BSP calls on banks to increase their vigilance against terrorist financing


THE BANGKO SENTRAL by Pilipinas (BSP) Banks reminded to implement targeted fiFinancial sanctions (TFS) such as asset freezes to combat the fiFinancing of terrorism and proliferation of weapons of mass destruction.

BSP Deputy Governor Chuchi G. Fonacier, through Memorandum No. M-2022-007, required its regulated financial institutions to implement TFS-related policies that are “consistent and proportionate to their risk profile.”

The memorandum was issued as the country intends to report to the Financial Action Task Force in May this year that it has ramped up TFS for terrorist financing and proliferation financing following its June 2021 gray list.

TFS are measures like freezing assets and limiting the availability of funds that will benefitfit Designated persons or entities which in turn can be misused for terrorism fiFinancing, proliferation of weapons of mass destruction and proliferation fiFinancing.

According to the BSP, banks are expected to conduct an assessment, periodic audit or review of screening systems to ensure their systems and processes are working as intended on TFS.

“The methodology should be tailored to the risk and context of the BSPs being supervised fifinancial institutions. The simpler the institution’s products, services and operations, the easier the approach can be used,” the central bank said.

At a minimum, they are expected to conduct sanctions checks by verifying the names and country of residence of Account Holders and others acting on behalf of Account Holders.

Information related to wire transfers and trades should also be verified. This should be done at account opening, periodically, and whenever a customer’s account information is updated, including ultimate beneficial owners, authorized signatories, or customer name changes.

Banks are also required to conduct a periodic review of all customers when changes are made to the sanctions list and nominees, the BSP said.

Corporate accounts involving one or more nominated person signatories will also be subject to TFS, the central bank said.

“Even if a company is not listed/designated but there is reasonable or probable reason to believe that the company is under the control of a specific person, the sanctions also apply,” the BSP said.

Banks are expected to certify to the Anti-Money Laundering Council within 24 hours a target match or account containing all identifying information specified in the sanctions database, even if no amount is required to be frozen in an account.

The sanctions database of fiFinancial institutions include terrorist groups identified by the United Nations Security Council.

The BSP said banks would have the option to add other individuals or groups to their sanctions database that are recognized by other jurisdictions, including Office of Foreign Assets Control of the US Treasury Department and the European Union. — Luz Wendy T. Noble


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