THE BANGKO SENTRAL ng Pilipinas (BSP) reminded banks to implement targeted financial sanctions (TFS) like asset freezing to combat the financing of terrorism and proliferation of weapons of mass destruction.
BSP Deputy Governor Chuchi G. Fonacier through Memorandum No. M-2022-007 told its supervised financial institutions to implement TFS-related policies that are “consistent and proportionate to their risk profile.”
The memorandum was issued as the country is aiming to report to the Financial Action Task Force this May that it has boosted TFS for terrorism financing and proliferation financing following its gray-listing in June 2021.
TFS are measures like asset freezing and limiting the availability of funds that will benefit designated persons or entities, which can in turn be used for terrorism financing, proliferation of weapons of mass destruction, and proliferation financing.
The BSP said banks are expected to conduct assessment, regular audit or review of screening systems to ensure that their systems and processes on TFS are working as intended.
“The methodology should be tailored fit according to the risk and context of the BSP-supervised financial institutions. The simpler the products, services and operations of the institution, the simpler the approach that can be used,” the central bank said.
At minimum, they are expected to practice sanction screening by verifying the names and country of residences of account holders and other persons acting on behalf of account owners.
Information on wire transfers and trade transactions should also be screened. This should be conducted upon account opening, periodically, and whenever there are updates to a client’s account information including ultimate beneficial ownership, authorized signatories, or change in the names of clients.
Banks also need to conduct a periodic screening of all customers whenever there are changes to the sanctions list and designated persons, the BSP said.
Corporate accounts that involve one or more signatories of a designated person will also be subjected to TFS, the central bank said.
“Even if a corporation is not listed/designated, but there is a reasonable ground or probable cause to believe that the corporation is under the control of a designated person, then the sanctions will also apply,” the BSP said.
Banks are expected to confirm with the Anti-Money Laundering Council within 24 hours a target match or an account that bears all identifier information designated in the sanctions database, even if there is no amount to be frozen in an account.
The sanctions database of financial institutions includes identified terror groups by the United Nations Security Council, among others.
The BSP said banks have the option to include in their sanctions database other persons or groups that have been designated by other jurisdictions including Office of Foreign Assets Control of the US Department of the Treasury and the European Union. — Luz Wendy T. Noble