By Melissa T. Lopez, Reporter

BSP eyes to temper banks’ ‘de-risking’

Posted on April 29, 2016

THE BANGKO SENTRAL ng Pilipinas (BSP) is in talks with international agencies to clarify standards against money laundering to temper de-risking among foreign banks amid heightened concerns due to the $81-million bank heist.

BSP Governor Amando M. Tetangco, Jr. said officials are seeking to minimize risk aversion among foreign banks in dealing with Philippine entities, which could eventually result in higher remittance costs that would have to be shouldered by overseas Filipinos (OF).

“We are talking with international standard-setters like the FATF (Financial Action Task Force), the BIS (Bank for International Settlements), the FSB (Financial Stability Board) including bilateral agencies like the US Treasury to explain to them what the impact of de-risking can potentially be in as far as remittances in general as well as the individual interest of overseas workers and their beneficiaries,” Mr. Tetangco told reporters on the sidelines of a financial inclusion summit organized by the BPI Foundation.

“I think they have been listening. In fact there have been advisories that have been issued clarifying certain standards because sometimes it is just as matter of interpretation. If the interpretation is on the strict side then it becomes a little bit more difficult to comply with the regulations.”

The central bank chief noted that de-risking among correspondent banks started in 2014, with the recent money laundering case involving a Philippine bank seen “not helping” the issue.

With more expensive transaction costs, overseas Filipinos may have to reduce the amounts they remit, or possibly resort to informal channels just to send money home.

“Since the closures limit the players that can competitively operate in the remittance market, this has the potential to reverse the steady gains we have made in reducing remittance costs,” Mr. Tetangco also pointed out in his keynote speech.

“De-risking may also result in movement by OFs toward informal remittance channels and subsequent financial exclusion. In the end, this may exact an even larger toll on the OFs and their families in terms of deprivation of access to safe and reliable financial services.”

Mr. Tetangco added that the central bank is also in the middle of a National Risk Assessment with other government agencies to “evaluate the country’s weaknesses” in anti-money laundering and counter-terrorist financing, which would also point out gaps which need to be plugged.

Mr. Tetangco also assured ample security features within the central bank’s systems amid the recent leak of sensitive voter data held by the Commission on Elections.

“In terms of cyber security, there are always risks. What is important is that these risks are properly addressed...,” the BSP chief said, adding that it has also issued a reminder to banks and financial entities to beef up guards against intrusion.

Mr. Tetangco added that attempts to hack the BSP’s Web site “always happen,” but have been thwarted.