THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to amend the reporting governance framework for money service firms to better regulate these businesses and help mitigate money laundering risks.

In a draft circular uploaded on its website, the central bank said it is seeking to amend sections under the Manual of Regulations for Non-bank Financial Institutions (MORNBFI) to revise the reporting governance framework of money service businesses (MSBs), remittance transfer companies (RTCs), and money changers or foreign exchange dealers (MX/FXDs).

These amendments aim to “enhance regulatory and supervisory activities 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.”

It would also enable the BSP to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) policies and initiatives.

“The proper conduct and effective supervision of MSBs are facilitated by the accurate and timely submission of required information concerning their transactions, financial condition, and results of operations.”

“At the same time, high-quality individual MSB reports contribute to the preparation of aggregate statistics that enable MSBs to make better-informed business decisions,” it added.

Regulatory reports must be complete, accurate, timely and adaptable, the central bank said.

MSBs must also establish a reporting system that includes a management information system; written policies and procedures documenting their standards and processes; periodic independent review of reporting processes and procedures; and timely reporting to the board of directors, partners, proprietor and senior management.

It also prescribes monetary penalties for noncompliance ranging from P150 to P1,500 daily for reporting violations.

MSBs shall also have a true and accurate account, record, or statement of their daily transactions, according to the draft circular.

“Records shall also include audio, photographic, and video evidence of events, acts, or transactions of the MSB, including all records of communication, oral (e.g., voice recordings) or written (e.g., letters) of officers and employees of the MSB,” it said.

These records must also be retained for a period of at least five years unless otherwise required by law or other regulations.

MSBs shall also strictly adopt a manual of accounts prescribed under the Financial Reporting Package for MSBs for “prudential reporting purposes.”

The draft rules said that crimes must be reported to the appropriate supervising department of the BSP, regardless of the amount involved. These include estafa, theft, robbery, and falsification, among others.

The amendments also detail the guidelines for audited financial statements.

“The Bangko Sentral recognizes that external auditors play a vital role in contributing to the conduct of effective supervision and sustaining the confidence of the public in the financial system,” it said.

“In this light, the regulations on financial audit aim to enhance the quality of information channeled to the supervisory process and ultimately promote fairness, transparency and accuracy in financial reporting.”

If approved, the circular will form part of the MORNBFI under “M-Regulations.”

“When completed and adopted, is intended to overwrite the existing Section 901-N of MORNBFI to enhance and provide structure to the regulatory standards for MSBs,” the BSP added. — Luisa Maria Jacinta C. Jocson

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