Bangko Sentral ng Pilipinas on Wednesday asked banks to practice extra caution when dealing with foreign exchange dealers, money changers and remittance agents to prevent money laundering.
Bangko Sentral issued a memorandum urging banks to be vigilant and to perform enhanced due diligence upon onboarding and during transaction monitoring, consistent with regulations and bank’s procedures as provided under the money laundering and terrorist financing preventionprogram.
“The bank’s MLPP should contain appropriate risk management practices to ensure that money laundering and terrorist financing risks arising from dealings with FXDs, MCs and RAs are effectively identified, assessed, monitored, mitigated and controlled,” Bangko Sentral said.
“To this end, banks should ensure the soundness and adequacy of their risk management policies and practices in dealing with FXDs, MCs and RAs…,” it said.
Bangko Sentral said banks should only deal with foreign exchange dealers, money changers and remittance agents registered with the regulator.
It said when dealing with remittance agents as remittance partners, banks had the ultimate responsibility for conducting appropriate due diligence to ensure they were not used as channel for money laundering and terrorist financing.
“Bank’s tie-up relationship with such customers shall not be used to circumvent existing regulations,” it said.
Bangko Sentral issued the memorandum, amid reports a Philippine bank and a remittance company were used as conduits for the laundering of $81 million funds stolen by computer hackers from the account of Bangladesh’s central bank in the New York Federal Reserve.
Bangko Sentral said banks should conduct risk assessment of the foreign exchange dealers, money changers and remittance agents, considering relevant factors such as business operations, types of customers, product/service availed, distribution channel, jurisdictions they are exposed to and expected account activity.
“By the nature of their business, they may inherently pose higher money laundering/terrorist financing risk which should be appropriately identified, monitored and mitigated,” it said.
Bangko Sentral said part of the banks’ due diligence process included requiring these foreign exchange traders to show proof of registration with Bangko Sentral; evaluating the business operations and customer profile of the foreign exchange dealers, money changers and
remittance agents; requiring them to submit a proof of registration with the Anti-Money Laundering Council; and obtaining senior management approval for establishing business relationship in accordance with the bank’s risk management policy.
“Unsatisfactory result of the due diligence process shall be a ground for denying the business relationship,” Bangko Sentral said.
Bangko Sentral also encouraged banks to periodically update their counter-party risk assessment based on risk and materiality, to ensure that their risk profile remains current and relevant.
