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BSP updates rules on client identification, dirty money

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THE BANGKO SENTRAL ng Pilipinas (BSP) has updated its rules for validating client identity by accepting the national ID and the use of technology for verification.

Circular 1022 issued by BSP Governor Nestor A. Espenilla, Jr. likewise tightens rules to improve guards versus dirty money deals.

The 17-page issuance now puts in the manual of banks the recognition of the Philippine Identification System (PhilSys) ID card as an official document for financial transactions. This is on top of documents issued by other government agencies and school ID for students.

The PhilSys will assign a unique 12-digit number to Filipinos and resident aliens to serve as their digital identity across multiple platforms, while the ID is expected to replace most of the government-issued cards to simplify access to public and financial services.

The central bank has also included a person’s PhilSys number as part of the minimum information to be collected by financial players before carrying out a transaction, alongside one’s name, date and place of birth, address, contact number, nationality, and specimen signature or biometric for individual users.

To add, the BSP also included the use of information and communication technology (ICT) to “capture and record” personal data of customers, on top of the traditional modes of collection via photocopying or scanning of documents as well as the manual recording of information.

“The use of ICT in the conduct of face-to-face contact and/or interview may be allowed: Provided, that the covered person has measures in place to mitigate the ML/TF (money laundering/terrorist financing) risks and that the entire procedure is documented,” the central bank said.

Prior to this, the BSP required banks be “in possession of” identification papers from a prospective client.

The central bank previously approved the use of electronic know-your-customer procedures that allow banks and financial players to use online channels like video calls and geocoding to verify a client’s identity. This is expected to ease the burden on customers by making it more convenient to get bank accounts and transact.

The circular also requires a more comprehensive strategy for financial firms to combat dirty money. The central bank prescribed lenders to have a “group-level” Money Laundering and Terrorist Financing Prevention Program, which should be under the watch of senior management.

On a broader scale, the new rules also require players to comply with relevant resolutions made by the United Nations Security Council in conducting due diligence among customers, especially on the “prevention, suppression and disruption” of the use of weapons of mass destruction and its financing.

These changes come just as the Philippines is going through its third mutual evaluation carried out by the Asia Pacific Group on Money Laundering, and inter-governmental body which assesses whether safeguards installed by governments are sufficient to combat illicit money flows.

Last week, President Rodrigo R. Duterte issued Executive Order 68 forming a multi-agency coordinating body that will enforce the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy 2018-2022. — Melissa Luz T. Lopez