BSP Advises BSFIs on Beneficial Ownership Due Diligence

On 20 June 2024, the Bangko Sentral ng Pilipinas (“BSP”) released BSP Memorandum (“Memorandum”) No. M-2024-021. The Memorandum serves as a Guidance Paper on Beneficial Ownership Due Diligence to provide all BSP Supervised Financial Institutions (“BSFIs”) with a reference material for benchmarking best practices and calibrating policies for enhanced beneficial owner (“BO”) identification and verification. The goal is to mitigate the risks associated with money laundering (“ML”), terrorist financing, and proliferation financing.

Given the increasing problem of exploitation of legal persons to conceal the true identity of beneficial owners for ML activities, BSFIs are ordered to be more vigilant in implementing beneficial ownership customer due diligence. 

While BSFIs have made progress in identification, verification, sanctions screening, and updating BO information, the Memorandum highlights three focus areas for improvement:

1. Enhanced BO Identification through the use of “control lens” to complement the identification process based on ownership.
2. Multi-Pronged Approach in adopting various methods to collect BO information.
3. Risk-Based Approach in reinforcing a risk-based approach in verifying BO information.

The Memorandum also outlines the essential elements of beneficial ownership due diligence, which include:

1. Board of Directors and Senior Management Oversight.
2. Beneficial Ownership Identification and Verification.
3. Ongoing Monitoring of Customers, Accounts, and Transactions.
4. Record-Keeping and Information Sharing.
5. Role of Self-Assessment.

While the Memorandum does not impose new or additional and specific compliance requirements for corporations, it emphasizes a multi-pronged approach to improve beneficial ownership due diligence. The key aspects of these elements include adopting tailor-fit policies and internal controls, conducting thorough institutional risk assessments, maintaining detailed records, and ensuring effective information sharing.

As a way forward, the Memorandum recommends that these elements be coupled with continuous and bespoke training program for all concerned personnel and the implementation of whole-of-nation approach, particularly the promotion of corporate registration on SEC’s eFAST facility and submission of General Information Sheet with BO declaration, sustained outreach program, and proportionate enforcement action against delinquent corporations.