THE CENTRAL BANK is looking to amend provisions on targeted financial sanctions (TFS) in an effort to enhance measures addressing terrorist financing (TF) and proliferation financing (PF).
The proposed circular of the Bangko Sentral ng Pilipinas (BSP) would amend part nine of the Manual of Regulations for Banks and for Non-Bank Financial Institutions.
“TFS implementation related to terrorism, TF, proliferation, and PF is rule-based as full application of the TFS is required,” the BSP said in the proposed guidelines.
“It requires both asset freezing and prohibitions to prevent funds or other assets from being made available, directly, or indirectly, for the benefit of designated persons. The full implementation of TFS requirements include, among others, detecting and preventing the non-implementation, potential breach, or evasion of TFS,” it added.
Under the proposed rules, financial institutions are required to freeze without delay any property or funds related to terrorism and proliferation of weapons of mass destruction.
This includes blocking assets owned or controlled by a designated person from being transacted, converted, concealed, moved, or disposed.
Banks would be required to adopt risk-based measures to reinforce and complement the rule-based full implementation of the TFS requirements without delay.
Financial institutions are also expected to properly adopt and maintain the sanctions database.
“Covered persons shall adopt mechanisms to ensure that the sanctions database is accurate, complete and up-to-date. All new designations shall be included in the sanctions database and screened against existing customer base without delay to adhere with the freezing and reporting requirements under applicable laws and regulations,” the central bank said.
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.
As part of the customer due diligence process, banks should also conduct sanctions screening procedures for customers and their transactions.
“The screening should be conducted upon (i) establishment of relationship or opening of an account, or at the latest prior to the first transaction, regardless of the customer risk profile, (ii) periodically over the course of the relationship, especially whenever new designations or updates are issued, and (iii) whenever there are updates to the client’s information,” the BSP said.
This is also to determine potential target matches in accordance with the procedures of the Anti-Money Laundering Council (AMLC).
“For name match, covered persons should have hierarchy of actions and references to disambiguate or resolve name match,” the BSP said.
“This includes inquiring or requesting additional information and identification documents from the customer or other reliable parties/relevant government agencies, such as the AMLC, to verify whether the name match is a potential target match or target match,” it added.
Banks are expected to confirm with the AMLC within 24 hours a target match and shall freeze without delay any funds or assets and file a detailed electronic receipt to AMLC.
“For uniform and effective implementation of TFS requirements covered persons shall regularly refer to the relevant, up-to-date legislation as well as specific AMLC and BSP rules and regulations on TFS.
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 sanctions database of financial institutions includes identified terror groups by the United Nations Security Council, among others.
The draft circular was issued as the country is aiming to exit the Financial Action Task Force’s (FATF) “gray list.”
In an Oct. 21 report, the FATF said the Philippines is still in its gray list after the country failed to address strategic deficiencies against money laundering, terrorist financing and proliferation financing.
According to the report, the country should enhance its use of financial intelligence and money laundering investigations and prosecutions in line with risk, the global “dirty money” watchdog said.
The Philippines should also enhance and streamline law enforcement agencies’ access to beneficial ownership information and ensure accurate and up-to-date information, FATF said.
The country has been on the list since June 2021. Government officials earlier expressed hope the country can exit the gray list by January 2023. — Keisha B. Ta-asan