Financial Crime World

Financial Sanctions Enforcement in Philippines

The Bangko Sentral ng Pilipinas (BSP) has outlined strict penalties for financial institutions that violate Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) regulations.

Background

In Circular No. 950 dated March 15, 2017, the BSP emphasized that violation of AML/CFT regulations constitutes a major breach and may result in severe sanctions against board members, senior management, and line officers.

Non-Monetary Sanctions

The BSP may impose non-monetary sanctions such as:

  • Written reprimands
  • Restrictions on licenses or products
  • Suspension or removal from office
  • Disqualification from holding any position in a covered institution

Additionally, the monetary penalties will be computed based on existing regulations and coordination with the Anti-Money Laundering Council (AMLC).

AML Risk Rating System

The BSP’s AML Risk Rating System (ARRS) assesses the overall performance of financial institutions in implementing AML/CFT measures. The system categorizes ratings into four levels:

  • Level 1: High risk
  • Level 2: Medium risk
  • Level 3: Low risk
  • Level 4: Very low risk

Enforcement Actions

Financial institutions with AML Composite ratings of 1 or 2 will be required to submit a written action plan to address noted inefficiencies within a reasonable period. Failure to do so may result in escalated enforcement actions, including:

  • Monetary penalties computed on a daily basis until improvements are implemented

In cases where the AML/CFT risk rating remains high over an extended period, the BSP may impose more severe sanctions, including:

  • Fines
  • Criminal charges

Aggravating and Mitigating Factors

The BSP has also outlined aggravating factors that can increase the severity of penalties, such as:

  • Frequency and duration of violations
  • Continuation of offenses after notification
  • Concealment
  • Loss or risk of loss to the bank

Mitigating factors include:

  • Good faith
  • Full cooperation
  • Positive measures taken to correct the violation
  • Voluntary disclosure of the offense

Conclusion

The BSP’s strict enforcement of AML/CFT regulations aims to protect the Philippine financial system from illicit activities and maintain public trust in the country’s banking sector. By imposing severe penalties on violators, the BSP ensures that financial institutions maintain high standards in preventing money laundering and terrorist financing.