The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has issued new regulations mandating that banks and other financial institutions report significant incidents related to money laundering, terrorism financing, and proliferation financing within 24 hours.
The directive, outlined in a circular signed by BSP Deputy Governor Bernadette Romulo-Puyat, amends sections of both the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
These changes are part of the BSP’s enhanced risk-based supervision framework aimed at countering money laundering and terrorist financing more effectively.
According to the updated rules, BSP-supervised financial institutions (BSFIs) must submit a risk event report to the central bank within one day of becoming aware of any significant risk event related to these issues.
The central bank emphasized that this rapid reporting requirement will help it quickly identify and respond to emerging risks and supervisory concerns.
This measure is also intended to aid the BSP in refining its supervisory risk assessments, strategies, and activities.
A “risk event” is defined by the BSP as any incident linked to money laundering, terrorism financing, and proliferation financing that could potentially harm the BSFI, destabilize the financial system, or undermine public confidence.
The requirement for reporting is triggered if the amount involved in the incident represents one percent or more of the BSFI’s total capital, or if the incident is deemed to have a material impact on a significant number of customers or counterparties, involves cross-border elements, or is likely to be covered in adverse media reports.
The required risk event report must include the date of discovery, a brief description of the incident, the type of transaction or product involved, the delivery channel used, the amount involved, and the initial root cause, if determined.
Additionally, the report should detail the immediate response or actions taken by the BSFI and the initial assessment of the impact on the institution.
The BSP also reserves the right to request additional information, documents, or updates as necessary and may conduct examinations to verify the root cause, assess the impact, and identify areas for improvement.
Non-compliance with these reporting requirements will result in monetary penalties as outlined in sections 1102/1102-Q of the amended regulations.
These stringent measures come as the Philippines continues to face scrutiny from the Financial Action Task Force (FATF), which has kept the country on its “gray list” of jurisdictions requiring increased monitoring since June 2021.
This listing has significant economic repercussions, particularly affecting cross-border transactions, credit acquisition, and foreign investment due to increased due diligence from foreign banks and financial entities.
