BSP tells banks:Improve targeted financial sanctions  

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has ordered banks and financial institutions to improve their respective targeted financial sanctions framework as part of efforts to remove the Philippines from the gray list of global dirty money watchdog Financial Action Task Force (FATF).

BSP Deputy Governor Chuchi Fonacier said the central bank’s Monetary Board has issued Resolution No. 1262 approving the guidance paper titled “Targeted Financial Sanctions Implementation.”

Fonacier said BSP-supervised financial institutions should use the guidance paper to strengthen their Anti-Money Laundering/Counter Terrorism and Proliferation Financing (AML/CTPF) controls to effectively implement the targeted financial sanctions.

“The guidance paper highlights best practices, scope for improvement and major challenges on targeted financial sanctions implementation as well as possible ways to address the same. It also identifies emerging typologies on the use of virtual assets for terrorist financing,” Fonacier said.

The regulator said the targeted financial sanctions are among the key features in the country’s AML/CTPF regime.

Last June, the Paris-based FATF highlighted the need for the Philippines to continue working on implementing its action plan to address its strategic deficiencies, including the enhancement of the targeted financial sanctions framework for both terrorist and proliferation financing.

The Philippines was re-included in the gray list or list of jurisdictions under enhanced monitoring in June last year and was given until January 2023 to address the strategic deficiencies identified in the review of the Asia-Pacific Group for Money Laundering.

The BSP said banks and financial institutions should continuously improve their respective targeted financial sanctions framework by calibrating their existing AML processes to mitigate emerging risks such as the use of virtual assets in terrorist financing activities.

“As we move forward, the challenge is to achieve sustainability as targeted financial sanctions risk is evolving and implementation is a continuing obligation,” the central bank said.

According to the BSP, significant progress on targeted financial sanctions was made possible in the past three years with the passage of additional enabling laws, release of regulatory issuances and guidance paper as well as the focused interventions through industry engagements.

The central bank said collaborative and proactive engagement among industry players, regulators and other stakeholders should be pursued to address the challenges.

The BSP is pushing for the conduct of sanctions risk assessment as part of the industry’s institutional risk assessment, adoption of proportionate and risk-based sanctions policies and procedures, adoption of risk-based measures to support full implementation or targeted financial sanction requirements, implementation of electronic or manual screening tools, among others.