Bangko Sentral ng Pilipinas Warns Banks: Strictly Adhere to Customer Due Diligence

The Bangko Sentral ng Pilipinas (BSP) has issued a stern reminder to banks and financial institutions to strictly adhere to customer due diligence amid a surge in fraud and scams. According to BSP Assistant Governor Lyn Javier, BSP-supervised financial institutions are required to conduct thorough customer due diligence on designated non-financial business and profession customers.

Requirements Under the Manual of Regulations

BSP- supervised financial institutions must identify and verify the true identity of DNFBP (Designated Non-Financial Business and Profession) customers and beneficial owners based on official documents or other reliable sources. This is mandated by Sections 921 and 921-Q of the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions.

Consequences of Violation

Javier warned that any violation of these sections will be subject to appropriate enforcement actions under existing laws and regulations. If a covered person is unable to comply with relevant customer due diligence measures, they should not open an account, commence business relations, or perform a transaction.

Instead, the business relationship should be terminated and a suspicious transaction report filed in relation to the customer.

Additional Requirements

The BSP has also issued Circular Letter CL-2019-043, which requires covered persons dealing with DNFBP customers to present a provisional certificate of registration or certificate of registration with the Anti-Money Laundering Council as part of customer due diligence.

Importance of Customer Due Diligence

Javier emphasized that if a covered person is unable to comply with relevant customer due diligence measures, they should not open an account, commence business relations, or perform a transaction. This is crucial in addressing the surge in fraud and scams, as well as meeting international standards for combating money laundering and terrorist financing.

Philippines’ Status on Gray List

The Philippines was recently re-included on the gray list by the Paris-based Financial Action Task Force (FATF) for failing to address remaining deficiencies in its regime to counter money laundering and terrorist and proliferation financing. This highlights the importance of banks and financial institutions adhering to strict customer due diligence measures.

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