BSP publishes risk assessment guide

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The Bangko Sentral ng Pilipinas (BSP) has issued a guidance document which outlines the conduct of Institutional Risk Assessment (IRA) of financial institutions supervised by the central bank or BSFI.

“Institutional Risk Assessment (IRA) is the cornerstone of the risk-based approach to money laundering (ML), terrorist financing (TF), proliferation financing (PF) and prevention and mitigation of the risk of sanctions”, he explains in the document.

The central bank stated that the IRA is a process using an appropriate methodology to identify, analyze and understand ML/FT/PF risks, including the risk of non-implementation, potential violation or circumvention of requirements targeted financial sanctions, arising from BSFI’s business activities and relationships.

Its findings are expected to inspire effective and risk-based anti-money laundering/countering terrorism and proliferation financing (AML/CTPF) resource allocation as well as direct the creation and/or improvement of AML/CTPF policies, systems, controls and procedures.

In addition, BSP stated that the IRA ensures that AML/CTPF policies, systems, controls and procedures are appropriate to OSFI’s operations and level of risk.

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He said that OSFIs must comply with all applicable regulatory requirements, such as the IRA, which require them to: use a methodology appropriate to their risk and context, taking into account all relevant risk factors, including customers, countries or geographic areas of operations, products, services, transactions or distribution channels; adequately document their results and findings; and provide up-to-date information.

In addition, they should recognize and assess any potential ML/FT/FP and sanctions risk associated with the creation and/or introduction of new goods and services, business strategies, distribution networks and technological advances.

“This risk assessment should be an integral part of the product or service development process and be performed before the launch of new products, business practices or the use of new or developing technologies,” Bangko Sentral noted.

He further stated that OSFIs should implement appropriate procedures to manage and mitigate the risks associated with ML/FT/FP and sanctions based on the findings of the IRA and/or risk assessment of the parties. new products or business practices. These measures should be explicitly stated in the ML/FT/FP prevention program.

As part of risk-based supervision, the risk assessment should also be made available to the central bank during reviews and other times deemed essential.


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