To promote the resilience of EMIs amid the increasing IT-related risks and to better protect the interests of e-money account holders, the Monetary Board has recently approved amendments to the Guidelines on Electronic Money (e-money) and the Operations of Electronic Money Issuers (EMI) in the Philippines.
In a media advisory, Bangko Sentral ng Pilipinas (BSP) governor Felipe M. Medalla said that “the amendments are geared towards equipping EMIs in attending to the evolving needs and behaviors of consumers and in responding to the existing and emerging risks in the financial sector, such as cybersecurity and money laundering.
“The revised guidelines reaffirm the BSP’s commitment to upholding the welfare of Filipinos by promoting a safe, secure, and inclusive financial system,” he added.
Setting out the rules
The revised guidelines set out higher liquidity and capital requirements for EMIs with significant outstanding e-money balances and large-scale operations, respectively.
EMIs with monthly outstanding e-money balance of at least P100 million will be required to maintain liquid assets in trust accounts equivalent to at least 50 per cent (50%) of their outstanding e-money balance and to cover the remaining balance with placements in bank deposits, government securities, or in other liquid assets acceptable to the BSP. EMIs with outstanding e-money balances below P100 million may continue to comply with the liquidity requirements by holding eligible liquid assets.
Meanwhile, the new rules set out higher minimum capital requirements for EMIs with large-scale operations recognizing the higher risk exposures of said entities.
The issuance defines large-scale EMIs as those with (12) month average value of aggregated inflow and outflow transactions equal to or greater than P25.0 billion.
Under the guidelines, large-scale EMIs are required to maintain minimum capital of P200 million while the minimum capital requirement for small-scale EMIs is P100 million.
Simplified classification of EMIs
Consistent with the application of the risk-based principle, the BSP lifted the P100 thousand monthly aggregate load limit and now allows EMIs to set pre-defined limits and thresholds per client category based on the results of their institutional risk assessment and customer due diligence process.
The amendments also simplified the classification of EMIs into two categories: (a) EMI-Banks; and (b) EMI Non-Bank Financial Institutions (EMI-NBFI), wherein the latter may include cooperatives. EMIs previously classified as EMI-Others will be grouped under EMI-NBFI.
The guidelines likewise expanded the definition of e-money to include those that may be transferred to other accounts as compared with earlier regulations limiting it to only those withdrawable in cash or cash equivalent.
In addition, the new rules broadened the acceptability of e-money to include merchants and issuers using the same mobile application.
EMIs shall be given one year from the effectivity of the revised regulations to comply.