BSP Issues New Guidelines on Customer Due Diligence for Philippine Banks
The Bangko Sentral ng Pilipinas (BSP) has recently issued a new circular on customer due diligence (CDD) for banks and non-bank financial institutions in the Philippines. This move aims to enhance financial stability and prevent money laundering.
New Guidelines on Conducting Customer Due Diligence
The new guidelines require banks to adopt a risk-based approach to CDD, depending on the type of customer, business relationship, or nature of the product, transaction, or activity. This means that banks will need to conduct more thorough due diligence on higher-risk customers and transactions.
Recognition of Philippine Identification System (PhilSys)
The BSP has recognized PhilSys as an official and sufficient proof of identity for individuals. Banks can accept a PhilSys Card Number (PCN), PhilSys Number (PSN), or Philippine Identification card (PhilID) in physical or digital form as proof of identity, subject to proper authentication.
Electronic Know-Your-Customer (e-KYC) Systems
Banks are allowed to use electronic KYC systems that cover the process of identity proofing and authentication. The e-KYC system must be supported by robust technology, governance, processes, and procedures that provide an appropriate level of confidence in the accuracy of results.
Data Privacy and Protection
The BSP has emphasized the importance of data privacy and protection, requiring banks to ensure that their conduct of e-KYC complies with relevant laws and regulations on user consent, data sharing, and protection. All related transactions and risks must be explicitly explained to customers and accepted by them before proceeding.
Compliance Requirements
- Banks with existing e-KYC systems using digital ID systems are required to comply with the new guidelines within one year from the effectivity of the circular.
- Those without such systems must ensure strict compliance prior to implementation.
By implementing these new guidelines, the BSP aims to enhance financial stability and prevent money laundering in the Philippines. Banks are expected to adhere to these requirements to maintain a safe and secure financial system for all stakeholders.