Banks told to tighten controls vs dirty money risks

THE BANGKO SENTRAL ng Pilipinas (BSP) reminded its supervised institutions to comply with anti-money laundering and countering terrorism and proliferation financing (AML/CTPF) rules to prevent dirty money from infiltrating the country’s payment systems.

In a memorandum signed by BSP Deputy Governor Bernadette Romulo-Puyat, the central bank directed banks and other financial institutions to implement rigorous onboarding and monitoring procedures to ensure accounts are not exploited for criminal activities.

“Consistent therewith, BSP-supervised institutions (BSIs) are enjoined to strictly ensure that their anti-money laundering and countering terrorism and proliferation financing controls, including account onboarding controls and ongoing account monitoring, remain effective and commensurate with risk across all payment activities,” it said.

Payment activities refer to all traditional and electronic payments or fund transfers made through channels such as branch offices, online, mobile, or those enabled by quick-response (QR) codes.

The BSP told BSIs to comply with applicable AML/CTPF requirements, as well as practice merchant due diligence, including identification, risk assessment and monitoring.

“Based on the foregoing regulations, BSIs are reminded that integrity controls for payment activities should be underpinned by sound account opening, onboarding, and ongoing account monitoring practices,” the central bank said.

“These ensure that customer and account relationships remain consistent with their stated purpose and to enable timely prevention, detection, and response to potential misuse of accounts as conduits for ML/TF/PF and related predicate offenses or other unlawful activity.”

BSIs were likewise instructed to observe the same measures for QR-enabled services, while prioritizing the safety of its payers and payees.

The BSP said AML/CTPF compliance is BSIs’ primary responsibility in cases where the payment activity requires merchant payment acceptance.

“The participation of these entities in the payment chain does not transfer, diminish, or substitute the AML/CTPF obligations of the BSI providing accounts, access to payment rails, or settlement services,” it said.

However, payment aggregators, or those facilitating transactions for multiple merchants, assume similar duties in managing AML/CTPF risks if they are involved in onboarding, monitoring and controlling sub-merchant access to payment services.

The BSP said the issuance is in line with its authority to protect and promote the efficiency, safety, security, and reliability of the country’s national payment system under the National Payment Systems Act, and ensure the financial system is safe from dirty money risks under the Anti-Money Laundering Act. — Katherine K. Chan