The Bangko Sentral ng Pilipinas (BSP) has released a draft circular outlining its proposed amendments to the country’s existing money laundering (ML), terrorist financing (TF), and proliferation financing (PF) risk reporting and notification requirements for banks and non-bank financial institutions.
The draft circular is currently open for stakeholders’ comments until January 31, 2023.
In the draft circular, the BSP is proposing that supervised financial institutions (BSFIs) must notify the central bank within 24 hours from the “date of knowledge of any significant ML, TF, or PF risk events.”
BSFIs will also be required to submit the following reports to the BSP:
- Annual Anti-Money Laundering/Countering the Terrorism and Proliferation Financing Reporting Package (ARP). BSFIs shall submit the duly accomplished ARP, as listed in Appendix 7, to the appropriate supervising department of the Bangko Sentral within 30 banking days after the end of the reference year.
- ML/TF/PF Risk Event Report. BSFIs shall notify the Bangko Sentral within twenty-four (24) hours from the date of knowledge of any significant ML/TF/PF risk event. It covers reporting of ML/TF/PF-related incidents that may present material and adverse impact on the BSFI, the financial system’s posture or erode public confidence therein.
This reporting shall form part of the BSFI’s incident management plan.
A ML/TF/PF risk event is reportable, if, based on the BSFI’s assessment, the incident has a material impact on the BSFI and/or the financial system such as those affecting a significant number of customers or counterparties, with cross border element, or those covered/may be covered in adverse media reports.
Manual of Regulations for Banks: Amendments to Section 911/911Q
According to the draft circular, the BSP is seeking to amend section 911/911Q to include further details related to risk assessments, specifically looking at the timely collection and analysis of relevant data.
Under section 911/911Q of the Manual of Regulations for Banks (MORB)/Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), BSFIs are currently required to develop sound risk management policies and practices to ensure ML/TF risks are identified, assessed, monitored, mitigated, and controlled.
The central bank outlines that to ensure the integrity of the financial system and the soundness of BSFIs, covered entities should “submit regular, and event-driven ML/TF/PF-related reports” to the BSP.
To ensure compliance with these new requirements, the draft circular notes that the BSP will impose “high penalty level monetary sanctions” on entities that will fail to adhere to their obligations.
As of this writing, BSP-supervised financial institutions currently consist of:
- Banks
- Quasi banks including their affiliates and subsidiaries
- Offshore banking units
- Stand-alone trust corporations
- Non-stock savings and loan associations
- Money service businesses
- Electronic money issuers
- Non-bank electronic money issuers
- Virtual asset service providers
- Stand-alone credit card issuers