The Philippines central bank has ordered local banks and financial firms to enhance their security measures for digital transactions and merchant accounts.

According to a report by The Manila Times, the regulator aims to curb risks related to money laundering and illegal financial activities.

The BSP has instructed financial institutions across the Philippines to strengthen their safeguards for QR payment systems and merchant accounts.

The directive was issued through a new memorandum reminding supervised institutions to maintain effective account monitoring practices.

Regulators emphasised that onboarding procedures must remain commensurate with the risks posed by the growing use of digital transactions.

The central bank stated that payment activities across online platforms and mobile applications require robust monitoring controls.

This includes person-to-person transfers and retail services conducted through third-party channels.

The memorandum also clarified the responsibilities of financial institutions that work with payment aggregators and similar intermediaries.

Regulators noted that the participation of intermediaries does not diminish the compliance obligations of the primary banks providing settlement accounts.

Payment aggregators must also carry independent responsibilities for conducting due diligence and reporting suspicious transactions.

The central bank directed supervised entities to maintain clear distinctions between merchant accounts and personal accounts.

Institutions must conduct periodic reviews of merchant profiles and transaction behaviour to ensure alignment with expected business operations.

Regulators also raised specific concerns regarding mule merchants and the unauthorised use of digital codes.

Financial institutions must now adopt stricter risk based measures to detect and prevent such illicit activities across the national payment system.

Featured image: Edited by Fintech News Philippines based on an image by via Magnific.