BSP to set higher fines for banks

By Melissa Luz T. Lopez
Senior Reporter
HEFTIER FINES await banks and financial firms who will violate rules set by the Bangko Sentral ng Pilipinas (BSP), which officials hope will keep banks on their toes in terms of compliance.
BSP Senior Assistant Governor and General Counsel Elmore O. Capule said among the key reforms provided by Republic Act (RA) 11211 — which updates the provisions of the central bank’s Charter — sets higher penalties for violating industry regulations.
“We want to make it painful on the part of banks to violate rules and regulations,” Mr. Capule said in a briefing last Friday.
Updates to the New Central Bank Act raise the fines which the Monetary Board can impose on erring institutions. From a ceiling of P30,000 per day for each violation, the rate has been raised to P1 million “for each transactional violation,” or P100,000 per calendar day for continuing lapses.
A new provision was also introduced, which reads: “In case profit is gained or loss is avoided as a result of the violation, a fine no more than three times the profit gained or loss avoided may also be imposed.”
“We are imposing a lot of penalties, but the Monetary Board will say — ‘that’s only the amount we will impose? Look at the magnitude of what they did,’” Mr. Capule added. “With this imposition, it’s not the fine that will kill them but the three times the profit… That’s very expensive on their part. I think that will really be a deterrent.”
An “informer’s reward” worth a maximum of P1 million is also included in the new law, which BSP officials hope to be a way to get more insider tips or whistleblowers to develop cases against financial firms and bank officers who go against the rules.
The biggest fine imposed by the BSP in history is the P1-billion penalty for the Rizal Commercial Banking Corp. over the lender was used by cyber criminals to pocket $81 million stolen from the Bangladesh central bank in 2016. It was settled by the lender in two tranches. To date, only $15 million has been returned to Dhaka.
The updated provisions of the New Central Bank Act are touted to strengthen the BSP’s monetary and regulatory functions, after having been left pending before Congress for roughly 20 years since its passage in 1993.
Apart from cash penalties, the BSP maintains the authority to suspend or revoke licenses granted to the financial firms, as well as their access to BSP services.
On the flipside, the new law also provides legal protection for BSP officials and staff when performing their official duties, which Mr. Capule said will provide more confidence as it would limit intimidation for lawsuits from subject banks.
RA 11211 takes effect March 5, or 15 days after it was published.