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BSFIs Must Implement Robust Customer Identification Systems to Combat Money Laundering and Terrorist Financing

In a bid to strengthen anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, the Bangko Sentral ng Pilipinas (BSP) has issued new guidelines for banks and financial institutions (BSFIs) to implement robust customer identification systems.

Requirements for BSFIs

The guidelines require BSFIs to collect and record accurate personal information about their customers using various methods such as:

  • Photocopying/scanning of identification documents
  • Biometric data capture
  • Manual recording

Additionally, they must digitize customer records in accordance with relevant BSP and Anti-Money Laundering Council (AMLC) issuances.

Exception for Calamities

In the event of a calamity, BSFIs are allowed to conduct face-to-face contact or interviews using Information and Communication Technology (ICT), provided that:

  • They have measures in place to mitigate ML/TF risks
  • They maintain a documented audit trail

Electronic Know Your Customer (e-KYC)

The BSP also recognizes e-KYC as an acceptable system for customer identification and verification. e-KYC refers to the use of electronic or digital methods to verify a customer’s identity. BSFIs may employ different methods, including:

  • Digital ID systems
  • But must ensure that they are anchored on robust and reliable technology architecture

Implementing e-KYC using Digital ID Systems

When implementing e-KYC using digital ID systems, BSFIs must understand the basic components of the system, including:

  • Identity proofing
  • Authentication

They must also adopt a tiered or risk-based approach to reliance on digital ID systems for customer due diligence (CDD) and ensure that the assurance level is appropriate for the ML/TF risks presented by each customer.

Supervisory Enforcement Actions

The BSP will deploy supervisory enforcement actions to promote adherence with the guidelines and bring about timely corrective actions. The circular takes effect 15 calendar days following its publication in the Official Gazette or a newspaper of general circulation.

Source: Bangko Sentral ng Pilipinas (BSP) Circular No. [Insert Number], dated [Insert Date]