BSP Governor Benjamin Diokno

MANILA – The Bangko Sentral ng Pilipinas (BSP) has adopted a more stringent and risk-focused screening policy for BSP supervised financial institutions (BSFIs) to ensure the banking sector’s integrity and improve operational risk management.
In a virtual briefing Thursday, BSP Governor Benjamin Diokno said around 7,500 names are currently in the watchlist of dismissed BSFI employees but clarified that the list does not cover those disqualified to work on banks alone.
With the issuance of Circular No. 1112, or the know-your-employee (KYE) rules, he said it will be hard to predict if there will be 100-percent compliance on the circular, adding “if there continues to be some bad behavior on the part of the workers, it (the list) will continue to increase.”
He said the regulator “subscribes to the principle that the ‘tone of good corporate governance should come from the top’ thus, the KYE rule will not only address fraud and irregularities due to weak operational risk management but also foster confidence in the banking system.
“People are the very heart of every institution, especially in banking which is built on trust. Robust know-your-employee procedures foster a stable banking system by weeding out unprincipled personnel who may cause reputational risk to a bank and the financial system,” he said.
Lawyer Florabelle Santos-Madrid, BSP Financial System Integrity Department director, said the central bank’s watchlist database is updated every time the central bank receives new information from banks regarding disqualification of certain individuals.
She said reports of bank employees’ participation in financial system-related crimes is among the red flags for the issuance of KYE rules.
“One of the primary reasons that we are tightening the rules on KYE is to prevent these cases from happening. So definitely, if there will be bank personnel involved in money laundering cases, that will be a red flag in terms of the robustness of their KYE processes,” she added during the same briefing. (PNA)