insights from Chilean data users, can add to existing data use evidence and inform the development of the national law and future register. Academics and nonprofit organizations in other parts of the world have also produced important resources, which can continue to support red-flagging work in public procurement.

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