BSP to issue new guidelines for MSBs

March 6, 2024 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is finalizing a new regulatory framework for money service businesses (MSBs) to ensure that risks remain manageable amid the evolving industry.

The regulator has made available a draft circular on the proposed guidelines covering MSBs such as remittance transfer companies and money changers or foreign exchange dealers. Stakeholders are given until March 15 to comment on the proposed circular.

The BSP intends to revise section 901-N of Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) to enhance and provide structure to the regulatory standards for MSBs by completing and adopting the new “M-Regulations.”

The new part of the MORNBFI would cover the reporting governance framework for MSBs, financial records, reports and audited financial statements.

The BSP said the amendments aim to boost the BSP’s supervision over MSBs to “ensure that attendant risks remain manageable as the industry continually evolves and business models become increasingly complex amidst emergence of new players in remittance and breakthrough financial technology.”

The central bank also aims to strengthen its anti-money laundering and combating the financing of terrorism regime, as these non-banks have high risk exposure to dirty money.

Under the draft rules, MSBs would be required to put in place sufficient mechanisms to monitor reputational risks across different business lines and functions. This enables the firm to address any issues and developments.

“Early warning systems should be established to detect emerging threats and ensure that corrective actions are carried out in a timely manner,” the BSP said.

These indicators may include the volume of complaints, number of negative news on the firm and the number of violations of laws or codes of conduct with material penalties or sanctions for non-compliance.

MSBs would also need to notify the appropriate supervising department of the BSP within five days of any event which may have a significant negative impact on their business or reputation or is likely to lead to a crisis.

“In this regard, MSBs shall ensure compliance with the notification or reporting requirements on reportable operational risk events, on major cyber related incidents and/or disruptions of financial services and operations, and on liquidity ratios falling below the minimum, among others,” it said.

Meanwhile, MSBs should also properly submit their financial records to the BSP on time and without error. Records would be retained for at least five years.

“The making of any false entry or the willful omission of entries relevant to any transaction is a ground for the imposition of administrative sanctions under section 37 of Republic Act 7653, as amended,” the BSP said.

MSBs would also be required to submit reports on crimes concerning the firm, when the amount involved in each crime is P20,000 or more.

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