Overview of the BSP’s KYC Policy

1. Overview of the BSP’s KYC Policy Meeting of the Cash Working Group UN WFP Office, Bonifacio Global City, Taguig 12 November 2015

2. BSP Circular 706, Updated Anti-Money Laundering Rules and Regulations* • Provides scope for banks to have a risk-based and tiered system of classifying customers • Establishes a framework for applying reduced, average and enhanced due diligence based on the type of customer • Allows outsourcing or reliance on third party for face-to-face/KYC • Liberalized list of acceptable IDs *Dated 5 January 2011

3. Risk-based and tiered system of classifying customers • Covered institutions shall specify the criteria and description of the types of customers that are likely to pose low, normal or high risk • Examples of low risk: • Individual customer with regular employment or economically productive activity • Small account balance and transactions • Resident in the area of the covered institution’s office or branch

4. Reduced, average and enhanced due diligence • Reduced Customer Due Diligence (CDD) for potentially low risk clients and enhanced CDD for higher risk accounts • Average due diligence requires obtaining all the ff. minimum information at the time of account opening • Name • Present Address • Date and place of birth • Nature of work; name of employer or nature of self-employment/business • Contact details • Specimen signature • Source of funds • Permanent address • Nationality • TIN, SSS number or GSIS number, if any • Name, present address, date and place of birth, nature of work and source of funds of beneficial owner or beneficiary, whenever applicable Reduced due diligence: deferred acceptance of minimum information -> Obtain 1-7 at the time of account opening, 8-11 to follow

5. Outsourcing arrangement • Covered institution may outsource to a counterparty the conduct of face-to-face contact provided that such arrangement is formally documented • Covered institution may also outsource to a counterparty the gathering of the minimum information and/or documents provided the ultimate responsibility for KYC and keeping identification documents shall lie with the covered institution No new accounts shall be opened and created without face-to-face contact and personal interview between the covered institution’s duly authorized personnel and the potential customer

6. Liberalized list of acceptable IDs • Covered institutions shall establish and record the true identity of its customers based on valid identification documents • Customers who engage in a financial transaction for first time shall be required to present the original and submit a clear copy of at least 1 valid photo-bearing ID* issued by an official authority • Official authority: 1) Government of the Republic of the Philippines; 2) its political subdivisions and instrumentalities; 3) GOCCS; and 4) private entities registered with or supervised/regulated by the BSP, SEC or IC *In case the acceptable ID does not bear any photo or the photo-bearing ID does not clearly show the face of the customer, a covered institution may utilize its own technology to take the photo of the customer.

7. Liberalized list of acceptable IDs *Updated as per BSP Circular 792 dated May 2013

8. Temporary relaxation of implementation of KYC requirement *BSP Memorandum No. M-2013-052

9. Thank you!www.bsp.gov.ph