In a move that is barely surprising these days as frustration levels rise in the regulatory enforcement units of central banks across the planet, Bangko Sentral ng Pilipinas puts its foot down. Going forwards, late or erroneous regulatory reports will attract penalties.
The proper conduct of monetary policy and effective banking supervision are core mandates of the Bangko Sentral. These mandates are facilitated by the accurate and timely submission of required information concerning a bank's financial condition and results of operations.
Bangko Sentral Ng Pilipinas | Circular 963 [LINK]
Reports submitted to the central bank must be "complete, accurate, consistent, reliable and timely to be considered compliant" and the reporting bank should establish an effective governance process over its reporting system.
While penalties for breaches in this circular seem to be less worrisome than paying into some mundane or petty cash hoard for regulatory jollies, there is a catch. "Habituality shall refer to the repetitive incurrence of reporting violations", and those banks which are flagged as non-compliant will accumulate points.
Banks that capture more than 100 demerit points in a single year will be considered by the central bank as violators or as the BSP puts it "habitual violators". These habit-forming violators will be worthy of further retribution, and that may come in the form of restrictions or even the suspension of license to trade specific facilities.
There are 38 reports listed in Annex B of the circular that will need to be fully functional and in place, but the central bank may add to the list over time. Some of the reports are relatively complex and what classifies as complete or more importantly accurate for reports that are impacted by volatility or where their contents may target uncertainty, there is going to be the potential for misunderstanding.
In September, Causal Capital will be running an operational risk program on Circular 900 [LINK] at which time we will explore this new consideration in-line with various reporting standards that are currently impacting the Philippine banking community.