Financial Crime World

Philippines’ Central Bank Issues New Guidelines on Customer Due Diligence

The Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, has issued a new circular that sets forth guidelines for banks and other financial institutions (BSFIs) to ensure effective customer due diligence (CDD) in their operations.

Effective Date

The circular takes effect on [date].

Purpose of the Guidelines

The goal of these guidelines is to prevent money laundering and terrorist financing (ML/TF) risks by ensuring that BSFIs implement robust systems for collecting and verifying customer information.

Identification Documents

Under the new guidelines, customers must present a valid identification document, such as:

  • PhilID
  • Other reliable documents that can validate their identity

BSFIs may also accept other identification documents not listed in the circular, but these must be used in conjunction with other verification methods to mitigate ML/TF risks.

Digital Identification Methods

The circular permits the use of electronic know-your-customer (e-KYC) systems, which involve digital ID systems that collect and verify customer information. To implement e-KYC, BSFIs must ensure that their systems are anchored on:

  • Robust, effective, and reliable technology architecture
  • Tiered or risk-based policies and procedures

Risk-Based Approach

The guidelines emphasize the importance of a risk-based approach to CDD, which considers factors such as:

  • Type of product
  • Delivery channel
  • Geographical location
  • Other relevant risk indicators

This allows BSFIs to tailor their CDD processes to specific customer segments and transactions.

Penalty Clause

The circular provides that the BSP may deploy supervisory enforcement actions to ensure compliance with its guidelines and promote timely corrective actions in case of non-compliance.

Objectives

The new guidelines aim to enhance the Philippines’ anti-money laundering and combating the financing of terrorism (AML/CFT) regime, which is critical for maintaining financial stability and preventing illicit activities.