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Philippian banks and financial institutions are struggling with compliances regarding the anti-money laundering regulations and mandatory credits to agriculture reforms. The Central Bank of Philippine, Bangko Sentral ng Pilipinas (BSP) reports that banking groups face difficulties complying with the Republic Act 10000.
Commercial Banks, Domestic Banks, and Foreign Banks, as well as thrift banks, have all declared these laws to be the most challenging to meet. According to the law, there should be a compulsion in credit allocation in Presidential Decree 171 due to which 15% of banks’ total funds that can be loaned are to be put aside for the agriculture sector. The agrarian reform beneficiaries should be allocated by 10%.
Compliance with mandatory credits to agriculture and agrarian (agri-agra) reform, as well as anti-money laundering continue to be the most challenging areas for banks and financial institutions, according to the Bangko Sentral ng Pilipinas (BSP). https://t.co/8fcYJZkEJ1
— The Philippine Star (@PhilippineStar) January 11, 2021
The banks that have failed to comply with these regulations have faced penalties as well. Around P10.3 billion worth of fine has been imposed on the banks that did not comply with the regulations. The BSP said, “Nonetheless, penalties have been collected from banks which have failed to fully comply with the mandatory agri-agra credit allocation.”
The BSP also said that banks are also required to comply with regulations regarding credit risk management, anti-money laundering, operational risk management, and risk management information technology. The banks have declared this to be the most challenging area for them in regards to compliance laid out by The Central Banks’ regulatory framework.
“Technology risk also remained as one of the risks common to banks due to the increasing support on technology-enabled solutions. Likewise, financial market risk transpired as one of the risks common to thrift as well as rural and cooperative banks,” said The Central Bank.