By Lee C. Chipongian
Three months after the release of the Casino Implementing Rules and Regulations (CIRR) of Republic Act No. 10927 (“An Act Designating Casinos as Covered Persons under Republic Act No. 9160, otherwise known as The Anti-Money Laundering Act of 2001, as amended), the Bangko Sentral ng Pilipinas (BSP) issued a reminder to all banks to strictly implement sound risk management practices when transacting and dealing with clients “engaged” in gambling or operating online gaming.
In a memo signed on January 17, BSP Deputy Governor Chuchi G. Fonacier said that banks must ensure their risk exposures are closely monitored and managed with the “increasing exposures to customers engaged in gambling and/or online gaming business”.
“Similar to other risk exposures, it is expected that a bank's Money Laundering and Terrorist Financing Prevention Program (MLPP) contains appropriate policies and procedures to ensure that ML (money laundering) and TF (terrorist financing) risks arising from dealings with customers engaged in gambling and/or online gaming business are effectively identified, assessed, monitored, mitigated and controlled,” according to Fonacier.
Fonacier said risk management practices include banks’ reporting mechanism and that they “should set the risk appetite for the risk exposure”.
The memo also reminded banks to implement customer due diligence, and that banks should conduct the appropriate due diligence necessary to the relationship to ensure that they will not be used as channel for ML/TF activities. “This includes developing an adequate understanding of the business model and operations of the customer engaged directly or indirectly in gambling and/or online gaming business to identify unusual or possibly suspicious activities.”
“Banks should only deal with gambling and/or online gaming businesses which are authorized/licensed by or registered with the appropriate government agency duly empowered by law or its charter to license or authorize entities or businesses to engage in such activities (and banks) should identify and verify the identity of the customers, including their beneficiaI owner/s,” according to fonacier.
The memo also instructed banks to conduct customer risk assessment, “considering relevant factors such as business operations, types of customers, product/service availed of, distribution channel, jurisdictions they are exposed to and expected account activity.”
Lastly, the central bank reminded banks to perform continuing account and transaction monitoring, which may include the following:
- Implementing a robust system or process to identify unusual movements of funds or transactions of the customer that warrant further investigation or the conduct of transactional enhanced due diligence to determine if filing of suspicious transaction report is warranted. This includes proactive monitoring of the customers' transactions based on appropriate parameters or alerts scenarios that capture their financial profile and behavioral account activities;
- Periodically updating the counterparty risk assessment based on risk and materiality, to ensure that their risk profile remains current and relevant; and
- Adopting policies and establishing guidelines, with defined criteria or grounds, for the review and/or handling of business relationship as a result of ongoing monitoring.