AML Compliance in Philippines: Key Regulations Your Fintech Must Know

5 mins

Fintech, the innovation of technology in the financial sector, has been rapidly growing in the Philippines. With this growth, the need for regulatory compliance and Anti-Money Laundering (AML) measures has become increasingly important. Fintech companies in the Philippines are facing new challenges to ensure that they are in compliance with AML regulations to prevent illegal activities such as money laundering.

AML compliance is not just a legal requirement but it is also crucial for maintaining the reputation of fintech companies. Financial regulators such as the Philippines Securities and Exchange Commission (SEC) and the Central Bank of the Philippines (BSP) have set AML regulations to ensure that fintech companies are following best practices in preventing illegal activities and maintaining the safety of their customers' funds. 

Fintech companies in the Philippines are subject to AML regulations, including customer identification and screening, transaction monitoring, and reporting of suspicious activities. These regulations ensure that fintech companies are collecting and managing user information securely and performing all necessary checks to stay compliant. Regulators like the FATF are actively observing the development of fintech to adjust regulations accordingly and to prevent vulnerabilities in new payment services.

The Role of the BSP in Ensuring AML Compliance

The BSP is the central bank of the Republic of the Philippines and is responsible for providing policy directions in the areas of money, banking, and credit. In order to ensure AML compliance, the BSP exercises regulatory powers as provided by the New Central Bank Act and other relevant laws over the operations of banks, finance companies, and non-bank financial institutions performing quasi-banking functions in the Philippines.

The BSP supervises the operations of fintech companies and exercises regulatory powers over their operations to ensure AML compliance. The BSP also ensures that the country's foreign exchange regulatory framework remains appropriate for the Philippine economy's sustained expansion through its International Operations Department.

The BSP has issued stricter rules, among the first of its kind in the ASEAN, aimed at protecting financial institutions from financial crimes including cyberattacks and cyber threats. Part Nine of the Manual of Regulations of the BSP contains AML regulations, which outline the BSP's authority to check compliance with the Anti-Money Laundering Act (AMLA), as amended. The manual lists out the following AML responsibilities:

  • Conduct business in conformity with high ethical standards in order to protect its safety and soundness as well as the integrity of the national banking and financial system;
  • Know sufficiently your customer at all times and ensure that the financially or socially disadvantaged are not denied access to financial services while at the same time prevent suspicious individuals or entities from opening or maintaining an account or transacting with the covered person by himself or otherwise;
  • Adopt and effectively implement a sound AML and terrorist financing risk management system that identifies, assesses, monitors and controls risks associated with money laundering and terrorist financing;
  • Comply fully with this Part and existing laws aimed at combating money laundering and terrorist financing by making sure that officers and employees are aware of their respective responsibilities and carry them out in accordance with superior and principled culture of compliance; and
  • Fully cooperate with Anti-Money Laundering Council (AMLC) for the effective implementation and enforcement of the AMLA, as amended.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Regulations

The Philippines implements AML/CTF regulations through the Anti-Money Laundering Act (AMLA) of 2001, as amended. The AMLA aims to prevent and curb money laundering and terrorism financing activities in the country by mandating financial institutions, including fintech companies, to adopt strict customer identification requirements and reporting obligations.

Some of the key provisions of the AMLA include:

  • Customer Identification: Financial institutions are required to establish and record the true identity of their clients based on official documents, and to maintain a system of verifying the identity of their clients. Anonymous accounts and accounts under fictitious names are strictly prohibited.
  • Record Keeping: Financial institutions must maintain records of all transactions for at least five years from the date of the transaction and preserve records on customer identification for at least five years from the date the account was closed.
  • Reporting of Covered Transactions: Financial institutions must report all covered transactions to the Anti-Money Laundering Council (AMLC) within five working days, unless the Supervising Authority concerned prescribes a longer period. Reporting institutions and their employees are prohibited from communicating any information related to the report to any person or entity.
  • Authority to Inquire into Deposits: The AMLC may inquire into bank deposits in cases of suspected violation of the AMLA when there is probable cause that the deposits are related to money laundering.

AML/CTF compliance is crucial for fintech companies operating in the Philippines. By adhering to the provisions of the AMLA, fintech companies can help prevent and mitigate the risks of money laundering and terrorism financing activities. Moreover, AML/CTF compliance can also enhance the reputation and credibility of fintech companies in the eyes of customers, regulatory authorities, and financial institutions. Fintech companies that fail to comply with AML/CTF regulations may face severe penalties, including fines, sanctions, and even criminal charges.

Tookitaki's Role in Fintech Compliance

Tookitaki is a leading provider of compliance solutions for the fintech industry. The company offers a suite of solutions designed to help fintech companies meet the ever-growing regulatory requirements in the area of AML/CTF. These solutions are designed to be user-friendly and flexible, allowing fintech companies to customize them to meet their specific needs.

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.

Tookitaki's solutions offer a range of benefits to fintech companies, including:

  • Automated Compliance Monitoring: Tookitaki's solutions automate the compliance monitoring process, helping companies save time and reduce the risk of human error.
  • Advanced Analytics: Tookitaki's solutions use advanced analytics to identify suspicious transactions, helping companies stay ahead of money laundering and terrorism financing activities.
  • Risk Management: Tookitaki's solutions help fintech companies manage their risk exposure by providing them with a comprehensive understanding of their customers' risk profiles.
  • Increased Efficiency: Tookitaki's solutions streamline the compliance process, making it more efficient and reducing the time and effort required to meet regulatory requirements.

Maximize Fintech Success through AML/CTF Compliance with Tookitaki

With a deep understanding of the regulatory landscape and industry trends, Tookitaki's solutions are designed to help companies achieve compliance and mitigate risks. By utilizing Tookitaki's solutions, companies can gain a competitive advantage and ensure that their AML/CTF programs are effective, efficient, and in line with the latest regulations. If you are a fintech company looking to enhance your AML compliance, we invite you to request a demo of Tookitaki's solutions today.