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Manila Bulletin devider Business devider Banking & Finance devider BSP tells virtual asset providers: Comply with PH travel rules

BSP tells virtual asset providers: Comply with PH travel rules

Published Jan 2, 2024 10:59 am

The Bangko Sentral ng Pilipinas (BSP) wants more vigilance in the way banks and non-banks comply with the Philippine Travel Rule (PHTR) when it relates to virtual asset service providers (VASPs).

In a memo (BSP Memorandum No. M-2023-042) which clarifies the implementation of the PHTR for VASPs, the BSP said that “notwithstanding the existing challenges in (PHTR), the (BSP) strongly enjoins BSFIs (BSP supervised financial institutions) to remain vigilant in safeguarding the financial system by maintaining secure and interoperable channels for information sharing on (PHTR).”

The memo basically clarified four issues in the PHTR which pertains to: applicability of transaction thresholds; expectations on transactions with jurisdictions without travel rules; applicability of PHTR to non-custodial VASPs; and regulatory expectations on transactions with unhosted wallets.

The BSP said that under existing rules, all virtual asset transfers are considered cross-border wire transfers.

But for the guidance of all BSFIs, the BSP said virtual asset transfers exceeding P50,000 should follow the PHTR such as originator and beneficiary information.

For virtual asset transfers below P50,000, the BSP said that originating institutions will likewise ensure accurate information that are “related to the payment chain”.

As for transacting virtual asset transfers to countries with no travel rules, the BSP wants VASPs to undertake the necessary due diligence.

Travel rule requirements for VASPs is covered under Recommendation 16 of the Paris-based Financial Action Task Force (FATF), the global anti-money laundering watchdog, that has the Philippines under its “gray list” which means it is under close monitoring when it comes to "dirty money" activities and efforts to curb money laundering.

The FATF’s Recommendation 16, according to the BSP, “was developed with the objective of preventing terrorists and other criminals from having unfettered access to electronically-facilitated funds transfers for moving their funds and detecting such misuse when it occurs.”

FATF placed the country in its gray list in mid-2021 as a jurisdiction under increased monitoring and “actively working with the FATF to address strategic deficiencies” to counter “money laundering, terrorist financing, and proliferation financing."

The Philippines, led by the BSP, has been working since 2021 to get out of the FATF gray list.

The deadline to complete the full action plan was by January 2023, which was missed. The FATF in an October 2023 plenary said there are still deficiencies as far as the Philippines’ compliance to its recommendations is concerned.

As noted by the International Monetary Fund in a recent surveillance review, the “key remaining gaps identified by the FATF are in the areas of effective risk-based supervision of designated non-financial businesses and professions, mitigating risks associated with casino junkets, enhancing law enforcement agencies’ access to beneficial ownership information, investigating and prosecuting complex money laundering cases, and increasing the identification, investigation, and prosecution of terrorism financing cases.”

The IMF also noted that the Philippines continue to face “significant challenges in the effective implementation” of FATF recommendations in implementing anti-money laundering and combatting terrorist financing (AML/CTF).

Last month, BSP Governor Eli M. Remolona Jr. expressed his hope that the country’s whole-of-government approach is enough to get delisted after more than two years on the FATF watchlist.

He reiterated that the Anti-Money Laundering Council (AMLC), which he chairs, is fully aware of the weak spots and the areas that needs more work to convince FATF that the Philippines should be taken out of their watchlist.

In an Oct. 27 report, the FATF said it “urges the Philippines to swiftly implement its action plan to address (the) strategic deficiencies as soon as possible as all deadlines expired in January 2023.”

The latest FATF report included 23 countries still under increased monitoring. Besides the Philippines, the only other ASEAN country in the watchlist is Vietnam.

The Philippines was given a one year extension from January 2023 to January 2024 to work on complying with the required AML/CTF action plans. Remolona said it is still possible to ask for an extension.
 

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