The Bangko Sentral ng Pilipinas (BSP) is on the verge of finalising a comprehensive new framework to bolster the regulatory standards for Money Service Businesses (MSBs) within the Philippines.
This initiative seeks to adapt and refine the regulatory environment, addressing the dynamic nature of the financial sector and the emerging complexities within the MSB landscape, including remittance transfer companies and foreign exchange dealers.
A draft circular outlining the proposed changes has been shared for public commentary, with stakeholders encouraged to contribute their insights by 15 March, 2024. This draft marks a significant step towards amending section 901-N of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) through the introduction of the new “M-Regulations.”
The envisioned regulations aim to enhance reporting governance, financial records, and audited statement requirements for MSBs, thereby elevating the BSP’s supervisory capabilities.
Central to the proposed framework is the ambition to fortify the anti-money laundering and terrorism financing measures, recognising the heightened susceptibility of these non-bank entities to such risks. The draft guidelines purportedly underscore the necessity for MSBs to implement robust systems for monitoring reputational risks and establishing early warning systems to swiftly detect and respond to potential threats.
These systems are expected to play a critical role in managing the volume of complaints, negative media coverage, and any violations of legal or regulatory standards that may incur substantial penalties.
Moreover, the new guidelines mandate prompt notification to the BSP by MSBs of any significant adverse events that could impact their business integrity or precipitate a crisis. This includes a wide range of incidents from operational risks to major cybersecurity breaches, along with deviations from prescribed liquidity ratios.
In terms of record-keeping, the BSP’s revamped framework will, if finalised, expect MSBs to maintain accurate and timely financial records, to be retained for a minimum of five years, with stringent penalties in place for any falsifications or omissions. Additionally, MSBs are required to report any criminal activities associated with their operations, particularly those involving sums exceeding PHP 20,000.
This comprehensive overhaul represents the BSP’s commitment to ensuring the MSB sector remains robust, transparent, and resilient amidst the emergence of novel financial technologies.
Featured image credit: Edited from Wikimedia
