AML Compliance for Foreign Remittance Firms

BSP Circular Letter No. CL-2014-050 is issued by the Bangko Sentral ng Pilipinas (BSP) through JOHNNY NOE E. RAVALO, Sector-in-Charge.
Republic Act No. 9160 (Anti-Money Laundering Act of 2001) applies to the AML requirements addressed by the circular letter.
Republic Act No. 9194 amended Republic Act No. 9160 and forms part of the AML legal framework to be effectively implemented.
The circular letter expressly ties compliance to Subsection X806.2.b and Subsection X806.1 of the MORB and MORNBFI.
The circular letter expressly ties sanctions to Section X811 of the MORB.

The circular letter requires banks and NBFIs to strictly comply with AML rules implementing Republic Act No. 9160 as amended by Republic Act No. 9194.
The circular letter directs banks and NBFIs to implement customer identification process requirements for establishing business relationships with new corporate and juridical entities.
The circular letter targets compliance weaknesses involving entities registered outside the Philippines, including foreign remittance companies.
The circular letter requires banks and NBFIs to apply a risk-based tiered customer acceptance policy and customer identification process for due diligence enhancement.

Subsection X806.2.b of the MORB and MORNBFI requires a customer identification process for new corporate and juridical entities.
The identification process must obtain minimum information and/or documents before establishing business relationships.
For entities registered outside the Philippines (including foreign remittance companies), the required minimum information and/or documents must be obtained duly authenticated by the Philippine Consulate where the entities are registered.
Banks and NBFIs must ensure that the consular authentication requirement is followed before establishing the business relationship.

Subsection X806.1 of the MORB and MORNBFI requires banks and NBFIs to formulate and implement a risk-based tiered customer acceptance policy and customer identification process.
For higher risk accounts, the policy and identification process must implement enhanced customer due diligence.
Enhanced customer due diligence for higher risk accounts must include obtaining additional information for due diligence.
Enhanced customer due diligence for higher risk accounts must include conducting required validation procedures.
Enhanced customer due diligence for higher risk accounts must include obtaining senior management approval for establishing the business relationship.

Banks and NBFIs must avoid engaging in business relationships with foreign remittance companies that do not comply with the AML regulations addressed by the circular letter.
Any violation of the directive to avoid non-compliant business relationships is subject to applicable sanctions and penalties under Section X811 of the MORB.