A propensity to commit fraud is now part of how banks measure a candidate for their work force under the new rules that the Bangko Sentral ng Pilipinas (BSP) issued last Thursday.
BSP Governor Benjamin E. Diokno said this measurement is included in the new guidelines approved by the Monetary Board. The guidelines, Diokno added, are part of the Central Bank’s aim to strengthen the “Know Your Employee” (KYE) policies and practices to tighten controls related to confirmation of deposit accounts.
“The issuance is part of the commitment of the Bangko Sentral to continue to raise the bar on corporate governance and risk management systems to protect the integrity of the financial system.” Diokno said. “Aligning BSP regulations with international best practices on KYE procedures is just half the battle. The other half depends on the strength of oversight of the board of directors of BSFIs [BSP-supervised financial institutions] in implementing these policies.”
Under the new rules, banks and other financial institutions monitored by the BSP are required to adopt a risk-focused screening process. The process considers sensitivities of certain positions that may require more stringent procedures.
“Adequate understanding of a candidate’s personal background and character, conflict of interest, as well as propensity to commit fraud or irregularity shall be considered in the recruitment process,” the BSP said.
The revised rules also emphasize the use of BSP records as part of the screening process of BSFIs.
Under the new set of guidelines, banks and other financial institutions are expected to leverage existing controls, available reports, and other relevant information to facilitate the assessment.
The new policy also identified certain behaviors that serve as red flags warranting further scrutiny as part of personnel’s performance evaluation.
Head offices of banks and other financial institutions are now also required to act on requests for confirmation of accounts from their clients or depositors.
“Segregating the confirmation process from the branch or officer handling the account is a control measure aligned with the principles set out under the operational risk management guidelines earlier issued by the Bangko Sentral,” the BSP said.
Image credits: Nonie Reyes
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