BSP seeks tighter watch list rules for nonbank executives
The Bangko Sentral ng Pilipinas (BSP) wants nonbank financial institutions to adopt modified bank-level rules for disqualifying directors, trustees and officers and placing their names on a watch list, a step aimed at reinforcing governance, improving risk management and maintaining public trust.
The central bank is soliciting feedback from industry players on a draft circular that would amend certain regulations covering nonbank entities such as pawnshops, investment houses and money service providers.
Institutions such as nonstock savings and loan associations, nonbank credit card issuers, electronic money issuers, money changers and foreign exchange dealers, and operators of payment systems also fall under this regulated category.
Under the proposal, the same disqualification rules applied to bank directors and officers would extend to executives of nonbanks, including the clearer guidelines the BSP introduced last July.
However, bank-level rules deemed irrelevant to the operations, business models or risk profiles of nonbanks would be excluded, while certain provisions would be modified to better fit the sector.
The July circular broadened the grounds for disqualifying directors and officers of banks and other financial institutions. It expanded the list of grounds for permanent disqualification that already included final convictions for crimes involving dishonesty or breach of trust, cases of insolvency and administrative liabilities that result in removal from office.
Under the amended regulations, individuals who voluntarily submit an irrevocable sworn commitment to permanently inhibit themselves from owning or managing any BSP-supervised financial institution are also deemed permanently disqualified.
The circular further clarified that in cases initiated by the BSP that result in final court convictions for violations of banking laws or for crimes involving dishonesty or breach of trust, the central bank’s Office of the General Counsel and Legal Services will recommend to the Monetary Board the permanent disqualification of the individuals involved.
Their names will then be added to the BSP’s watch list of individuals permanently barred from serving as directors or officers in any BSP-supervised financial institution.
