The BSP Proposes New Rules for Reporting Financial Crime: How Will it Affect the AML Regime in the Philippines?

The Bangko Sentral ng Pilipinas (BSP) has recently released a draft circular outlining proposed amendments to the country's money laundering (ML), terrorist financing (TF), and proliferation financing (PF) risk reporting for banks and non-bank financial institutions. These proposed changes aim to strengthen the AML regime in the Philippines by increasing the transparency and accountability of financial institutions in identifying and reporting financial crime risks. 

Today, we will be exploring the proposed changes in detail and discuss the implications for the AML regime in the Philippines. We will analyze the impact these changes will have on financial institutions' operations and bottom line and how it will affect their compliance with AML regulations. We aim to provide insights on how financial institutions can navigate these new requirements and maintain compliance with the regulations.

The Need for Change 

The current regulations for Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Proliferation Financing (PF) in the Philippines are outlined in the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI). These regulations require supervised financial institutions (BSFIs) to develop sound risk management policies and practices to ensure ML/TF/PF risks are identified, assessed, monitored, mitigated, and controlled.

Recently, the Philippines was placed under increased monitoring by the Financial Action Task Force (FATF) due to strategic deficiencies in their anti-money laundering efforts. The FATF identified a need for improvement in areas such as an increase in the effective use of financial intelligence and the identification, investigation, and prosecution of TF cases. In response to this, the BSP has suggested amendments to the country’s ML/TF/PF risk reporting and notification requirements for banks and non-bank financial institutions.

The Proposed Changes: A Closer Look

Deep-diving into the proposed changes, we begin with the requirement for supervised financial institutions (BSFIs) to notify the central bank within 24 hours from the “date of knowledge of any significant ML/TF/PF risk event.” This means that BSFIs, which include banks and fintech companies such as digital banks, payment services and e-wallets, must be prepared to quickly identify and report any significant risks related to ML/TF/PF.

Another notable amendment is the requirement for covered entities to submit an annual anti-money laundering/countering terrorism and proliferation financing reporting package (ARP). This package must be submitted to the BSP within 30 banking days after the end of the reference year. The ARP is designed to provide the BSP with a comprehensive overview of an institution's AML/CFT/CPF measures, risk assessments and controls, customer due diligence procedures, transaction monitoring systems, and suspicious activity reports (SARs) filed during the year.

By requiring regular and event-driven ML/TF/PF-related reports, the BSP aims to ensure the integrity of the financial system and the soundness of BSFIs. The proposed changes would also help the BSP to identify and assess the ML/TF/PF risks faced by the financial institutions and take appropriate measures to mitigate them.

Navigating the New Normal: Compliance Challenges for Financial Institutions in the Philippines

As with any change in regulations, the proposed amendments to the ML/TF/PF risk reporting will bring about new compliance challenges for financial institutions in the country.

• The requirement to notify the BSP within 24 hours of any significant ML/TF/PF risk event would require financial institutions to have a robust system in place to quickly identify, assess, and report any risk events.
• The requirement to submit an annual ARP reporting package would require financial institutions to have robust systems and processes in place to collect, analyze and report the necessary data. This may pose a challenge for institutions that do not currently have the necessary systems in place to efficiently compile and submit the required information.
• The proposed changes would also have an impact on the bottom line of banks and non-bank financial institutions. The BSP has stated that it will impose high penalty level monetary sanctions on entities that fail to adhere to their obligations. This would mean that financial institutions would need to invest in systems, processes and staff to ensure compliance with the proposed changes.

The Solution: Tookitaki's Platform

Are you a bank or a financial technology company in the Philippines looking for a solution to help comply with the proposed changes to AML reporting and notification requirements? Look no further than Tookitaki's platform. Our cutting-edge technology is designed to help financial institutions navigate the ever-changing compliance landscape and stay ahead of the curve.

Tookitaki's Anti-Money Laundering Suite (AMLS) is a comprehensive and end-to-end AML compliance platform designed to assist financial institutions in detecting, preventing and managing financial crimes. The platform is built on a foundation of "collective intelligence" which is operationalized to enable partner financial institutions in uncovering money trails that aren’t discoverable by today’s standards and is up-to-date with the newest risk scenarios published by the BSP. The platform uses machine learning and big data analytics to provide a comprehensive approach to detecting and preventing financial crime. This allows financial institutions to identify suspicious activity more quickly and efficiently.

The platform comprises of four modules – Transaction Monitoring, Smart Screening, Customer Risk Scoring and Case Manager – that are optimized for Intelligent Alert Detection (IAD) and Smart Alert Management (SAM). The Transaction Monitoring module helps financial institutions to identify and monitor suspicious transactions in real-time, while the Smart Screening module uses advanced algorithms to automatically screen customer credentials and transaction details for potential risks. The Customer Risk Scoring module dynamically assess a risk score to each customer based on their transaction history and additional layers of personal information, while the Case Manager module allows financial institutions to manage and investigate suspicious activity in a single, unified view.

Stay Ahead of the Game: Request a Demo of Tookitaki's Platform Today!

The proposed changes to the AML, TF and PF reporting requirements will have a significant impact on the Philippine financial institutions. It is crucial for these institutions to understand the implications of these changes and take steps to ensure compliance.

If you are interested in learning more about Tookitaki's platform and how we can partner together to stay compliant amidst these changes, request a demo today.