Published and draft legislation - Colombia

Know Your Customer Requirements

Circular 34/2015, amending the SARLAFT rules on small unsecured loans and certain insurance products

Colombia's financial watchdog, Superintendencia Financiera, with oversight for the financial industry in Colombia, published External Circular 034/2015, containing the Know Your Customer requirements for lending small amounts and microinsurance products, bringing them into line with those for online deposits in Colombia. The most relevant changes are:

  • The already existing Know Your Customer procedures for opening online savings accounts are now activated for small credit transactions and microinsurance. Thus it is now sufficient to take the name, ID number and issue date of the ID document to provide the customer with such products.
  • These products no longer require a mandatory investigation into the customer's business activity, or a declaration of incoming and outgoing payment volumes or the customer's understanding of finance; nor are they subject to the rules on publicly exposed persons.
  • These exceptions are valid providing the total credit facility remains below 2 PLMWs or Prevailing Legal Monthly Minimum Wages (COP $1,288.700 = approx. USD $430) and the term is less than 36 months. For microinsurance, the requirement is that the insured value is not over $86,987.250 = approx. USD $29,000.) and the monthly premium is not greater than one ninth of 1 PLMMW (COP $72,000 = approx. USD $24.).

Greater access to microfinance products

In line with the Decree 2654 about low-volume consumer credit, analyised in Progreso 2,This set of rules expands the range of people who can take out microfinance products, facilitating access to the financial industry and providing more banking services to the general public.