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Philippines: BSP tightens rules on correspondent banking
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has tightened the guidelines on correspondent banking relationships as legislation against money laundering and terrorism financing needed to avoid being included in the watchlist of the global watchdog have yet to be passed.
BSP Governor Benjamin Diokno said the BSP has approved amendments to the Manual of Regulations for Banks (MORB) to prevent correspondent banking activities from being utilized for money laundering or terrorist financing activities.
Diokno issued Circular 1078 stating that covered persons should designate an officer responsible in ensuring compliance with the regulations as well as policies and procedures.
“Covered persons shall adopt policies and procedures to prevent correspondent banking activities from being utilized for money laundering or terrorism financing activities,” the BSP chief said.
Diokno, who also chairs the Anti-Money Laundering Council (AMLC), said the regulator could deploy enforcement actions to promote adherence to the requirements and bring about timely corrective actions.
Diokno said the guidelines articulate the specific regulatory expectations with respect to different type of correspondent banking relationships to enable banks to have improved money laundering and terrorism financing risks associated with correspondent banking relationships.
“The inherent nature and structure of transactions and relationships in correspondent banking renders it vulnerable to money laundering or terrorist financing activities,” he said.
Correspondent banks execute financial transactions on behalf of customers of another bank, while cross-border nature and amount of transactions involved pose material threat to financial institutions.
“The layers involved in transactions processed through correspondent banking relationships pose a challenge in monitoring transactions and in identifying suspicious transactions,” Diokno said.
The Monetary Board and Diokno said banks should perform the applicable customer due diligence on accounts and relationships opened upon effectivity of the new guidelines and requirements of updating as part of the ongoing monitoring should be required for existing relationships.
Source: https://www.philstar.com/business/2020/03/12/2000012/bsp-tightens-rules-correspondent-banking