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Financial firms must perform strict due diligence on DNFBPs

FINANCIAL INSTITUTIONS should “strictly perform” customer due diligence (CDD) on Designated Non-Financial Business and Profession (DNFBP) clients, the Bangko Sentral ng Pilipinas (BSP) said.

This is in accordance with sections 921 of the Manual of Regulations for Banks (MORB) and 921-Q of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), the central bank told all BSP-supervised financial institutions (BSFIs) in a memorandum.

“All BSFIs are further reminded that violations of Sections 921 and 921-Q of the MORB and MORNBFI, respectively, shall be subject to appropriate enforcement actions under existing applicable laws and regulations,” the central bank said in the memorandum. 

Before a business relationship is established, DNFBPs must adopt policies to identify their customers and verify their identity based on official or other documents to assess the extent of risks the customer may expose them to.

BSFIs should also require the presentation of the appropriate certificate of registration with the Anti-Money Laundering Council (AMLC) as part of the due diligence process, in accordance with Republic Act (RA) No. 9160 or the AML Act.

Financial institutions should also understand the purpose or the intended nature of the business relationship DNFBPs have with their clients and inspect transactions throughout the course of the relationship.

“Under existing regulations, where a covered person is unable to comply with the relevant CDD measures, considering risk-based approach, it shall (a) not open the account, commence business relations, or perform the transaction; or (b) terminate the business relationship; but in both cases, it shall consider filing a suspicious transaction report (STR) in relation to the customer,” the BSP said. 

DNFBP clients include jewelry dealers, company service providers, lawyers and accountants, as well as real estate developers and brokers.

These also include companies that help manage funds, investments and securities of fund owners, companies that help organize and set up new companies in the Philippines or abroad, and persons who are engaged to assist in managing companies.

In 2018, the AMLC published a set of guidelines for DNFBPs in a bid to fight against money laundering and terrorism financing.

The Financial Action Task Force (FATF) put the country in its “gray list” of jurisdictions under increased monitoring for “dirty money” risks in June 2021.

Based on the FATF’s latest assessment, the Philippines needs to show it is implementing effective risk-based supervision of designated nonfinancial businesses and professions.

The government is hoping to exit the FATF’s gray list by January 2024. — K.B. Ta-asan

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