BSP wants banks to report cases of money laundering within 24 hours

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) will require banks and non-banks to report within 24 hours any significant money laundering, terrorism financing, and proliferation financing incident.

In a draft circular, the regulator said it aims to amend certain sections of the Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) as part of its risk-based anti-money laundering and countering the terrorism and proliferation financing (AML/CTPF) supervision.

“The sound management of significant money laundering, terrorism financing, and proliferation financing risks is critical in ensuring the sustained resilience and integrity of the financial system in general, as well as the safety and soundness of the BSFIs in particular,” the BSP said.

It explained that a critical component of a risk assessment and management process of the BSP-supervised financial institutions (BSFIs) is the timely collection and analysis of relevant data, including risk events.

Under the proposed reporting requirement, BSFIs will be required to notify  the central bank within 24 hours from date of knowledge of any significant money laundering, terrorism financing, and proliferation financing risk event.

“It covers reporting of money laundering, terrorism financing, and proliferation financing-related incident 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,” the BSP said.

It added that a money laundering, terrorism financing, and proliferation financing risk event is reportable if, based on the BSFI’s assessment, it has a material impact on the BSFI and the financial system – such as those affecting significant number of customers or counterparties, with cross-border element or those may be covered in adverse media reports.

Likewise, the regulator also requires banks and non-bank financial institutions to submit an annual Anti-Money Laundering/Countering the Terrorism and Proliferation Financing Reporting Package (ARP) within 30 banking days after the end of every year.

“The BSP may require the BSFI to provide additional information, documents, and/or updates, as necessary, until the reported risk event is resolved. The BSP may also conduct special or overseeing examination, as warranted, to verify, among others, the root cause of the incident, assess the impact to the BSFI and/or the financial system, if any, and identify areas for improvement to strengthen overall money laundering, terrorism financing, and proliferation financing risk management framework,’ the central bank said.

According to the BSP, it will impose appropriate penalties against entities that fail to submit an ARP and those that filed erroneous or delayed reports.

It warned that non-compliance with the reporting requirements would be subject to “high” penalty level monetary sanctions.

Furthermore, the regulator said it could deploy its range of enforcement actions to promote adherence to the requirements and bring about timely corrective actions.

“Monetary and non-monetary sanctions, as provided under existing laws, BSP rules and regulations, may likewise be imposed on the BSFI and/or its directors, officers and/or employees for violation of the reporting requirements,” the central bank said.

The BSP said the initial submission of the annual ARP for 2022 is due on June 30 this year.

Paris-based dirty money watchdog Financial Action Task Force (FATF) has given the Philippines until this month to address strategic deficiencies in its regimes to counter money laundering, terrorist financing, and proliferation financing.

The FATF reincluded the country in the gray list or list of jurisdictions under increased monitoring in June 2021 for having inadequate money laundering and counter terrorism financing controls.