Scope: who must comply
- All banks must develop and implement a compliance system and appoint/designate a compliance officer to oversee implementation.
- Every commercial bank must appoint an independent full-time compliance officer.
- For other types of bank, an incumbent senior officer may be designated concurrently as compliance officer, subject to no conflict of interest.
- The Circular requires action through the bank’s Board of Directors and submission to the BSP’s appropriate supervising and examining department.
Core compliance system requirements
- A bank’s compliance system must include a written compliance program approved by the Board of Directors.
- The written compliance program must enable the bank to identify relevant Philippine laws and regulations, analyze risks of non-compliance, and prioritize compliance risks (e.g., low, medium, high).
- The written compliance program must provide for periodic compliance testing with applicable laws and regulations, with testing frequency commensurate with risk levels:
- annual testing for low-risk,
- quarterly testing for medium-risk, and
- monthly testing for high-risk.
- The written compliance program must provide for reporting compliance findings noted to appropriate levels of management.
- The written compliance program must establish the responsibilities and duties of the compliance officer and other personnel involved in the compliance function.
- A bank must submit to the BSP the following within twenty (20) banking days from Board approval:
- a copy of the compliance program, and
- the written approval of the Board of Directors.
- The written compliance program must be updated at least annually to incorporate changes in laws and regulations.
- Any changes to the compliance program must be approved by the Board and submitted to BSP within twenty (20) banking days from Board approval.
- The compliance system must include a constructive working relationship with regulatory agencies through the compliance officer, including consultation for clarification and discussion of compliance findings, including borderline issues.
- The compliance system must include a clear and open communication process within the bank to educate and address compliance matters, including training of officers and staff through regular meetings, distribution of manuals, and dissemination of regulatory issuances.
- The compliance system must include continuous monitoring and assessment of the compliance program through periodic review of the compliance function to measure effectiveness, with internal audit as a possible mechanism.
- The compliance program may operate parallel to or as part of the bank’s internal control and auditing programs.
Compliance officer: appointment and role
- The compliance officer’s principal function is to oversee and coordinate the implementation of the compliance system and to identify, monitor, and control compliance risk.
- The appointment/designation of a compliance officer requires prior approval of the Monetary Board.
- The bio-data of the proposed compliance officer must be submitted to the BSP’s appropriate supervising and examining department.
- The compliance officer must have the skills and expertise to provide appropriate guidance and direction on development, implementation, and maintenance of the compliance program.
- Every commercial bank must appoint an independent full-time compliance officer with rank of at least a Vice-President.
- For other types of bank, an incumbent senior officer may be designated concurrently as compliance officer provided the designation does not create any conflict of interest situation.
- The internal auditor of a bank may be designated as the bank’s compliance officer subject to the condition that the internal auditor’s primary duty will be to act as compliance officer.
Submission timeline and compliance period
- Banks must comply with the Circular’s requirements within a period of two (2) months from the date of this Circular.
- Submission of the compliance program and Board approval to BSP must occur within twenty (20) banking days from the date of Board approval.
- Submission of Board-approved changes to the compliance program must occur within twenty (20) banking days from the date of Board approval.
Adoption, authentication, and implementing approval
- The Circular is adopted on 2 Oct. 1997.
- The Circular is signed by (SGD.) GABRIEL C. SINGSON, Governor.