Banks told to strengthen measures vs money laundering

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has reminded banks to design and implement preventive measures to detect and mitigate money laundering, as well as terrorist and proliferation financing.

BSP Deputy Governor Chuchi Fonacier said the regulator has issued a guidance paper to provide practicable insights in the conduct of institutional risk assessment (IRA) to achieve optimal results that would inform risk-driven approach to minimize money laundering, as well as terrorist and proliferation financing.

Fonacier said BSP-supervised financial institutions are enjoined to consider the guidance paper in the conduct of the IRA and take commensurate preventive measures in line with their risk posture.

“The guidance paper outlines, among others, the governing rules and international standards, regulatory expectations, and the IRA process,” Fonacier said.

The IRA is the cornerstone of risk-based approach to money laundering, as well as terrorist and proliferation financing and sanctions risk prevention and mitigation.

According to the BSP, the paper was informed by existing laws, rules, and regulations governing IRA, relevant documents issued by standard setting bodies and regulator, as well as observed best practices in the conduct of IRA.

“It must be emphasized that in conducting the IRA, there is no one-size-fits-all approach and the methodology should tailor-fit to the nature and complexity of BSFI’s activities and operations,” Fonacier said.

The IRA facilitates the identification of the sources of money laundering, as well as terrorist and proliferation financing and sanctions threats or risks, the vulnerabilities of the BSFI’s operations, the assessment of the existing controls to prevent or mitigate such risks, the determination of the residual risk and evaluation of corresponding action plans.

Based on the paper, banks and financial institutions should create bespoke policies, controls, and procedures to effectively manage and mitigate the identified risks.

Last month, Paris-based Financial Action Task Force (FATF) retained the Philippines in its ‘gray list’ as it stressed the need for the country to further strengthen its action plan to address strategic deficiencies in its regimes to counter money laundering, terrorist financing, and proliferation financing.

The global dirty money watchdog has retained the Philippines in the list of jurisdictions under increased monitoring due to strategic deficiencies that included 22 other countries released during the recently concluded hybrid FATF plenary from June 14 to 17.

After being reincluded in the FATF’s gray list in June last year, the Philippines has made progress in its high-level political commitment to work with the FATF and Asia Pacific Group on Money Laundering (APG) to strengthen the effectiveness of its anti-money laundering and counter financing of terrorism regime.