The Bangko Sentral ng Pilipinas has ordered banks to issue all customers with EMV chip-enabled cards until the middle of next year or face a fine.
In a statement yesterday, the BSP said the Monetary Board, its highest policy-setting body, recently issued supplemental guidelines on EMV migration that it noted finally prescribed a hard deadline for compliance and also laid down penalties for noncompliance.
The new guidelines will “push the banking industry toward full adoption of EMV technology at a much faster pace,” the BSP said.
The BSP earlier set the deadline for EMV migration on Jan. 1, 2017, but some banks still have yet to comply until now.
Cards with EMV chips are deemed more secure than the traditional magnetic stripe payment cards.
“BSP-supervised financial institutions are given until June 30, 2018, to fully comply with the EMV requirement. Failure to do so will subject BSP-supervised financial institutions to monetary sanctions provided under relevant provisions in the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions,” the BSP said.
While banks and other financial institutions work to achieve full compliance, the BSP said they were “mandated to book provisions for probable fraud losses starting Sept. 30, 2017 until full compliance is achieved.”
BSP Deputy Governor Nestor A. Espenilla Jr. told reporters last week that fraud loss provisioning was added to cover operational risk.
“If implementation is delayed, they have to estimate possible losses due to fraud because of not being EMV-compliant,” Espenilla explained.
The BSP also urged banks to ramp up information dissemination on the process of replacing the magnetic stripe cards with EMV cards.