The Bangko Sentral ng Pilipinas (BSP) will fuse its Money Laundering Terrorist/Financing Risk Assessment System (MRAS) to its recently adopted Supervisory Assessment Framework (SAFr) to have more teeth in fighting against illegal or dirty money and fortify financial system stability.
BSP Governor Benjamin E. Diokno said the MRAS as their primary tool for anti-money laundering/countering the financing of terrorism (AML/CFT) supervision, can contribute to the “overall stability of the domestic financial system.”
“The BSP introduced MRAS following the recent adoption of SAFr for BSP- supervised financial institution or BSFIs. MRAS can be integrated into the SAFR as it allows seamless evaluation of other risk areas vis-a-vis anti-money laundering, terrorist financing and proliferation financing risks,” said Diokno during his regular “GBED Talks” online. MRAS applies the principle of proportionality as well, he added.
As now part of BSP’s “arsenal of supervisory tools in fighting money laundering, terrorist financing, and related threats in the financial sector” MRAS also highlights the conduct of Institutional Risk Assessment
(IRA) and the implementation of Targeted Financial Sanctions, said Diokno.
“The IRA should be integrated in the BSFI’s corporate governance framework and emphasized by the board and senior management to ensure that it is considered in the BSFI’s strategic direction and operations,” he explained. The IRA is the foundation of a BSFI’s AML/CFT framework.
As an enhancement to the existing Anti Money Laundering Risk Rating System, MRAS uses a four-point rating scale (high, above average, moderate and low) in evaluating a BSFIs’ money laundering risk profile, according to the BSP.
MRAS evaluates inherent risks, the quality of risk management and the effectiveness of a BSFIs’ self-assessment systems. Integral to this is the context of the risk, as well as a BSFI’s business model and operations, said the BSP. “Under MRAS, more supervisory resources will be allocated to BSFIs with higher net risk exposures and those that pose heightened risk to the safety and soundness of the financial system,” said the BSP, adding that it will benefit BSFIs. “They will be informed of sources of risks and vulnerabilities, and can then prepare appropriate measures to address them,” it added.