BSP warns banks on security risks

Bangko Sentral ng Pilipinas. INQUIRER.net FILE PHOTO

DESPITE the entry of dirty money into a local bank and a remittance firm that sent shock waves to the financial system, the Bangko Sentral ng Pilipinas (BSP) maintained that the banking industry remained “strong and stable.”

Still, the BSP pointed out that it was always on the lookout for emerging risks to the banking sector and would move to sanction any erring bank that might pose such risk.

“Well-trained [onsite] bank examiners and [offsite] bank supervisors periodically assess whether banks have the requisite overall governance framework to manage emerging risks. This includes mainstream risks on credit quality, market price movements and bank operations. In addition, specialist examination teams are in place to evaluate the effectiveness of a bank’s prevention program to ensure bank handling of the risks out of IT (information technology) and cyber security issues, money laundering and terrorist financing,” the BSP said in a statement.

Also, “the BSP is vested with the legal authority to take appropriate enforcement actions against individual banks and their personnel for violation of banking laws and regulations as well as noncompliance with minimum regulatory standards on governance, risk management and market conduct,” it added.

“The BSP’s track record demonstrates the will to decisively act by meting sanctions on erring bank directors and officers, restricting imprudent activities, prohibiting unsafe or unsound practices and even shutting down banks,” BSP Governor Amando M. Tetangco Jr. said.

But Tetangco noted that the strength and soundness of the banking system was underpinned by the efforts of the BSP and other government agencies to pursue financial stability as a prudential objective.

“On our own and as a collective body with other financial regulators, we have also focused specifically on the potential build up of systemic risks. The issues that we have been assessing covers quite a bit of ground, but they are inter-related by the common strand that they can create comingled risks that can be systemic in nature,” Tetangco said.