MORNBFI Vol. 1 - Planters Development Bank

§§ 4805Q.4 - 4806Q.1.a.11.12.31of the risk management, degree ofadherence to internal control mechanismsrelated to the customer identificationprocess, such as the determination of theexistence of customers and the completenessof the minimum information and/ordocuments establishing the true and fullidentity of, and the extent and standard ofdue diligence applied to, customers, CT andST reporting and record keeping andretention, as well as the adequacy andeffectiveness of other existing internalcontrols associated with money launderingand terrorist financing.For UBs and KBs with electronic moneylaundering transaction monitoring system,in addition to the above, the internal auditshall include determination of the efficiencyof the system’s functionalities as requiredby Subsecs. 4805Q.3 and 4807Q.2.The results of the internal audit shallbe timely communicated to the board ofdirectors and shall be open for scrutinyby BSP examiners in the course of theregular or special examination withoutprejudice to the conduct of its ownevaluation whenever necessary. Results ofthe audit shall likewise be promptlycommunicated to the compliance officefor its appropriate corrective action. TheCompliance Office shall regularly submitreports to the board to inform them ofmanagement’s action to addressdeficiencies noted in the audit.(As amended by Circular No. 706 dated 05 January 2011)B.Customer Identification ProcessSec. 4806Q Customer IdentificationA covered institution shall maintain asystem of verifying the true identity of theircustomers and, in case of corporate andjuridical entities, require a system ofverifying their legal existence andorganizational structure as well as theauthority and identification of all personspurporting to act on their behalf. Alongthis line, it shall formulate a risk-basedand tiered customer acceptance policy,customer retention policy and customeridentification process that involves reducedcustomer due diligence (CDD) forpotentially low risk clients and enhancedCDD for higher risk accounts.(Circular No. 706 dated 05 January 2011)§ 4806Q.1 Customer acceptance policyEvery covered institution shall develop clear,written and graduated acceptance policiesand procedures that will ensure that thefinancially or socially disadvantaged are notdenied access to financial services while atthe same time prevent suspiciousindividuals or entities from opening anaccount.(Circular No. 706 dated 05 January 2011)§ 4806Q.1.a. Criteria for type ofcustomers: low, normal and high risk;standards for applying reduced, averageand enhanced due diligence. Coveredinstitutions shall specify the criteria anddescription of the types of customers thatare likely to pose low, normal or high riskto their operations as well as the standardsin applying reduced, average and enhanceddue diligence including a set of conditionsfor the denial of account opening.Enhanced due diligence shall be appliedto customers that are assessed by thecovered institution or by this Part as highrisk for money laundering and terroristfinancing.For customers assessed to be of lowrisk such as an individual customer withregular employment or economicallyproductive activity, small account balanceand transactions, and a resident in the areaof the covered institution’s office orbranch, the covered institutions mayapply reduced due diligence. Some entitiesmay likewise be considered as low riskclients, these are: banking institutions,trust entities and QBs authorized by theQ RegulationsPart VIII - Page 8Manual of Regulations for Non-Bank Financial Institutions