Stricter gambling payment rules eyed

The Bangko Sentral ng Pilipinas (BSP) is seeking to tighten regulations on online gambling payments to prevent the misuse of financial services and implement closer monitoring over the sector.

The central bank posted a draft circular on its website which aims to establish regulations on online gambling payment services.

The proposed rules aim to “promote responsible use of digital financial services, strengthen financial consumer protection, uphold financial health, and mitigate the social and financial risks associated with online gambling.”

“Towards this end, it is imperative to ensure that digital payment services of PSPs (payment service providers) are not misused for activities that are socially harmful and detrimental to financial health,” the BSP said.

The booming gaming industry in the Philippines is now drawing heightened scrutiny amid concerns over rising addiction and financial problems among Filipinos.

The Department of Finance  has proposed a tax on online gaming, as well as other possible measures to crimp the public’s access to digital gambling platforms, such as imposing limits on paying time or cash-in.

Under the BSP’s proposed circular, these regulations could cover PSPs engaged in these services as well as operators of a payment system (OPSs) serving as payment acquirer or aggregator of the online gambling operator.

It aims to establish standards and expectations for PSPs in the provision of online gambling payment services and set the enhanced know-your-customer  measures to uphold applicable legal prohibitions on access to and participation in online gambling, it said.

Under the draft rules, PSPs and OPSs engaging or intending to engage in online gambling payment services must secure prior authority from the central bank.

They must also maintain a minimum capitalization of PHP 300 million and a composite rating not lower than three based on the BSP Supervisory Assessment Framework.

PSPs and OPSs must also have strong anti-money laundering and counter-terrorism financing (AML/CTF) risk management; robust fraud management system and a board-level committee on AML/CTF compliance.

No links

The central bank also wants to prohibit payment providers from including links to online gambling platforms.

“PSPs that offer or facilitate online gambling payment services shall not be allowed to provide links to online gambling websites or otherwise provide any functionality that will redirect a user to an online gambling operator’s platform,” it added.

For enhanced monitoring, the draft rules also require PSPs to provide a facility for the creation of a separate online gambling transaction account (OGTA) for eligible account holders.

The OGTA refers to the “specific transaction account that shall be created upon the instance of the eligible account owner in order to participate in online gambling.”

Eligible account owners can only have one OGTA, which is also only funded with transfers from the same bank or institution.

PSPs must also ensure mandatory facial biometric verification for account opening and periodic facial biometric re-verifications to mitigate fraud.

The payment service providers should also strictly monitor the transactions to and from the OGTA, in accordance with anti-money laundering risk management policies.

For example, transfer of funds to the OGTA will be subject to a daily limit that should not exceed 20% of the average daily balance of the eligible owner’s transaction account. Incoming fund transfers beyond the said limit must be rejected by the PSP.

“PSPs concerned shall set a transaction window within which online gambling payment services could be offered, and such transaction window should not exceed six hours per day,” it said.

“In cases of heavy usage of the online gambling payment service, as defined by the PSP concerned, a 24-hour cooling off period shall be implemented, such that the next transfer can only be made after the lapse of said period.”

When a user creates an OGTA, all lending options in the same digital platform shall also be disabled, it added.

The BSP also said PSPs and OPSs must employ prudent acceptance criteria and procedures for the onboarding and monitoring of online gambling operators.

“PSPs and OPSs concerned shall only engage with online gambling operators that are in good standing and compliant with government registration, permit and other related requirements,” it added.

Online gambling operators are considered “high-risk merchants,” the BSP said, which would require enhanced due diligence from PSPs and OPSs.

Apart from conducting beneficial ownership verification, PSPs and OPSs must also “understand, evaluate, analyze, and periodically assess the overall potential risk of an online gambling operator.”

Responsible gambling

Under the proposed rules, PSPs must also develop a Responsible Online Gambling Policy to “promote responsible gambling and enable account owners to exercise self-control and prevent gambling addiction.”

Under this policy, mandatory or periodic pop-up alerts will be determined for account owners depending on their usage.

“PSPs concerned must prominently display notices within their digital platforms informing users of available responsible gambling tools, OGTA limitations, and access to support resources.”

“PSPs concerned may also develop other programs and initiatives to promote responsible gaming and aid in deterring possible compulsive or irresponsible gambling behavior,” it added.

Under the rules, employees of PSPs and OPSs are also prohibited from engaging in gambling and any form of online gambling activities.

Violations of these rules would lead to sanctions or monetary penalties. Penalties are not to exceed PHP 100,000 per calendar day for violations of continuing nature or a maximum penalty of PHP 1,000,000 for each transactional violation.

Non-monetary sanctions include the suspension of the authority to offer online gambling payment services for a first offense. For a second offense, this would lead to the revocation of authority to offer said services as well as the suspension of authority to settle through the payment and settlements system.

“The supervising department of the Bangko Sentral shall determine whether there is noncompliance and shall inform the PSP of such noncompliance.”

“Once notified of such non-compliance, the PSP shall immediately cease its online gambling payment services until full compliance has been achieved by the PSP,” it added. — Luisa Maria Jacinta C. Jocson