R.S. Bernaldo & Associates

[2] A marketing office shall refer to any permanent office or place of business of a TC that is annexed to the head office or to a branch.

Prerequisites and Documentary Requirements for the Grant of Authority to Establish a Branch/Marketing Office:

 Branch

 A TC seeking to establish a branch shall submit the following to the appropriate supervising department of the Bangko Sentral:

1. Application letter signed by the TC’s President, which shall indicate the number of branches to be established and the proposed location/s;
2. Corporate Secretary’s Certificate attesting to the approval by the TC’s Board of Directors to establish branch/es; and
3. Certification/Undertaking signed by the President that the TC is compliant with the prudential criteria under Section 111-T.

 No TC operating in the Philippines shall establish branches without the prior approval of the Monetary Board;

 Marketing Office

 A TC may establish a marketing office/s upon giving prior notice transmitted to the appropriate supervising department of the Bangko Sentral not later than ten (10) banking days after the TC’s Board of Directors approval of the proposal to open a marketing office/s together with the corporate secretary’s certificate attesting the BOD’s approval to establish a marketing office and certification/undertaking signed by the President that the TC is compliant with the prudential criteria under Section 111-T.

 Enforcement Actions

• The Bangko Sentral may limit the activities and services offered by a branch/marketing office or revoke the franchise and close any branch/marketing office;
• If any part of the submitted certification is found to be false, the Bangko Sentral may also suspend the privilege of such TC to establish and/or open approved branches/marketing offices and/or relocate branches/marketing offices and impose sanctions on the certifying officers concerned.

 Section 110-T is hereby amended to provide the distribution guidelines of UITFs as follows:

 DISTRIBUTION OF TRUST PRODUCTS

 The trust products of a TC shall only be distributed by the TC itself, except for UITFs, which may be distributed as provided under this Section. The TC shall adopt a distribution arrangement which is consistent with its strategic plan of operation and in a manner that is not prohibited by laws, rules, and regulations. Such arrangement should be properly documented and shall be made available to the Bangko Sentral.

THIRD-PARTY DISTRIBUTORS OF UITFs

 A TC may engage the following third parties to distribute its UITFs:

• individual agents; and
• institutional agents

 The distribution of UITFs through a bank shall be governed by the provisions on cross-selling under Section 113 of the MORB.

 Use of a service provider, such as an electronic platform, to offer UITFs shall not be considered as a distribution arrangement and is subject to the outsourcing framework provided under Section 112-T:

 Qualification Requirements. The TC shall exercise prudence in the selection of third-party distributors.

• An individual agent must meet the qualifications for UITF marketing personnel as prescribed under Section 109-T.
• An institutional agent must be duly registered as a corporation with the SEC and actively operating. It must have the necessary authority from the appropriate regulatory agency to distribute financial products, must be in good financial standing, and must have the appropriate structure and adequate facilities to engage in the distribution of UITFs. Individuals involved in the distribution shall likewise meet the requirements prescribed under Section 109-T.

 Authority to Engage Third-Party UITF Distributors. Third-party engagement by the TC in the distribution is considered a Type “C” activity under Section 111-T.

 A TC seeking to engage a third-party distributor shall submit the following documents to the appropriate supervising department of the Bangko Sentral not later than ten (10) banking days after the approval of TC’s BOD on the proposal to distribute UITfs through a third-party:

      Notification letter signed by the TC’s President stating the intended mode of distribution;

      Corporate Secretary’s certificate on the BOD’s approval of the engagement of third-party distributors; and

      Certification signed by the President that the TC complies with the prudential criteria under Section 111-T, as well as pertinent laws, rules and regulations.

 Scope of Activities and Functions. A distributor shall only perform activities allowed for a TC’s marketing office as provided under Section 105-T (Allowable Activities of a Marketing Office)

 Agreement. At a minimum, the following shall be set out in the formal agreement of a distribution activity between the TC and the third-party distributor:

 1)   Complete description of the activities to be performed;

2)     Distribution fee arrangement;

3)     Any restriction or prohibition regarding the performance by the distributor of its functions;

4)  Responsibility and accountability of the distributor for errors, omissions or fraud, and any fine or penalty related thereto;

5)  Delineation of responsibilities on the handling of customer complaints pertaining to, at a minimum, the products covered under the agreement and the services performed by the distributor, and on the establishment of a redress mechanism;

6)    Ownership of, and access to, the relevant documents maintained by the distributor;

7)    The protection of confidentiality of all data and information related to the distribution activity, the liability/ies of the TC and the distributor, and the actions that the TC may take against the distributor for breach of confidentiality or any form of disclosure of confidential information;

8)      Amendment, pre-termination and cancellation of the agreement; and

9)      An undertaking to comply with the requirements under this Section.

 On-boarding Process and Maintenance of Client Information and Records. The on-boarding of clients through third-party distributors and the maintenance of client information and records shall be in accordance with the Basic Standards provided in Appendix Q-49. In addition, the following requirements shall apply:

• Individual Agent – On behalf of the TC, the individual agent shall conduct the client suitability assessment (CSA) process. Individual agent may likewise conduct the customer identification and verification process, including the gathering of the minimum information and performing face-to-face contact subject to the rules on outsourcing under the existing anti-money laundering and combating the financing of terrorism (AML/CTF) laws, rules and regulations. The ultimate responsibility for knowing the customer still lies with the TC and it shall likewise maintain and be responsible for any information gathered through CSA and any related documents.

• Institutional Agent – The institutional agent may adopt its own CSA process or that of the TC. Moreover, TC may rely on the institutional agent for the conduct of customer identification and verification process, including the gathering of the minimum information and performing face-to-face contact subject to the rules on outsourcing under the existing AML/CTF laws, rules and regulations. Still, the ultimate responsibility for knowing the customer lies with the TC and it shall likewise maintain and be responsible for any information gathered through CSA and any related documents.

• General Provision – The TC shall adopt control mechanisms to ensure that distributors observe the requirements under relevant laws, rules and regulations. TC shall provide appropriate remedies or remuneration to clients as may be allowed under existing laws or regulations in cases where clients are prejudiced due to errors, omissions and fraud by the distributor.

 Disclosure to the public of authorized distributors by the TC shall remain in effect as long as the arrangement between the TC and the distributor remains active.

 Enforcement Actions. The Bangko Sentral may issue directives to improve the distribution activity or impose sanctions to limit the level of or suspend any distribution activity.

Section 112-T is hereby amended as follows:

 Duties and Responsibilities of TCs and their Directos/Officers in all Case of Outsourcing of Other Functions

 Outsourcing of activities shall not compromise confidentiality or access to (client) sensitive information; and

      No TC shall outsource inherent trust functions such as the administration and management of assets, strategic decision-making activities, and activities of similar import.

MEMORANDUM NO. M-2020-067 Transitory Guidelines on the Reporting of Certain Exposures in the Capital Adequacy Ratio (CAR) Reports

To: All Covered Banks and Quasi-Banks

All covered banks and quasi-banks shall temporarily report in the CAR reports the following in pursuant to the amendments to the Risk Based Capital Adequacy Frameworks for universal and commercial banks (U/KBs) and their subsidiary banks and quasi-banks, and stand-alone thrift banks (TBs), rural banks (RBs) and cooperative banks (Coop Banks):

1. Peso-denominated loans, to the extent guaranteed by the Agricultural Guarantee Fund Pool (AGFP) and Agricultural Credit Policy Council (ACPC) shall be afforded a zero percent (0%) risk weight, and shall be temporarily reported in the same manner as a guaranteed exposure of the Trade and Investment Development Corporation of the Philippines (TIDCORP).
2. Current exposures to micro, small and medium enterprises (MSMEs), both qualified and unqualified portfolio, shall be temporarily reported during the regulatory relief under Memorandum No. M-2020-034, starting from the reference cut-off date as of
   end-September 2020, as follows:

MEMORANDUM NO. M-2020-068 Implementation of Section 4 (uu) of the R.A. No. 1194 or the “Bayanihan to Recover as One Act”

To: All BSP-Supervised Financial Institutions (BSFIs)

All BSFIs are required to implement a mandatory one-time 60-day grace period to all loans that are existing, current and outstanding fall due, or any part thereof, on or before December 31, 2020 in accordance with Section 4 (uu) of R.A. No. 1194 or the “Bayanihan to Recover as One Act”. This mandatory grace period shall apply to each loan of individuals and entities with multiple loans.

During the mandatory grace period, BSFIs shall not charge or apply interest on interest, penalties, fees, or other charges to future payments/amortizations of borrowers. Waiver previously executed by borrowers covering payments falling due until December 31, 2020 is not valid because BSFIs are likewise prohibited from requiring clients to waive the application of provisions stated in R.A. No. 1194.

The parties may agree to: (1) a grace period longer than sixty (60) days, and/or (2) payment of accrued interest on staggered basis beyond December 31, 2020. Nonetheless, the borrower shall not preclude from paying the accrued interest in full on the new due date.

For full context of Section 4 (uu) of the R.A. No. 1194, see:

Memorandum No. M-2020-068 Implementation of Section 4 (uu) of the R.A. No. 1194 or the
“Bayanihan to Recover as One Act”

MEMORANDUM NO. M-2020-070 e-Submission of Documents to the Payments and Settlement Office (PSO)

To: Third Party Payment Service Providers Participating in PhilPaSS and All BSP-Supervised Financial Institutions

PSO will allow electronic submissions of documents through the e-mail address: Payments_Unit [at] bsp [dot] gov [dot] ph. Submission shall cover requests using the official forms uploaded in the BSP’s website and the required documents related to the following:

1. Application for participation to the Philippine Payment and Settlement System (PhilPaSS)
2. PhilPaSS Participant Browser user accounts (i.e. renewal of Smart Card/s, application for new user/s and/or deletion of user, password reset, etc.)
3. Application for VPN connectivity
4. Requests for manual settlement

Accomplished Summary Statement Form or SSF printed and scanned in the institution’s letter head shall be e-submitted together with all the documents pertaining to the above with all pages of the documents and the SSF bearing the stamp “Certified True Copy” and signed by the institution’s authorized officer. Template of SSF is in the Annex 1 of this Memorandum.

Acknowledgment via e-mail from PSO will be received, otherwise, it will imply non-delivery of the
e-submission to the PSO.

Take note that original copies of the documents shall no longer be required to be submitted after e-submissionexcept for board resolution on the list of authorized signatories of the institution that will be submitted in original and hard copy addressed to:

Ms. Remedios C. Macapinlac

Officer-in-Charge

Payments and Settlement Office

Room 101, 5-Storey Building

Bangko Sentral ng Pilipinas

A. Mabini Street, Malate, Manila 1004

MEMORANDUM NO. M-2020-073 Submission of Supervisory Reports through the BSP Financial Institution Portal (FI Portal)

To: All Banks

Relative to the submission of Reserve Reports, Financial Reporting Package (FRP) and FRP-Related reports for all banks through the BSP FI Portal, the following guidelines shall be observed:

1. The BSP FI Portal can be accessed at https://fiportal.bsp.gov.ph/ using compatible version of web browsers[1]. For guidance in navigating the portal, BSP FI Portal Manual is attached in this memorandum as Annex A.
2. Implementation of the FI Portal will entail a parallel run period to be followed by live submission as provided in the table below:

3. Updated Data Entry Templates (DETs) of PBS, RCBP and Stress Testing Reports to be used in FI Portal submission should be downloaded at http://www.bsp.gov.ph/ses/reporting_templates. DETs of other reports submitted through the FI Portal don’t need to be downloaded.
4. E-mail submissions shall continue to be considered as the official submission of the bank during the parallel run even those amendments to reports that are due prior to the parallel run. Upon live implementation, the submission to the FI Portal shall be considered official thus e-mail submissions shall be discontinued.
5. Non-imposition of penalties for reporting violations stated under Section 171 of MORB shall be observed during the period of parallel run and in the first two (2) reporting periods for live submissions, as well as for cases of new or enhanced reports moving forward.
6. Only a maximum of three (3) e-mail addresses for U/KBs and two (2) e-mail addresses for TBs and RCBs among the officially registered e-mail address/es of authorized officers of the bank shall be allowed to have access to the BSP FI Portal and must register for Two Factor Authentication (2FA) following the user guide attached in this Memorandum as Annex B. Access to the FI Portal of the remaining registered e-mail addresses shall be covered by a separate announcement.
7. Reporting submissions should continue to comply with the prescribed BSP reporting standards for the particular report in order to be considered compliant with Section 171 of the MORB. It likewise follows that only files prescribed by the BSP for the report shall be accepted as compliant with the existing reportorial requirements subject to validation and applicable penalties for reporting violations.
8. In cases of temporary inability to access the BSP FI Portal due to periodic maintenance, unscheduled downtime and other similar situations, banks will be advised accordingly on the actions they need to take.

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