Declaration of Policy
- Payment systems are acknowledged as integral components of the country's financial infrastructure.
- Their safe and efficient operation is vital for monetary and financial system stability.
Objectives
- The Bangko Sentral is tasked to promote payment systems that are safe, secure, efficient, and reliable.
- Aim to control systemic risk and foster sustainable economic growth.
Definitions
- Provides exhaustive definitions for key terms such as Bangko Sentral, Clearing, Designated Payment System, Director, End-user, Fund, Issuer, Manager, Monetary Board, Netting, Officer, Operator, Participant, Payment Instrument, Payment Order, Payment System, Payment System Management Body, Service Provider, Settlement, and Systemic Risk.
Authority of Bangko Sentral
- Bangko Sentral holds supervisory and regulatory authority over payment systems to ensure system stability and effectiveness.
Powers of Bangko Sentral
- Designate payment systems that pose or potentially pose systemic risk or for public interest.
- Require prior authorization for operators of designated payment systems.
- Accredit Payment System Management Bodies for self-regulation.
- Issue detailed rules governing operation standards, qualifications, confidentiality, Anti-Money Laundering compliance, user protection, and pricing.
- Issue directives and orders to participants as necessary.
- Require operational reports and information.
- Levy annual supervisory fees on participants.
Adoption of International Standards
- Bangko Sentral's regulatory actions shall align with internationally accepted standards and practices.
Bangko Sentral as Operator
- Bangko Sentral may own and operate payment systems and control participant eligibility and account openings.
- Internal safeguards will ensure oversight of its operator functions.
Inter-Agency and Foreign Coordination
- Coordination with other regulators and government agencies to avoid regulatory overlap and inconsistencies.
- Consultation mandatory before licenses are granted, suspended, or revoked for payment system operators.
- Coordinated actions for cross-border payment systems and securities regulation compliance.
Registration of Payment System Operators
- All operators must register with Bangko Sentral within six months.
- New operators post-enactment also required to register timely.
Organization of Operators
- Operators of designated systems (except Bangko Sentral) must incorporate as stock corporations.
- Operators are exempt from being classified as debtors under the Financial Rehabilitation and Insolvency Act while authorized.
Certification by Securities and Exchange Commission (SEC)
- SEC cannot register or approve operators or amendments without Monetary Board certification.
Acquisition of Shares in Operators
- Acquisitions leading to over 10% ownership require prior Monetary Board approval.
- Unauthorized transfers are invalid and not recognized legally.
Responsibilities of Operators
- Primarily responsible for safe, efficient, reliable operation.
- Must develop processes for participant selection, monitoring, and self-regulation, subject to Bangko Sentral review.
Finality of Settlement
- Settlements made per agreed procedures are final and irrevocable.
- If payment was not legally due, it remains settled but creates a new obligation to repay.
Insolvency Notification
- Participants must notify the operator promptly upon issuance of insolvency or related orders.
- Operators must stop processing pending payments involving the insolvent participant.
- Operators themselves must notify participants and Bangko Sentral if they become insolvent.
Designation of Manager for Operators
- Bangko Sentral may designate a qualified manager without prior hearing if safety, efficiency, or reliability threats are detected.
- Grounds include legal violations, non-compliance, insufficient assets, eroding capital, or prejudicial business conditions.
- Manager assumes control, suspends current management, and may recommend revocation of authority.
- Judicial review limited and time-bound assessment period for manager's control.
- Financial costs of management by the designated manager have priority for payment.
Netting
- Operators can net payment orders received before insolvency notices.
- Such netting is recognized as valid in insolvency proceedings.
Administrative Sanctions
- Monetary Board may impose fines up to P1,000,000 per transaction or P100,000 per day for continuing violations.
- Additional fines may be imposed for gains or avoided losses.
- Suspension, disqualification, or removal of directors/officers for various willful violations.
- Cease and desist orders for ongoing violations.
- Revocation of certificates of authority or registration for fraud, non-compliance, or acts threatening system safety and public interest.
Criminal Penalties
- Willful violations subject to fines from P200,000 to P2,000,000 and/or imprisonment from 2 to 10 years.
Implementing Rules and Regulations
- Bangko Sentral must promulgate rules within 60 days for effective implementation.
Separability Clause
- Unconstitutional provisions do not affect the validity of the rest of the Act.
Repealing Clause
- Laws and rules inconsistent with this Act are repealed or modified accordingly.
Transitory Provision
- Existing payment systems are granted time to comply with the Act's requirements as determined by Bangko Sentral.
Effectivity
- The Act takes effect 15 days after publication in the Official Gazette or two newspapers of general circulation in the Philippines.