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July 19, 2024

BSP tightens grip on dirty money with stricter beneficial ownership rules

The Bangko Sentral ng Pilipinas (BSP) is clamping down on financial crimes with stricter beneficial ownership (BO) due diligence regulations, aiming to bolster the country’s fight against money laundering and terror financing.

The new rules, aligned with the Anti-Money Laundering Council’s (AMLC) definition, classify a beneficial owner as any individual who ultimately controls a customer or legal entity.

BSP Deputy Governor Chuchi G. Fonacier highlighted the importance of “juridical entities” for economic growth, but warned their structures can be misused to obscure ownership and mask illegal activities.

The BSP mandates banks and other financial institutions to conduct in-depth BO due diligence. This entails a thorough understanding of clients’ business nature and ownership to thwart the exploitation of legal structures for illicit purposes.

Fonacier stressed these guidelines go beyond mere compliance. They serve as a benchmark for financial institutions to refine their internal policies, systems, and controls tailored to their specific risk profiles.

The focus on BO due diligence is critical to mitigating risks and preventing the abuse of corporate structures for financial crimes. The Philippines, despite progress in anti-money laundering efforts, remains on the Financial Action Task Force’s (FATF) gray list as of February 2024.

The FATF underlines the need for robust measures to counter the misuse of legal entities for money laundering and terror financing. They advocate for comprehensive approaches to ensure accurate and timely collection of BO information.