BSP looks to tighten MSB reporting standards to boost risk monitoring

The Bangko Sentral ng Pilipinas (BSP) is looking to tighten its reporting standards for money service businesses (MSBs) to boost monitoring of risks in the sector.

A draft circular posted on its website showed the BSP wants to amend the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) “to enhance and provide structure to the regulatory standards for MSBs.”

The proposed amendments cover the reporting governance framework for MSBs.

“The amendments to the relevant sections of the MORNBFI set forth the Bangko Sentral’s initiative to enhance regulatory and supervisory activities over MSBs to ensure that attendant risks remain manageable as the industry continually evolves and business models become increasingly complex amidst emergence of new players in remittance and breakthrough financial technology,” the BSP said.

“They further the fulfillment of the Bangko Sentral’s international obligations and political commitment to strengthen its Anti-Money Laundering and Combating the Financing of Terrorism regimes,” it added.

The draft circular introduces provisions on MSBs’ risk monitoring and reporting.

“MSBs shall ensure that sufficient mechanisms are in place to monitor reputational risk across different business lines and functions. This enables the board or proprietor and management to address any significant issues and developments,” the central bank said in the circular.

It cited measures such as early warning systems to help detect and control risks.

“Sample early warning indicators include volume of complaints, number of negative news on the institution, number of violations of laws/regulations/codes of conduct with material penalties or sanctions for noncompliance,” it added.

BSPMSBs are also tasked to notify the BSP of events which may have a “significant impact on their business or reputation and/or is likely to lead to a crisis,” such as cyber-related incidents, disruptions of financial services, liquidity ratios falling below the minimum, among others.

The BSP added that MSBs must employ an “effective” reporting system.

This is composed of a management information system; policies and procedures on the MSBs’ standards; periodic independent reviews of reporting procedures; and timely reporting to the board or proprietor and senior management.

It also revises the sanctions imposed on MSBs that do not comply with the BSP’s reporting standards, namely erroneous reports, delayed reports, and unsubmitted reports.

Under the draft rules, penalties range from PHP 150 to PHP 1,350 depending on the violation.

Fines for erroneous reports will be prescribed based on each occurrence while fines for delayed or unsubmitted reports will be based on each day it accumulates.

Previously, the penalty was set at PHP 60 for each occurrence of an erroneous report or each day of a delayed or unsubmitted report.

MSBs are also required to conform to Philippine financial reporting and accounting standards, as well as adopt the Manual of Accounts under the Financial Reporting Package for MSBs for prudential reporting purposes.

The guidelines on the reporting of crimes and losses were also increased so that the amount involved per incident would start at P100,000 from P20,000 previously for incidents involving material loss, destruction or damage to the MSB’s property/facilities, other than arising from a crime.

If the draft circular is approved, MSBs will have one year from its effectivity to comply with the amended regulations.

The BSP is accepting comments on the draft circular until March 15. — By Luisa Maria Jacinta C. Jocson