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BSP warns on money laundering risks

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FINANCIAL INSTITUTIONS under the watch of the Bangko Sentral ng Pilipinas (BSP) need to submit reports on transactions that were done with banks in North Korea and Iran due to risks of money laundering (ML) and terrorism financing (TF) schemes.

“For both DPRK (Democratic People’s Republic of Korea) and Iran), BSFIs (BSP-supervised financial institutions) should immediately submit a report to the Anti-Money Laundering Council on the actions taken as well as known information, such as name, date and nature of transaction, and amount involved, if any, regarding the designated individuals and entities…,” the central bank said in Circular Letter No. CL-2020-026 signed by BSP Deputy Governor Chuchi G. Fonacier on May 10.

The BSP said an updated assessment from global money laundering watchdog Financial Action Task Force (FATF) said both North Korea and Iran were found to have “significant strategic deficiencies” in countering ML and TF and in warding off proliferation financing (PF) regimes.

“At this time, we have no actual data on hand, but we expect that the transactions will be nil to minimal, especially for DPRK given the existing UN (United Nations) transactions,” Ms. Fonacier said in a text message yesterday.

The circular said the FATF’s findings on North Korea said the risks come from the country’s illicit activities related to their drive to develop weapons of mass destruction and its financing.

Following this, the FATF urged other countries to require financial institutions to be more watchful of their direct or indirect business dealings with North Korea as well as businesses acting on their behalf.

“BSFIs are likewise directed to terminate correspondent relationships with DPRK banks, where required by relevant UNSC (United Nations Security Council) Resolutions,” the circular added.

The central bank said BSFIs shall apply enhanced due diligence (EDD) measures and consider North Korea as a high-risk jurisdiction.

Meanwhile, the FATF has found that Iran has yet to address its strategic deficiencies, posing TF concerns to the international financial system. The watchdog said Iran will be considered a “high-risk jurisdiction” until the country addresses its deficiencies.

With this, the circular also directed BSFIs to apply EDD procedures and counter-measures when dealing with transactions with Iran.

“For Iran, there are valid trade and individual transactions, but also not significant, and these could be subjected to EDD,” Ms. Fonacier said via text

The Philippines is also under tighter watch from the FATF as it is under a 12-month observation period until October to implement tighter regulations on money laundering and counter-terrorism financing. — L.W.T. Noble





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