July 29, 2019 – The Bangko Sentral ng Pilipinas (BSP) has advised banks in the Philippines to only deal with licensed virtual currency exchanges (VCEs) and exercise extreme due diligence when doing business with them.
As per Memorandum No. M-2019-021, the central bank said that all BSP-supervised financial institutions must exercise “extra caution, vigilance, as well as perform enhanced due diligence” in accordance to their own Money Laundering and Terrorist Financing Prevention Program (MTPP) when dealing with money service businesses (MSBs), including Virtual Currency Exchanges.
A summary of what these financial institutions should observe (as per BSP’s recommendation) are:
- To deal only with virtual currency exchanges registered with the BSP.
- Conduct risk assessment of the VCEs, such as their business operations, products, types of customers, etc.
- Conduct enhance due diligence:
- require proof of the VCE’s registration with the BSP
- understand the VCE’s business
- verify the VCE’s compliance with the Anti-Money Laundering Council (AMLC).
- conduct validation procedures
- Perform continuous account and transaction monitoring
- proactively monitor the VCE’s transactions, including the personal accounts of the VCE’s owners or proprietors
- implement systems to identify unusual movement of funds
- periodically update counterparty risk assessent
In the memorandum, the BSP said that supervised financial institutions that failed to comply will be subject to sanctions and penalties.
There are 11 licensed virtual currency exchanges in the country today.
Recently, the Philippines Securities and Exchange Commission has released draft guidelines regarding “Digital Asset Exchanges“. A digital asset exchange refers to exchanges where there is an order book where buyers and sellers of a particular digital asset can set their own price. This differs to regular buy-and-sell crypto websites and apps that offer immediate conversion of fiat to digital asset at a specific price at any given time.
This article is first published on BitPinas: BSP: Banks Should Only Deal With Registered Virtual Currency Exchanges