BSP reinforces ‘know-your-employee’ rules for banks

The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, said Thursday it strengthened the “know-your-employee” policies and practices and tightened controls related to confirmation of deposit accounts as part of the operational risk management system of supervised financial institutions.

BSP Governor Benjamin Diokno, who is also the board chairman, said in a statement the issuance was part of the commitment of the BSP to “continue to raise the bar on corporate governance and risk management systems to protect the integrity of the financial system.”

“Aligning BSP regulations with international best practices on KYE procedures is just half the battle. The other half depends on the strength of oversight of the board of directors of BSP-supervised financial institutions in implementing these policies,” Diokno said.

Under the new rules, financial institutions are required to adopt a risk-focused screening process which considers sensitivities of certain positions that may require more stringent procedures.

Adequate understanding of a candidate’s personal background and character, conflict of interest and propensity to commit fraud or irregularity will be considered in the recruitment process. The revised rules also emphasize the use of BSP records as part of the screening process of BSFIs.

The issuance highlights the importance of continuing assessment of employees’ fitness and propriety to perform the responsibilities required of the position. BSFIs are expected to leverage on existing controls, available reports, and other relevant information to facilitate the assessment.

The new policy also identified certain behaviors that serve as red flags warranting further scrutiny as part of personnel’s performance evaluation.

The guidelines include the requirement for the head office of BSP-supervised financial institutions to act on requests for confirmation of accounts from their clients or depositors.

Segregating the confirmation process from the branch or officer handling the account is a control measure aligned with the principles set out under the operational risk management guidelines earlier issued by the Bangko Sentral.

Topics: Monetary Board , Bangko Sentral ng Pilipinas , Benjamin Diokno
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.