Manual of Regulation For Non Bank Financial Institution Volume 2

FOREWORD
The 2009 Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) is

an updated compilation of regulations and policies issued by the Bangko Sentral ng Pilipinas
(BSP) for financial institutions under its supervision. Available in hard and soft copies, it is a
convenient reference and guide for said financial institutions in the conduct of their operations.
The updated MORNBFI incorporates regulatory policies issued to align banking

practices on risk management, good corporate governance, and capital adequacy, accounting
and reporting with international standards. It also includes rules implementing legislative
reform measures, the more significant of which are the General Banking Law of 2000, the
Anti-Money Laundering Act of 2001 and the Special Purpose Vehicle Act of 2002.
In providing easy access to this information, the updated MORNBFI seeks to facilitate
compliance with the supervisory and regulatory requirements of BSP that will contribute to
the enhancement of its partnership with financial institutions under its supervision, and
ultimately to the strengthening of the Philippine Banking System and the economy.
AMANDO M. TETANGCO, JR.

Governor
PREFACE
(2009 Edition)
The 2009 Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) is

the latest updated edition from the initial issuance in 1996 . The updates consist of the significant
policy developments and changes in statutory laws. It shall serve as the principal source of
banking regulations issued by the Monetary Board and the Governor of the BSP and shall be
cited as the authority for enjoining compliance with the rules and regulations embodied
therein.
To accomplish the work of proposing revision to the Old Manual, the Monetary Board
of the BSP, in its Resolution No. 1203 dated December 7, 1994, directed the creation of a
multi-departmental Ad Hoc Review Committee. The Committee was officially constituted
under Office Order No. 2 Series of 1995 and was reconstituted several times thereafter.
Under the aforesaid office order, the Committee is tasked to update the Manuals on a
continuing basis (i) to incorporate relevant issuances (ii) propose revision/deletion of provisions
which have become obsolete, redundant, irrelevant or inconsistent with laws/regulations
(iii) reformulate provisions as the need arises and (iv) oversee printing of the Manuals/
Updates in coordination with the Corporate Affairs Office.
The present Committee, as reconstituted under Office Order No. 430, Series
of 2007 dated 08 June 2007, is composed of: Mr. Alberto A. Reyes, Director, Central
Point of Contact Department (CPCD) II, Chairman; Atty. Magdalena D. Imperio, Deputy
Director, Office of the General Counsel and Legal Services (OGCLS), Vice Chairman;
Ms. Ma. Corazon T. Alva, Acting Deputy Director, Examination Department (ED) I;
Ms. Ma. Belinda G. Caraan, Acting Deputy Director/Head, Financial Consumer Affairs
Group (FCAG); Atty. Lord Eileen S. Tagle, Legal Officer III, OGCLS; Ms. Maria Cynthia
M. Sison, Bank Officer IV, Office of the Supervisory Policy Development (OSPD);
Ms. Concepcion A. Garcia, Bank Officer IV, OSPD; Atty. Florabelle S. Madrid, Manager,
CPCD I, members; and Mr. Nestor A. Espenilla, Jr., Deputy Governor, Supervision
and Examination Sector, Adviser.
The Committee Secretariat is composed of Ms. Celedina P. Garbosa, Acting Manager,

CPCD II, Head; Ms. Ma. Corazon B. Bilgera, Bank Officer II, OSPD; Ms. Ma. Cecilia U. Contreras,
Supervision and Examination Specialist I, CPCD II, members.
The Bangko Sentral ng Pilipinas

INSTRUCTIONS TO USERS
(2009 Edition)
The Manual of Regulations for Non-Bank Financial Institutions (the “Manual”) contains
the rules and regulations which govern non-bank financial institutions (NBFIs) subject to
the supervision of the Bangko Sentral ng Pilipinas (BSP) under existing laws, i.e. : Quasi-
banks (Q Regulations), NSSLAs (S Regulations), Pawnshops (P Regulations), and other NBFIs,
trust entities, subsidiaries and affiliates of banks and quasi-banks (N Regulations).
The Manual is divided into four (4) books Q, S, P or N. Each book is divided into
parts. Each part is divided into sections containing four (4) digits and the letter Q, S, P or N,
as applicable, i.e., 4143Q. The first digit “4” means that the regulation is applicable to
NBFIs; the second digit “1” refers to the Part number, and the third and fourth digits “4”
and “3” refer to the section number.
Sections may contain subsections represented by number/s after the decimal point,
i.e., 4143Q.1.
To illustrate, Subsection 4143Q.1 indicates:
Main Section on “Disqualification of Directors/Trustees and Officers”
Subsection on “Persons disqualified to become officers”
4 1 4 3 Q . 1
Regulation addressed to quasi-banks
Part One on “Organization, Management and Administration"
Regulations addressed to NBFIs
The runners in the upper-right or left hand corners of each page show the sections/
subsections of the regulations and the cut-off date of the regulatory issuances included in
the page of the Manual where the runner is shown.
MANUAL OF REGULATIONS FOR NON-BANK FINANCIAL INSTITUTIONS
S REGULATIONS
(Regulations Governing Non-Stock Savings and Loan Associations)
TABLE OF CONTENTS
PART ONE - ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY
SECTION 4101S Scope of Authority of Non-Stock Savings and Loan Associations

4101S.1 Membership
4101S.2 Organizational requirements
SECTIONS 4102S - 4105S (Reserved)
B. CAPITALIZATION
SECTION 4106S Capital

4106S.1 Revaluation surplus
C. (RESERVED)
D. NET WORTH-TO-RISK ASSETS RATIO
SECTION 4116S Capital-to-Risk Assets
SECTION 4117S Withdrawable Share Reserve
SECTION 4118S Surplus Reserve for Ledger Discrepancies
SECTION 4119S Reserve for Office Premises, Furniture, Fixtures and Equipment
SECTION 4120S (Reserved)
ix
E. (RESERVED)
F. NET INCOME DISTRIBUTION
SECTION 4126S Limitations on Distribution of Net Income

4126S.1 Reporting and verification
4126S.2 Recording of net income for distribution
G. TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS
SECTION 4141S Definition; Qualifications; Responsibilities and Duties of

Trustees
4141S.1 Definition of trustees
4141S.2 Qualifications of trustees
4141S.3 Powers and authority of the board of trustees
4141S.4 General responsibility of the board of trustees
4141S.5 Duties and responsibilities of the board of
trustees
SECTION 4142S Definition and Qualifications of Officers

4142S.1 Definition of officers
4142S.2 Qualifications of officers
SECTION 4143S Disqualifications of Trustees and Officers

4143S.1 Persons disqualified to become trustees
4143S.2 Persons disqualified to become officers
4143S.3 Disqualification procedures
4143S.4 Effect of non-possession of qualifications or
possession of disqualifications
4143S.5 (Reserved)
4143S.6 Watchlisting
SECTION 4144S Compensation of Trustees, Officers and Employees

4144S.1 Compensation increases
4144S.2 Liability for loans contrary to law
SECTION 4145S Bonding of Officers and Employees
SECTION 4146S Agents and Representatives
x
SECTION 4148S Full-Time Manager for NSSLAs
H. BRANCHES AND OTHER OFFICES
SECTION 4151S Establishment of Branches/Extension Offices

4151S.1 Application
4151S.2 Conditions precluding acceptance/processing of
application
4151S.3 Internal control system
4151S.4 Permit to operate
I. BUSINESS DAYS AND HOURS
SECTION 4156S Business Days and Hours
J. REPORTS
SECTION 4161S Records

4161S.1 Uniform system of accounts
4161S.2 Philippine Financial Reporting Standards/
Philippine Accounting Standards
SECTION 4162S Reports

4162S.1 Categories and signatories of reports
4162S.2 Manner of filing
4162S.3 Sanctions and procedures for filing and payment
of fines
SECTION 4164S Internal Audit Function

4164S.1 Status
4164S.2 Scope
4164S.3 Qualification standards of the internal auditor
4164S.4 Code of Ethics and Internal Auditing Standards
xi
K. INTERNAL CONTROL
SECTION 4171S External Auditor
SECTION 4172S Financial Audit

4172S.1 Audited financial statements of NSSLAs
4172S.2 Posting of audited financial statements
SECTION 4180S Selection, Appointment, Reporting Requirements and Delisting

of External Auditors and/or Auditing Firm; Sanction
L. MISCELLANEOUS PROVISIONS
SECTION 4181S Publication Requirements
SECTION 4182S Business Name
SECTION 4183S Prohibitions
SECTION 4190S Duties and Responsibilities of NSSLAs and their Directors/

Officers in all Cases of Outsourcing of NSSLA Functions
SECTIONS 4191S (Reserved)
SECTION 4192S Prompt Corrective Action Framework
SECTION 4193S Supervision by Risks
SECTION 4194S Market Risk Management
SECTION 4195S Liquidity Risk Management
SECTION 4199S General Provision on Sanctions
xii
PART TWO - DEPOSIT AND BORROWING OPERATIONS
A. DEMAND DEPOSITS
SECTION 4201S Checking Accounts
B. SAVINGS DEPOSITS
SECTION 4206S Definition
SECTION 4207S Minimum Deposit
SECTION 4208S Withdrawals
SECTION 4209S Dormant Savings Deposits
C. (RESERVED)
D. TIME DEPOSITS
SECTION 4222S Minimum Term and Size of Time Deposits
SECTION 4223S Withdrawals of Time Deposits
E. - F. (RESERVED)
G. INTEREST ON DEPOSITS
SECTION 4241S Interest on Savings Deposits
xiii
SECTION 4242S Interest on Time Deposits
4242S.1 Time of payment
4242S.2 Treatment of matured time deposits
H. (RESERVED)
I. SUNDRY PROVISIONS ON DEPOSIT OPERATIONS
SECTION 4261S Opening and Operation of Deposit Accounts

4261S.1 Who may open deposit accounts
4261S.2 Identification of member-depositors
4261S.3 Number of deposit accounts
4261S.4 Signature card
4261S.5 Passbook and certificate of time deposit
4261S.6 Deposits in checks and other cash items
J. (RESERVED)
K. OTHER BORROWINGS
SECTION 4286S Borrowings
PART THREE - LOANS AND INVESTMENTS
A. LOANS IN GENERAL
SECTION 4301S Authority; Loan Limits; Maturity of Loans
SECTION 4302S Basic Requirements in Granting Loans
xiv
SECTION 4303S Loan Proceeds
SECTION 4304S Loan Repayment
SECTION 4305S Interest and Other Charges

4305S.1 - 4305S.2 (Reserved)
4305S.3 Interest in the absence of contract
4305S.4 Escalation clause; when allowable
4305S.5 Interest accrual on past due loans
SECTION 4306S Past Due Accounts

4306S.1 Accounts considered past due
4306S.2 Extension/renewal of loans
4306S.3 Write-off of loans as bad debts
4306S.4 Updating of information provided to credit
information bureaus
SECTION 4307S "Truth in Lending Act" Disclosure Requirements

4307S.1 Definition of terms
4307S.2 Information to be disclosed
4307S.3 Inspection of contracts covering credit
transactions
4307S.4 Posters
4307S.5 Penal provisions
SECTION 4312S Grant of Loans and Other Credit Accommodations

4312S.1 General Guidelines (Deleted by Circular No.
622 dated 16 September 2008)
412S.2 - 4312S.3 (Reserved)
4312S.4 Signatories (Deleted by Circular No. 622 dated
16 September 2008)
B. SECURED LOANS
SECTION 4321S Kinds of Security
xv
C. - D. (RESERVED)
E. LOANS/CREDIT ACCOMMODATIONS TO TRUSTEES, OFFICERS,

STOCKHOLDERS AND THEIR RELATED INTERESTS
SECTION 4356S General Policy
SECTION 4357S Direct/Indirect Borrowings; Ceilings
SECTION 4358S Records; Reports
SECTION 4370S Sanctions
F. - I. (RESERVED)
J. OTHER OPERATIONS
SECTION 4391S Fund Investments

4391S.1 - 4391S.2 (Reserved)
4391S.3 Investment in debt and marketable equity securities
4391S.4 - 4391S.10 (Reserved)
K. MISCELLANEOUS PROVISIONS
PART FOUR - (RESERVED)
xvi
PART FIVE - (RESERVED)
PART SIX - MISCELLANEOUS
A. OTHER OPERATIONS
SECTION 4601S Fines and Other Charges

4601S.1 Guidelines on the imposition of monetary
penalties; payment of penalties or fines
SECTION 4631S Revocation/Suspension of Non-Stock Savings and Loans

Association License
SECTION 4641S Electronic Services
SECTION 4642S Issuance and Operations of Electronic Money

4642S.1 Declaration of policy
4642S.2 Definitions
4642S.3 Prior Bangko Sentral approval
4642S.4 Common provisions
4642S.5 Quasi-bank license regquirement
4642S.6 Sanctions
4642S.7 Transitory provisions
B. SUNDRY PROVISIONS
SECTION 4651S Notice of Dissolution
SECTION 4652S Confidential Information
SECTION 4653S Examination by the Bangko Sentral
xvii
SECTION 4654S Applicability of Other Rules
SECTION 4655S Annual Fees
SECTION 4656S Basic Law Governing Non-Stock Savings and Loan

Association
SECTION 4657S Non-Stock Savings and Loan Association Premises and

Other Fixed Assets
4657S.1 Accounting for non-stock savings and loans
association premises; other fixed assets
4657S.2 (Reserved)
4657S.3 Reclassification of real and other properties
acquired as non-stock savings and loans
association premises
4657S.4 - 4657S.8 (Reserved)
4657S.9 Batas Pambansa Blg. 344 - An Act to Enhance
the Mobility of Disabled Persons by Requiring
Certain Buildings, Institutions, Establishments
and Public Utilities to Install Facilities and Other
Devices
SECTION 4660S Disclosure of Remittance Charges and Other Relevant

Information
SECTION 4691S Anti-Money Laundering Regulations

4691S.1 - 4691S.8 (Reserved)
4691S.9 Sanctions and penalties
SECTION 4695S Valid Identification Cards for Financial Transactions
xviii
List of Appendices
09.12.31
LIST OF APPENDICES
No. SUBJECT MATTER
S-1 Safeguards in Bonding of Non-Stock Savings and Loan Association

Accountable Officers and Employees
S-2 List of Reports Required from Non-Stock Savings and Loan Associations
Annex S-2-a - Reporting Guidelines on Crimes/Losses
S-3 Guidelines on Prescribed Reports Signatories and Signatory Authorization

Annex S-3-a - Format of Resolution for Signatories of Category A-1
Reports
Annex S-3-b - Format of Resolution for Signatories of Category A-2
Reports
Annex S-3-c - Format of Resolution for Signatories of Categories A-3
and B Reports
S-4 Format-Disclosure Statement of Loan/Credit Transaction
S-5 Abstract of "Truth in Lending Act" (Republic Act No. 3765)
S-6 Anti-Money Laundering Regulations

Annex S-6-a - Certification of Compliance with Anti-Money
Laundering Regulations
Annex S-6-b - Rules on Submission of Covered Transaction Reports
and Suspicious Transaction Reports by Covered
Institutions
S-7 Revised Implementing Rules and Regulations R.A. No. 9160, as

amended by R.A. No. 9194
S-8 Guidelines to Govern the Selection, Appointment, Reporting

Requirements and Delisting of External Auditors and/or Auditing Firm
of Covered Entities
xix
§§ 4101S - 4101S.2
08.12.31
PART ONE
ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY which limit and/or allow membership

coverage broader or narrower than the
Section 4101S Scope of Authority of foregoing definition, shall be allowed to
Non-Stock Savings and Loan Associations continue as such.
An NSSLA shall include any non-stock, non- The Monetary Board may, as
profit corporation engaged in the business of circumstances warrant, require NSSLAs
accumulating the savings of its members and mentioned in the immediately preceding
using such accumulations for loans to paragraph to amend their by-laws to comply
members to service the needs of households with the concept of a well-defined group.
by providing long-term financing for home c. In no case shall the total amount of
building and development and for personal entrance fees exceed one percent (1%) of
finance. An NSSLA may also engage in a the amount to be contributed or otherwise
death benefit program meant exclusively for paid-in by the particular member: Provided,
the benefit of its members. That for new members, the fee shall be based
An NSSLA shall accept deposits from on the amount of contributions computed in
and grant loans to its members only and accordance with the revaluation of the assets
shall not transact business with the general of the NSSLA.
public.
§ 4101S.2 Organizational requirements1
§ 4101S.1 Membership a. Articles of Incorporation; by-laws
a. NSSLAs shall issue a certificate of The articles of incorporation and by-laws of a
membership to every qualified member proposed NSSLA, or any amendment
and shall maintain a registry of their thereto, shall not be registered with the SEC
members. unless accompanied by a certificate of
b. An NSSLA shall confine its approval from the Monetary Board.
membership to a well-defined group of b. Application for approval. The articles
persons. of incorporation and by-laws of a proposed
A well-defined group shall consist of any NSSLA, both accomplished in the prescribed
of the following: forms, shall be submitted to the Monetary
(1) Employees, officers, and trustees of Board through the appropriate department of
one company, including member-retirees; the SES together with a covering application
(2) Government employees belonging for the approval thereof, signed by a majority
to the same office, branch, or department, of the board of trustees and verified by one
including member-retirees; and of them. The application shall include:
(3) Immediate members of the (1) The proposed articles of
families up to the second degree of incorporation and by-laws together with the
consanguinity or affinity of those falling names and addresses of the incorporators,
under Items “(1)” and “(2)” above. trustees and officers, with a statement of their
NSSLAs whose articles of incorporation character, experience,and general fitness to
and by-laws were approved and registered engage in the non-stock savings and loan
prior to the effectivity of R. A. No. 8367 and business;
1
See SEC Circular No. 3 dated 16 February 2006.
Manual of Regulations for Non-Bank Financial Institutions S Regulations

Part I - Page 1
§§ 4101S.2 - 4116S
08.12.31
(2) An itemized statement of the Members who have contributed

estimated receipts and expenditures of the P1,000 or more to the capital of an NSSLA
proposed NSSLA for the first year; may increase their capital contribution.
(3) Filing fee of P1,000; and Partial withdrawal from the amount paid
(4) Such other information as the by a member as capital contribution,
Monetary Board may require. during his membership, may be allowed
c. Grounds for disapproval of unless the by laws of the NSSLA provide
application. The Monetary Board may deny otherwise, and subject to such rules and
the application to organize an NSSLA on the regulations as the Monetary Board may
basis of a finding that: prescribe in the matter of such withdrawal
(1) The NSSLA is being organized for of capital contribution. However, in no
any purpose other than to engage in the case, shall such partial withdrawal
business of a legitimate NSSLA; diminish the member’s capital
(2) The NSSLA’s financial program is contribution to less than P1,000.
unsound; Members of NSSLAs may participate
(3) The proposed members are in the profits of the NSSLA on the basis of
adequately served by one (1) or more their respective capital contributions on
existing NSSLAs; and the date distribution of net income is
(4) There exist other reasons which the approved by its board of trustees.
Monetary Board may consider as sufficient (As amended by Circular No. 573 dated 22 June 2007)
ground for such disapproval.
d. Certificate of authority to operate; § 4106S.1 Revaluation surplus. In
revocation or suspension thereof. NSSLAs, cases of both retiring and new members,
prior to transacting business, shall procure a revaluation surplus shall be added to their
a certificate of authority to transact business contributions by imputing their respective
from the Monetary Board. After due notice proportionate shares in the withdrawable
and hearing, the Monetary Board may revoke share reserve and the reserve for furniture,
or suspend, for such period as it determines, fixtures, and furnishings.
the certificate of authority of any NSSLA, the
solvency of which is imperiled by losses or Secs. 4107S - 4110S (Reserved)
irregularities, or of any NSSLA which
willfully violates any provision of R. A. No. C. (RESERVED)
8367, these rules or any pertinent law or
regulation. Secs. 4111S - 4115S (Reserved)
(As amended by CL-2008-078 dated 15 December 2008)
D. NET WORTH-TO-RISK ASSETS RATIO
Secs. 4102S - 4105S (Reserved)
Sec. 4116S Capital-to-Risk Assets. The
B. CAPITALIZATION combined capital accounts of each NSSLA
shall not be less than an amount equal to
Sec. 4106S Capital. NSSLAs established after ten percent (10%) of its risk assets which is
14 August 2001, shall have a minimum defined as its total assets minus the
capital contribution of at least P1.0 million. following assets:
The minimum capital contribution a. Cash on hand;
requirement shall also apply to all pending b. Evidences of indebtedness of the
applications to establish NSSLAs received Republic of the Philippines and of the BSP
prior to 14 August 2001. and any other evidences of indebtedness/
S Regulations Manual of Regulations for Non-Bank Financial Institutions

Part I - Page 2
§§ 4116S - 4118S
09.12.31
obligations, the servicing and repayment (2%) of the total capital contributions of the
of which are fully guaranteed by the members.
Republic of the Philippines; An amount corresponding to the
c. Loans to the extent covered by withdrawable share reserve shall be set up
hold-out on, or assignment of, deposits by the NSSLA, such amount invested in
maintained in the lending NSSLA and held bonds or evidences of indebtedness of the
in the Philippines; Republic of the Philippines or of its
d. Office premises, depreciated; subdivisions, agencies or instrumentalities,
e. Furniture, fixtures and equipment, the servicing and repayment of which are
depreciated; fully guaranteed by the Republic of the
f. Real estate mortgage loans insured Philippines, and evidences of indebtedness
by the Home Guarantee Corporation to of the BSP.
the extent of the amount of the insurance; For a uniform interpretation of the
and provisions of this Section, the following shall
g. Other non-risk items as the serve as guidelines:
Monetary Board may, from time to time, a. The withdrawable share reserve
authorize to be deducted from total assets. shall be set up from the undivided profits
The Monetary Board shall prescribe of the NSSLA and shall be funded in the
the manner of determining the total assets form of cash deposited as a separate
of such NSSLA for the purpose of this account and/or an investment allowed
Section, but contingent accounts shall not under this Section;
be included among total assets. b. Should there be an increase in the
Whenever the capital accounts of an capital contribution, the reserve shall be
NSSLA are deficient with respect to the correspondingly adjusted at the end of each
preceding paragraph, the Monetary Board, month from undivided profits, if any; and
after considering the report of the c. The reserve shall be adjusted first
appropriate department of the SES on the before the NSSLA shall declare and
state of solvency of the NSSLA concerned, distribute to its members any portion of its
shall limit or prohibit the distribution of net net income at any time of the year.
income and shall require that part or all of (As amended by Circular No. 573 dated 22 June 2007)
net income be used to increase the capital
accounts of the NSSLA until the minimum Sec. 4118S Surplus Reserve for Ledger
requirement has been met. The Monetary Discrepancies. Whenever an NSSLA has a
Board may, after considering the aforesaid discrepancy between its general ledger
report of the appropriate department of the accounts and their respective subsidiary
SES, and if the amount of the deficiency ledgers, the board of trustees of the NSSLA
justifies it, restrict or prohibit the making of shall set up from the undivided profits of
new investments of any sort by the NSSLA the NSSLA, if any, a surplus reserve, in an
with the exception of the purchases of amount equivalent to the amount of the
evidence of indebtedness included under discrepancy, and this reserve shall not be
Item “b” of this Section until the minimum available for distribution to members or for
required capital ratio has been restored. any other purpose unless and until the
(As amended by Circular No. 573 dated 22 June 2007) discrepancy is accounted for. The board of
trustees shall also direct the employee
Sec. 4117S Withdrawable Share Reserve responsible for the discrepancy to account
NSSLAs shall create a withdrawable share for said discrepancy: Provided, That the
reserve which shall consist of two percent failure of the employee to do so shall

Part I - Page 3
§§ 4118S - 4126S.1
09.12.31
constitute as ground for his dismissal if the withdrawable share reserve required under
discrepancy is of serious or recurring nature. Sec. 4117S is less than, or if by such
(As amended by Circular Nos. 661 dated 01 September 2009 distribution would be reduced below, the
and 573 dated 22 June 2007) amount specified in said Section. The
reserve shall be adjusted first before the
Sec. 4119S Reserve for Office Premises, NSSLA shall distribute its net income at any
Furniture, Fixtures and Equipment. NSSLAs time of the year.
shall set aside five percent (5%) of their c. Capital-to-risk assets ratio. NSSLAs
yearly net income until it amount to at least shall not distribute any of its net income to
five percent (5%) of the total assets as a their members if their capital-to-risk assets ratio
reserve for a building fund to cover the cost is below the level required under Sec. 4116S.
of construction or acquisition of office d. Discrepancies between general ledger
premises, and of the purchase of office and subsidiary ledger accounts. The surplus
furniture, fixtures and equipment. reserves set up as required under Sec. 4118S
An NSSLA which, as determined by its shall not be reverted to free surplus for
board of trustees, has adequate office distribution to members unless and until the
premises, furniture, fixtures and equipment discrepancy between the general ledger
necessary for the conduct of its business accounts and their respective subsidiary
need not set up the reserve: Provided, That ledgers for which the surplus reserve has been
this fact should be certified by its board of set up ceases to exist.
trustees in a resolution to be submitted to e. Other unbooked capital
the appropriate department of the SES for adjustments required by BSP, whether or
verification and approval: Provided, not allowed to be set up on a staggered
however, That in case reserves had been set basis. The unbooked valuation reserves and
up, the NSSLA so exempted may revert the other unbooked capital adjustments
reserves to free surplus. required by the BSP, whether or not allowed
(As amended by Circular No. 573 dated 22 June 2007) to be set up on a staggered basis, shall be
deducted from the amount of net income
Sec. 4120S (Reserved) available for distribution to members.
f. Interest and other income earned
E. (RESERVED) but not yet collected/received, net of
reserve for uncollected interest on loans
Secs. 4121S - 4125S (Reserved) Accrued interest and other income not yet
received but already recorded by an
F. NET INCOME DISTRIBUTION NSSLA, net of allowance for uncollected
interest on loans, shall be deducted from
Sec. 4126S Limitations on Distribution of the amount of net income available for
Net Income distribution to members.
a. Basis for participation in profits (As amended by Circular No. 573 dated 22 June 2007
Member-depositors of an NSSLA may
participate in the profits of the NSSLA on § 4126S.1 Reporting and verification
the basis of their capital contributions on the Declaration of income for distribution to
date distribution of net income to members members shall be reported by an NSSLA
is approved by its board of trustees/directors. concerned to the appropriate department of
b. Level of withdrawable share the SES in the prescribed form (Revised
reserve. No NSSLA shall distribute any of BSP Form No. 7-26-25H) within ten (10)
its net income to its members if the business days after date of declaration.

Part I - Page 4
§§ 4126S.1 - 4141S.3
09.12.31
Pending verification of above-mentioned (b) those duly elected in subsequent meetings

report by the appropriate department of the of the NSSLA’s members; and (c) those elected
SES, the NSSLA concerned shall not make any to fill vacancies in the board of trustees.
announcement or communication on the
intended distribution of net income nor shall § 4141S.2 Qualifications of trustees
any actual distribution be made thereon. No person shall be eligible as trustee of an
In any case, the declaration may be NSSLA unless he is a member of good
announced and the income distributed, if after standing of such NSSLA.
twenty (20) business days from the date of the In addition, such person shall have the
report required herein shall have been received qualifications and none of the
by the BSP, no advice against such distribution disqualifications as provided in pertinent
has been received by the NSSLA concerned. laws and BSP rules.
(As amended by Circular Nos. 661 dated 01 September 2009 A trustee shall have the following
and 573 dated 22 June 2007) minimum qualifications:
a. He shall be at least twenty-five (25)
§ 4126S.2 Recording of net income for years of age at the time of his election/
distribution. The liability for members’ share appointment;
in the net income distribution shall be taken b. He shall be at least a college
up in the books upon receipt of BSP approval graduate or have at least five (5) years
thereof, or if no such approval is received, experience in business, or shall have
after twenty (20) business days from the date undergone any BSP training in NSSLA or
the required Report on Distributable Net banking operations: Provided, however,
Income was received by the appropriate That undergraduates eligible to be elected
department of the SES whichever comes as trustees in the NSSLA’s by-laws may be
earlier. A memorandum entry may be made allowed as may be approved by the
to trustees and for full disclosure purposes, Monetary Board;
the amount of income for distribution may c. He must have attended a special
be disclosed in the financial statements by seminar on corporate governance for board
means of a footnote which should include of trustees conducted or accredited by the
a statement to the effect that the distribution BSP; and
is subject to review by the BSP. d. He must be fit and proper for the
(As amended by Circular No. 573 dated 22 June 2007) position of a trustee of the NSSLA. In
determining whether a person is fit and
Secs. 4127S - 4140S (Reserved) proper for the position of a trustee, the
following matters must be considered:
G. TRUSTEES, OFFICERS, EMPLOYEES integrity/probity, competence, education,
AND AGENTS diligence, and experience/training.
The foregoing qualifications for trustees
Sec. 4141S Definition; Qualifications; shall be in addition to those already required
Responsibilities and Duties of Trustees or prescribed by R.A. No. 8367, as
For purposes of this Section, the following amended, and other existing applicable laws
shall be the definition, qualifications, and regulations.
responsibilities and duties of trustees.
§ 4141S.3 Powers and authority of the
§ 4141S.1 Definition of trustees board of trustees. The corporate powers of
Trustees shall include: (a) those who are an NSSLA shall be exercised, its business
named as such in the articles of incorporation; conducted, and all its property shall be

Part I - Page 5
§§ 4141S.3- 4141S.5
08.12.31
controlled and held by its board of trustees. It is the primary responsibility of the board
The powers of the board of trustees as of trustees to appoint competent
conferred by law are original and cannot management team at all times. The board
be revoked by the members. The trustees of trustees should apply fit and proper
hold their office charged with the duty to standards on key personnel. Integrity,
act for the NSSLA in accordance with their technical expertise and experience in the
best judgment. institution’s business, either current or
planned, should be the key considerations
§ 4141S.4 General responsibility of the in the selection process. And because
board of trustees. The position of an NSSLA mutual trust and a close working
trustee is a position of trust. A trustee relationship are important, the board of
assumes certain responsibilities to different trustees’ choice should share its general
constituencies or stakeholders (e.g., the operating philosophy and vision for the
NSSLA itself, its member-depositors and institution. The board of trustees shall
other creditors, its management and establish an appropriate compensation
employees and the public at large). These package for all personnel which shall be
constituencies or stakeholders have the right consistent with the interest of all stakeholders.
to expect that the institution is being run in (2) To establish objectives and draw up
a prudent and sound manner. a business strategy for achieving them.
The board of trustees is primarily Consistent with the institution’s objectives,
responsible for the corporate governance of business plans should be established to
the NSSLA. To ensure good governance of direct its on-going activities. The board of
the NSSLA, the board of trustees should trustees should ensure that performance
establish strategic objectives, policies and against plan is regularly reviewed, with
procedures that will guide and direct the corrective action taken as needed.
activities of the NSSLA and the means to (3) To conduct the affairs of the
attain the same as well as the mechanism institution with high degree of integrity.
for monitoring management’s performance. Since reputation is a very valuable asset,
While the management of the day-to-day it is in the institution’s best interest that
affairs of the institution is the responsibility in dealings with its members, it observes
of the management team, the board of trustees a high standard of integrity. The board of
is, however, responsible for monitoring and trustees should prescribe corporate values,
overseeing management action. codes of conduct and other standards of
appropriate behavior for itself, the senior
§ 4141S.5 Duties and responsibilities management and other employees. Among
of the board of trustees. To ensure prudent other matters, activities and transactions that
and efficient administration of NSSLAs, the could result or potentially result in conflict
following guidelines shall govern the of interest, personal gain at the expense of
responsibilities and duties of the board of the institution, or unethical conduct shall
trustees of NSSLAs: be strictly prohibited. It shall provide
a. Specific duties and responsibilities policies that will prevent the use of the
of the board of trustees facilities of the NSSLA in furtherance of
(1) To select and appoint officers who criminal and other illegal activities.
are qualified to administer the NSSLA affairs (4) To prescribe a clear assignment of
effectively and soundly and to establish responsibilities and decision-making
adequate selection process for all personnel. authorities, incorporating a hierarchy of

Part I - Page 6
§ 4141S.5
08.12.31
required approvals from individuals to the (d) an adequate system for measuring
board of trustees. The board of trustees shall risk; and
establish in writing the limits of the (e) effective internal controls and a
discretionary powers of each officer, comprehensive risk-reporting process.
committee, sub-committee and such other The board of trustees may constitute a
group for the purpose of lending, investing committee for this purpose.
or committing the NSSLA to any financial (8) To constitute the Audit Committee.
undertaking or exposure to risk at any time. The Audit Committee shall be composed
The board of trustees shall have a schedule of trustees, preferably with accounting and
of matters and authorities reserved to it for finance experience. Said audit committee
decision, such as major capital expenditures, provides oversight of the institution’s
equity investments and divestments. internal and external auditors. It shall be
(5) To effectively supervise the responsible for the setting up of the internal
NSSLA’s affairs. The board of trustees shall audit department and for the appointment
establish a system of checks and balances of the internal auditor as well as the
which applies in the first instance to the independent external auditor. It shall
board itself. Among the members of the monitor and evaluate the adequacy and
board, an effective system of checks and effectiveness of the internal control system.
balances must exist. The system shall also (9) To meet regularly. To properly
provide a mechanism for effective check discharge its function, the board of trustees
and control by the board of trustees over shall meet regularly. Independent views in
the chief executive officer and key board meetings shall be given full
managers and by the latter over the line consideration and all such meetings shall be
officers of the NSSLA. duly minuted.
(6) To monitor, assess and control the (10) To keep the individual members
performance of management. The board of of the board and the members informed. It
trustees shall put in place an appropriate is the duty of the board of trustees to present
reporting system so that it is provided with to all its members and to the stakeholders
relevant and timely information to be able a balanced and understandable assessment
to effectively assess the performance of of the NSSLA’s performance and financial
management. For this purpose, it may condition. It should also provide appropriate
constitute a governance committee. information that flows internally and to the
(7) To adopt and maintain adequate public. All members of the board shall have
risk management policy. The board of reasonable access to any information about
trustees shall be responsible for the the institution.
formulation and maintenance of written (11) To ensure that the NSSLA has
policies and procedures relating to the beneficial influence on the economy. The
management of risks throughout the board of trustees has a continuing
institution. The risk management policy responsibility to provide those services and
shall include: facilities which will be supportive of the
(a) a comprehensive risk management national economy.
approach; (12) To assess at least annually its per-
(b) a detailed structure of limits, formance and effectiveness as a body, as
guidelines and other parameters used to well as its various committees, the chief
govern risk-taking; executive officer and the NSSLA itself. The
(c) a clear delineation of lines of composition of the board of trustees shall
responsibilities for managing risk; also be reviewed regularly with the end in

Part I - Page 7
§ 4141S.5
08.12.31
view of having a balanced membership. of all members, he shall also give due
Towards this end, a system and procedure regard to the rights and interests of other
for evaluation shall be adopted which may stakeholders.
include, but not limited to, the setting of (3) To devote time and attention
benchmark and peer group analysis. necessary to properly discharge their
(13) To keep their authority within the duties and responsibilities. Trustees shall
powers of the institution as prescribed in devote sufficient time to familiarize
the articles of incorporation, by-laws and themselves with the institution’s business.
in existing laws, rules and regulations. To They must be constantly aware of the
conduct and maintain the affairs of the institution’s condition and be
institution within the scope of its authority knowledgeable enough to contribute
as prescribed in its charter and in existing meaningfully to the board’s work. They
laws and regulations, the board of trustees must attend and actively participate in
shall appoint a compliance officer who shall board and committee meetings, request
be responsible for coordinating, monitoring and review meeting materials, ask
and facilitating compliance with existing questions and request explanations. If a
laws and regulations. The compliance officer person cannot give sufficient time and
shall be vested with appropriate authority attention to the affairs of the institution, he
and provided with appropriate support and shall neither accept his nomination nor run
resources. It may also constitute a for election as member of the board of
compliance committee. trustees.
b. Specific duties and responsibilities (4) To act judiciously. Before deciding
of a trustee on any matter brought before the board of
(1) To conduct fair business transactions trustees, every trustee should thoroughly
with the NSSLA and to ensure that personal evaluate the issues, ask questions and seek
interest does not bias board decisions. clarifications when necessary.
Trustees should, whenever possible, avoid (5) To exercise independent judgment.
situations that would give rise to a conflict A trustee should view each problem/
of interest. If transactions with the institution situation objectively. When a
cannot be avoided, it should be done in the disagreement with others occurs, he
regular course of business and upon terms should carefully evaluate the situation and
not less favorable to the institution than those state his position. He should not be afraid
offered to others. The basic principle to be to take a position even though it might be
observed is that a trustee should not use unpopular. Corollarily, he should support
his position to make profit or to acquire plans and ideas that he thinks will be
benefit or advantage for himself and/or his beneficial to the institution.
related interests. He should avoid situations (6) To have a working knowledge of
that would compromise his impartiality. the statutory and regulatory requirements
(2) To act honestly and in good faith, affecting the NSSLA, including the content
with loyalty and in the best interest of the of its articles of incorporation and by-laws,
NSSLA, its members, regardless of the the requirements of the BSP, and where
amount of their capital contributions, and applicable, the requirements of other
creditors, if any. A trustee must always act regulatory agencies.A trustee also keeps
in good faith, with the care which an himself informed of the industry
ordinarily prudent man would exercise developments and business trends in order
under similar circumstances. While a trustee to safeguard the institution’s
should always strive to promote the interest competitiveness.

Part I - Page 8
§§ 4141S.5 - 4143S.1
08.12.31
(7) To observe confidentiality. Trustees his position and responsibilities, or have

must observe the confidentiality of non- undergone training in NSSLA or banking
public information acquired by reason of operations acceptable to the appropriate
their position as trustees. They may not department of the SES;
disclose said information to any other c. He must be fit and proper for the
person without the authority of the board. position of an officer of the NSSLA. In
determining whether a person is fit and
Sec. 4142S Definition and Qualifications proper for the position of an officer, the
of Officers. Officers shall include the following matters must be considered:
President, Vice-President, General integrity/probity, competence, education,
Manager, Corporate Secretary, Treasurer diligence, and experience/training. The
and others mentioned as officers of the foregoing qualifications for officers shall be
NSSLA, or whose duties as such are in addition to those already required or
defined in the by-laws. prescribed by R.A. No. 8367, as amended,
The minimum qualifications for trustees and other existing applicable laws and
prescribed in Sec. 4141S are also applicable regulations.
to officers.
Sec. 4143S Disqualification of Trustees and
§ 4142S.1 Definition of officers Officers. The following regulations shall
Officers shall include the president, govern the disqualification of NSSLAs’
executive vice president, senior vice trustees and officers.
president, vice president, general
manager, secretary, treasurer, and others § 4143S.1 Persons disqualified to
mentioned as officers of the NSSLA, or become trustees. Without prejudice to
those whose duties as such are defined in specific provisions of law prescribing
the by-laws, or are generally known to be disqualifications for trustees, the following
the officers of the NSSLA (or any of its are disqualified from becoming trustees:
branches and offices other than the head a. Permanently disqualified. Trustees/
office) either through announcement, officers/employees permanently disqualified
representation, publication or any kind by the Monetary Board from holding a
of communication made by the NSSLA. director/trustee position:
A person holding the position of (1) Persons who have been convicted by
chairman, vice-chairman or any other final judgment of a court for offenses involving
position of the board who also performs dishonesty or breach of trust such as but not
functions of management such as those limited to, estafa, embezzlement, extortion,
ordinarily performed by regular officers forgery, malversation, swindling, theft,
shall also be considered an officer. robbery, falsification, bribery, violation of
B.P. Blg. 22, violation of Anti- Graft and
§ 4142S.2 Qualifications of officers Corrupt Practices Act and prohibited acts
An officer shall have the following and transactions under Section 7 of
minimum qualifications: R.A. No. 6713 (Code of Conduct and Ethical
a. He shall be at least twenty-one (21) Standards for Public Officials and
years of age; Employees);
b. He shall be at least a college (2) Persons who have been convicted
graduate or have at least five (5) years by final judgment of a court sentencing
experience in NSSLA or banking operations them to serve a maximum term of
or related activities or in a field related to imprisonment of more than six (6) years;

Part I - Page 9
§ 4143S.1
08.12.31
(3) Persons who have been convicted the board of trustees during their
by final judgment of the court for violation incumbency, and trustees who failed to
of banking/quasi-banking/NSSLA laws, physically attend for whatever reasons in
rules and regulations; at least twenty-five percent (25%) of all
(4) Persons who have been judicially board meetings in any year, except that
declared insolvent, spendthrift or when a notarized certification executed by
incapacitated to contract; the corporate secretary has been submitted
(5) Trustees, officers or employees of attesting that said trustees were given the
closed banks/QBs/trust entities who were agenda materials prior to the meeting and
found to be culpable for such institution’s that their comments/decisions thereon
closure as determined by the Monetary were submitted for deliberation/discussion
Board; and were taken up in the actual board
(6) Trustees and officers of banks, QBs meeting, said trustees shall be considered
and trust entities found by the Monetary present in the board meeting. This
Board as administratively liable for violation disqualification applies only for purposes
of banking laws, rules and regulations of the immediately succeeding election;
where a penalty of removal from office is (3) Persons who are delinquent in the
imposed, and which finding of the Monetary payment of their obligations as defined
Board has become final and executory; or hereunder:
(7) Trustees and officers of banks, QBs (a) Delinquency in the payment of
and trust entities or any person found by obligations means that an obligation of a
the Monetary Board to be unfit for the person with an NSSLA where he/she is a
position of trustees or officers because they trustee or officer, or at least two (2)
were found administratively liable by obligations with other banks/FIs, under
another government agency for violation different credit lines or loan contracts, are
of banking laws, rules and regulations or past due pursuant to existing regulations;
any offense/violation involving dishonesty (b) Obligations shall include all
or breach of trust, and which finding of said borrowings from a bank/QB/trust entity/
government agency has become final and NSSLA/other FIs obtained by:
executory. (i) A trustee or officer for his own
b. Temporarily disqualified. Trustees/ account or as the representative or agent
officers/employees disqualified by the of others or where he/she acts as a
Monetary Board from holding a trustee guarantor, endorser or surety for loans from
position for a specific/indefinite period of such FIs;
time. Included are: (ii) The spouse or child under the
(1) Persons who refuse to fully disclose parental authority of the trustee or officer;
the extent of their business interest or any (iii) Any person whose borrowings or
material information to the appropriate loan proceeds were credited to the account
department of the SES when required of, or used for the benefit of a trustee or
pursuant to a provision of law or of a circular, officer;
memorandum, rule or regulation of the BSP. (iv) A partnership of which a trustee or
This disqualification shall be in effect as long officer, or his/her spouse is the managing
as the refusal persists; partner or a general partner owning a
(2) Trustees who have been absent or controlling interest in the partnership; and
who have not participated for whatever (v) A corporation, association or firm
reasons in more than fifty percent (50%) of wholly-owned or majority of the capital of
all meetings, both regular and special, of which is owned by any or a group of persons

Part I - Page 10
§ 4143S.1
08.12.31
mentioned in the foregoing Items “(i)”, “(ii)” department of the SES of their
and “(iv)”; disqualification;
This disqualification shall be in effect (9) Those under preventive suspension;
as long as the delinquency persists. (10) Persons with derogatory records as
(4) Persons who have been convicted certified by, or on the official files of, the
by a court for offenses involving dishonesty judiciary, NBI, PNP, quasi-judicial bodies,
or breach of trust such as, but not limited to, other government agencies, international
estafa, embezzlement, extortion, forgery, police, monetary authorities and similar
malversation, swindling, theft, robbery, agencies or authorities of foreign countries
falsification, bribery, violation of B.P. Blg. 22, for irregularities or violations of any law,
violation of Anti-Graft and Corrupt Practices rules and regulations that would adversely
Act and prohibited acts and transactions under affect the integrity of the trustee/officer or
Section 7 of R.A. No. 6713 (Code of Conduct the ability to effectively discharge his
and Ethical Standards for Public Officials and duties. This disqualification applies until
Employees), violation of banking laws, rules they have cleared themselves of the
and regulations or those sentenced to serve alleged irregularities/violations or after a
a maximum term of imprisonment of more lapse of five (5) years from the time the
than six (6) years but whose conviction has complaint, which was the basis of the
not yet become final and executory; derogatory record, was initiated;
(5) Trustees and officers of closed banks (11) Trustees and officers of banks,
QBs/trust entities/NSSLAs and other FIs QBs and trust entities found by the
under BSP supervision/regulation pending Monetary Board as administratively liable
their clearance by the Monetary Board; for violation of banking laws, rules and
(6) Trustees disqualified for failure to regulations where a penalty of removal
observe/discharge their duties and from office is imposed, and which finding
responsibilities prescribed under existing of the Monetary Board is pending appeal
regulations. This disqualification applies before the appellate court, unless
until the lapse of the specific period of execution or enforcement thereof is
disqualification or upon approval by the restrained by the court;
Monetary Board on recommendation by (12) Trustees and officers of banks, QBs
the appropriate department of the SES of and trust entities or any person found by
such trustees’ election/re-election; the Monetary Board to be unfit for the
(7) Trustees who failed to attend the position of trustees or officers because they
special seminar on corporate governance were found administratively liable by
for board of trustees required by BSP. This another government agency for violation
disqualification applies until the trustee of banking laws, rules and regulations or
concerned had attended such seminar; any offense violation involving dishonesty
(8) Persons dismissed/terminated or breach of trust, and which finding of said
from employment for cause. This government agency is pending appeal
disqualification shall be in effect until before the appellate court, unless
they have cleared themselves of execution or enforcement thereof is
involvement in the alleged irregularity restrained by the court; and
or upon clearance, on their request, from (13) Trustees and officers of banks, QBs
the Monetary Board after showing good and trust entities found by the Monetary
and justifiable reasons, or after the lapse Board as administratively liable for violation
of five (5) years from the time they were of banking laws, rules and regulations
officially advised by the appropriate where a penalty of suspension from office

Part I - Page 11
§§ 4143S.1 - 4143S.3
08.12.31
or fine is imposed, regardless whether § 4143S.3 Disqualification procedures

the finding of the Monetary Board is final a. The board of trustees and
and executory or pending appeal before management of every NSSLAs shall be
the appellate court, unless execution or responsible for determining the existence
enforcement thereof is restrained by the of the ground for disqualification of the
court. The disqualification shall be in effect NSSLA’s trustee/officer or employee and
during the period of suspension or so long for reporting the same to the BSP. While
as the fine is not fully paid. the concerned NSSLA may conduct its own
(As amended by Circular Nos. 584 dated 28 September 2007 and investigation and impose appropriate
513 dated 10 February 2006) sanction/s as are allowable, this shall be
without prejudice to the authority of the
§ 4143S.2 Persons disqualified to Monetary Board to disqualify a trustee
become officers officer/employee from being elected
a. The disqualifications for trustees appointed as trustee/officer in any FI under
mentioned in Subsec. 4143S.1 shall the supervision of the BSP. Grounds for
likewise apply to officers, except those disqualification made known to the NSSLA
stated in Items “b(2)” and “b(7)”. shall be reported to the appropriate
b. Except as may be authorized by the department of the SES within seventy-two
Monetary Board or the Governor, the (72) hours from knowledge thereof.
spouse or a relative within the second b. On the basis of knowledge and
degree of consanguinity or affinity of any evidence on the existence of any of the
person holding the position of chairman, grounds for disqualification mentioned in
vice chairman, president, executive vice Subsecs. 4143S.1 and 4143S.2, the trustee
president or any position of equivalent or officer concerned shall be notified in
rank, general manager, treasurer, chief writing either by personal service or
cashier or chief accountant is disqualified through registered mail with registry return
from holding or being elected or appointed receipt card at his/her last known address
to any of said positions in the same NSSLA; by the appropriate department of the SES
and the spouse or relative within the of the existence of the ground for his/her
second degree of consanguinity or affinity disqualification and shall be allowed to
of any person holding the position of submit within fifteen (15) calendar days
manager, cashier, or accountant of a branch from receipt of such notice an explanation
or office of an NSSLA is disqualified from on why he/she should not be disqualified
holding or being appointed to any of said and included in the watchlisted file,
positions in the same branch or office; together with the evidence in support of
c. Except as may otherwise be his/her position. The head of said
allowed under C.A. No. 108, otherwise department may allow an extension on
known as “The Anti-Dummy Law,” as meritorious ground.
amended, foreigners cannot be officers or c. Upon receipt of the reply/explanation
employees of NSSLAs; and of the trustee/officer concerned, the
d. Any appointive or elective public appropriate department of the SES shall
official, whether full time or part time, proceed to evaluate the case. The trustee/
except in cases where such service is officer concerned shall be afforded the
incident to financial assistance provided by opportunity to defend/clear himself/herself.
the government or GOCCs or in cases d. If no reply has been received from
allowed under existing law. the trustee/officer concerned upon the

Part I - Page 12
§ 4143S.3
08.12.31
expiration of the period prescribed under disqualified persons and his/her inclusion in
Item “b” above, said failure to reply shall be the masterlist of permanently disqualified
deemed a waiver and the appropriate persons.
department of the SES shall proceed to g. If the disqualification is based on
evaluate the case based on available records/ dismissal from employment for cause, the
evidence. appropriate department of the SES shall, as
e. If the ground for disqualification is much as practicable, endeavor to establish
delinquency in the payment of obligation, the specific acts or omissions constituting the
the concerned trustee or officer shall be given offense or the ultimate facts which resulted
a period of thirty (30) calendar days within in the dismissal to be able to determine if the
which to settle said obligation or, restore it disqualification of the trustee/officer
to its current status or, to explain why concerned is warranted or not. The
he/she should not be disqualified and evaluation of the case shall be made for the
included in the watchlisted file, before the purpose of determining if disqualification
evaluation on his disqualification and would be appropriate and not for the purpose
watchlisting is elevated to the Monetary of passing judgment on the findings and
Board. decision of the entity concerned. The
f. For trustees/officers of closed QBs, appropriate department of the SES may
trust entities, NSSLAs or other FIs under BSP decide to recommend to the Monetary Board
supervision, the concerned department of a penalty lower than disqualification (e.g.,
the SES shall make appropriate reprimand, suspension, etc.) if, in its
recommendation to the Monetary Board judgment the act committed or omitted by
clearing said trustees/officers when there is the trustee/officer concerned does not
no pending case/complaint or evidence warrant disqualification.
against them. When there is evidence that a h. All other cases of disqualification,
trustees/officer has committed irregularity, whether permanent or temporary shall be
the appropriate department of the SES shall elevated to the Monetary Board for approval
make recommendation to the Monetary and shall be subject to the procedures
Board that his/her case be referred to the OSI provided in paragraphs “a”, “b”, “c” and “d”
for further investigation and that he/she be above.
included in the masterlist of temporarily i. Upon approval by the Monetary
disqualified persons until the final resolution Board, the concerned trustee/officer shall
of his/her case. Trustees/officers with be informed by the appropriate department
pending cases/complaints shall also be of the SES in writing either by personal
included in said masterlist of temporarily service or through registered mail with
disqualified persons upon approval by the registry return receipt card, at his/her last
Monetary Board until the final resolution of known address of his/her disqualification
their cases. If the trustee/officer is cleared from being elected/ appointed as trustee/
from involvement in any irregularity, the officer in any FI under the supervision of
appropriate department of the SES shall BSP and/or of his/her inclusion in the
recommend to the Monetary Board his/her masterlist of watchlisted persons so
delisting. On the other hand, if the trustee disqualified.
officer concerned is found to be responsible j. The board of trustees of the
for the closure of the institution, the concerned institution shall be immediately
concerned department of the SES shall informed of cases of disqualification
recommend to the Monetary Board his/her approved by the Monetary Board and shall
delisting from the masterlist of temporarily be directed to act thereon not later than the

Part I - Page 13
§§ 4143S.3 - 4143S.6
08.12.31
following board meeting. Within seventy- disqualified NSSLA trustees/ officers under
two (72) hours thereafter, the corporate the following procedures:
secretary shall report to the Governor of a. Watchlist categories. Watchlisting
the BSP through the appropriate department shall be categorized as follows:
of the SES the action taken by the board on (1) Disqualification File “A” (Permanent)
the trustee/officer involved. - T r u s t e e s / o f f i c e r s / e mp l o y e e s
k. Persons who are elected or permanently disqualified by the Monetary
appointed as trustee or officer in any of the Board from holding a trustee/officer position
BSP supervised institutions for the first time in any institution under the supervision/
but are subject to any of the grounds for regulation of BSP.
disqualification provided for under Subsecs. (2) Disqualification File “B” (Temporary)
4143S.1 and 4143S.2, shall be afforded the -Trustees/officers/employees
procedural due process prescribed above. temporarily disqualified by the Monetary
l. Whenever a trustee/officer is Board from holding a trustee/officer position
cleared in the process mentioned under in any institution under the supervision/
Item “c” above or, when the ground for regulation of BSP.
disqualification ceases to exist, he/she would b. Inclusion of trustees/officers/
be eligible to become trustee or officer of employees in the watchlist. Upon
any bank, QB, trust entity or any institution recommendation by the appropriate
under the supervision of the BSP only upon department of the SES, the inclusion of
prior approval by the Monetary Board. It trustees/officers/employees in watchlist
shall be the responsibility of the appropriate disqualification files “A” and “B” on the basis
department of the SES to elevate to the of decisions, actions or reports of the courts,
Monetary Board the lifting of the banks, QBs, other NSSLAs and FIs under BSP
disqualification of the concerned trustee/ supervision, BSP, NBI or any other
officer and his/her delisting from the administrative agencies shall first be approved
masterlist of watchlisted persons. by the Monetary Board.
(As amended by Circular No. 584 dated 28 September 2007) c. Notification of trustees/officers/
employees. Upon approval by the Monetary
§ 4143S.4 Effect of non-possession of Board, the concerned trustee/officer/
qualifications or possession of employee shall be informed through
disqualifications. Trustees/officers elected registered mail, with registry return receipt
or appointed without possessing the card at his/her last known address of his/ her
qualifications in Subsecs. 4141S.2/4142S.2 inclusion in the masterlist of watchlisted
or possessing any of the disqualifications as persons disqualified to be a trustee/officer in
enumerated in Subsecs.4143S.1/4143S.2, any FI under the supervision of the BSP.
shall vacate their respective positions d. Confidentiality. Watchlisting shall be
immediately. for internal use only and may not be accessed
or queried upon by outside parties including
§ 4143S.5 (Reserved) banks, QBs, trust entities, NSSLAs or other
FIs under BSP supervision except with the
§ 4143S.6 Watchlisting. To provide the authority of the person concerned and with
BSP with a central information file to be used the approval of the Deputy Governor, SES,
as reference in passing upon and reviewing or the Governor, or the Monetary Board.
the qualifications of persons elected or The BSP will disclose information on
appointed as trustee or officer of an NSSLA, its watchlist files only upon submission of
the SES shall maintain a watchlist of a duly accomplished and notarized

Part I - Page 14
§§ 4143S.6 - 4145S
08.12.31
authorization from the concerned person Sec. 4144S Compensation of Trustees,

and approval of such request by the Deputy Officers and Employees. No trustee, officer
Governor, SES or the Governor or the or employee of an NSSLA shall receive from
Monetary Board. The prescribed such NSSLA and no NSSLA shall pay to any
authorization form to be submitted to the trustee, officer, or employee of such NSSLA,
concerned department of the SES is in any commission, emolument, gratuity or
Appendix Q-45. reward based on the volume or number of
NSSLAs can gain access to information loans made, or based on the interest or fees
in the said watchlist for the sole purpose of collected thereon. Nothing in this Section,
screening their applicants for hiring and/ however, prohibits or limits any of the
or confirming their elected trustees and following:
appointed officers. NSSLAs must obtain the a. Receipt or payment of salaries of
said authorization on an individual basis. trustees, officers and employees;
e. Delisting. All delistings shall be b. Receipt or payment of commissions
approved by the Monetary Board upon to agents whether or not based on the
recommendation of the appropriate volume or number of loans or on the
department of the SES except in cases of interest and fees collected thereon; or
persons known to be dead, where delisting c. Receipt or payment of bonuses of
shall be automatic upon proof of death and trustees, officers or employees if such
need not be elevated to the Monetary bonuses are based on the profits and not
Board. Delisting may be approved by the on the volume or number of loans made
Monetary Board in the following cases: or on the interest or fees collected thereon.
(1) Watchlist – Disqualification File “B”
(Temporary) – § 4144S.1 Compensation increases.All
(a) After the lapse of the specific period increases in compensation, in any form, of
of disqualification; all trustees and trustee-officers in excess of
(b) When the conviction by the court ten percent (10%) thereof per annum shall
for crimes involving dishonesty, breach of require the approval of the BSP.
trust and/or violation of banking laws
becomes final and executory, in which § 4144S.2 Liability for loans contrary
case the trustee/officer/employee is relisted to law. No NSSLA shall make or purchase
to Watchlist – Disqualification File “A” any loan or investment not authorized or
(Permanent); permitted under R.A. No. 8367, and any
(c) Upon favorable decision or trustee, officer or employee, who on behalf
clearance by the appropriate body, i.e., of any such NSSLA, knowingly makes or
court, NBI, bank, QB, trust entity or such purchases any such loan or investment or
other agency/body where the concerned who knowingly consents thereto shall be
individual had derogatory record. Trustees/ personally liable to the NSSLA for the full
officers/employees delisted from the amount of any such loan or investment.
Watchlist – Disqualification File “B” other
than those upgraded to Watchlist – Sec. 4145S Bonding of Officers and
Disqualification File “A” shall be eligible Employees. All officers and employees of
for re-employment with any bank, QB, an NSSLA who, in the regular discharge of
trust entity, NSSLA or other FI under BSP their duties have access to money or
supervision. negotiable securities shall, before entering
(As amended by CL-2007-001 dated 04 January 2007 and upon such duties, furnish to the employing
CL-2006-046 dated 21 December 2006) NSSLA a good and sufficient bond and

Part I - Page 15
§§ 4145S - 4151S.1
08.12.31
providing for indemnity to the NSSLA against Sec. 4146S Agents and Representatives
the loss of money or securities, by reason of No person shall act as an agent or sales
their dishonesty. The bond of the cashier, representative of an NSSLA or operate an
assistant cashier, treasurer, and other agency without obtaining a license from
employees having money accountability the Monetary Board. No license is required
shall not be less than their average daily for a collector of an NSSLA but no person
accountability. The bond must be issued by shall hold himself out or act as collector
a reputable bonding company duly licensed unless he is authorized as a collector in
by the Insurance Commission and approved writing by such NSSLA.
by the BSP. Capital contribution or a cash
bond deposited with the NSSLA or with a Sec. 4147S (Reserved)
bank, may also be allowed.
To protect the funds of depositors and Sec. 4148S Full-Time Manager for NSSLAs
creditors, the Monetary Board may NSSLAs with total assets of at least
regulate/ restrict the payment by the P5.0 million shall maintain a full-time
NSSLA of compensation, allowances, fees, manager to take charge of the operations of
bonuses, and fringe benefits to its trustees the NSSLA. The manager shall possess all the
and officers in exceptional cases and when qualifications and shall not have any
the circumstances warrant, such as, but not disqualification under Subsecs. 4142S.2 and
limited to the following: 4143S.2, respectively.
a. When the NSSLA is found by the
Monetary Board to be conducting business Secs. 4149S - 4150S (Reserved)
in an unsafe or unsound manner;
b. When the NSSLA is found by the H. BRANCHES AND OTHER OFFICES
Monetary Board to be in an unsatisfactory
financial condition such as, but not limited Sec. 4151S Establishment of Branches/
to, the following cases: Extension Offices. Prior BSP authority shall
(1) Its capital is impaired; and be obtained before operating a branch or
(2) It has suffered continuous losses other offices.
from operations for the past three (3) years.
In the presence of any one (1) or more of § 4151S.1Application.The application
the circumstances mentioned above, the shall be prescribed by the appropriate
Monetary Board may impose the following department of the SES and accompanied by
restrictions in the compensation and other the following minimum requirements:
benefits of trustees and officers: a. Sketch of the location of the proposed
(a) Except for the financial assistance office which shall be within the compound
to meet expenses for the medical, of the mother firm’s branch office;
maternity, education and other emergency b. Itemized statement of estimated
needs of the trustees or officers or their receipts and expenses of the NSSLA in
immediate family, other forms of financial connection with such branch or extension
assistance may be suspended. office;
(b) When the total compensation c. Description or enumeration of
package including salaries, allowances, fees service facilities that will cater to the deposit
and bonuses of trustees and officers are and credit needs of members of the NSSLA;
significantly excessive as compared with d. Financial statements for the year
industry averages, the Monetary Board may immediately preceding the date of
order their reduction to reasonable levels. application;

Part I - Page 16
§§ 4151S.1 - 4161S.2
08.12.31
e. Certification as to the actual except when extraordinary instances

number of members that will be serviced caused by unforeseen, unavoidable event
by the branch/extension office; and directly affect the NSSLA’s ability to open
f. Undertaking that the branch/ for business. NSSLAs shall post
extension office will service only members conspicuously at all times in their place of
of the NSSLA. business their schedule of regular business
hours and days.
§ 4151S.2 Conditions precluding
acceptance/processing of application. The Secs. 4157S - 4160S (Reserved)
application shall not be accepted/processed
in any of the following cases: J. REPORTS
a. The NSSLA’s operation during the
year immediately preceding the date of Sec. 4161S Records. NSSLAs shall have a
filing of application was unprofitable; true and accurate account, record or
b. Total capital accounts of the statement of their daily transactions. The
NSSLA are less than P100 million as of making of any false entry or the willful
the date of filing of the application; omission of entries relevant to any
c. Total number of members to be transaction is a ground for the Monetary
served in the proposed branch/extension Board for the imposition of administrative
office is less than 500; or sanctions under Section 37 of R.A.
d. Non-compliance by the NSSLA No. 7653, without prejudice to the criminal
with any of the pertinent provisions of liability of the director or officer responsible
banking laws, rules, regulations and therefore under Sections 35 and 36 of R.A.
policies of the BSP. No. 7653 and/or the applicable provisions
of the Revised Penal Code. Records shall
§ 4151S.3 Internal control system. The be up to-date and shall contain sufficient
NSSLA shall submit to the appropriate detail so that an audit trail is established.
department of the SES a system of internal
safeguards and control measures to be § 4161S.1 Uniform System of
adopted for compliance by the staff of the Accounts. NSSLAs are required to pattern
proposed branch/extension office. their charts of accounts and recording
systems after the Uniform System of
§ 4151S.4 Permit to operate. Actual Accounts prescribed for NSSLAs including
operation shall commence only after a reportorial and publication requirements.
permit to operate has been issued by the The voucher system of accounting or the
BSP. ticket system, or such other accounting
system acceptable to the BSP as well as
Secs. 4152S - 4155S (Reserved) the prescribed chart of accounts shall be
adopted for use by NSSLAs.
§ 4161S.2 Philippine Financial
Sec. 4156S Business Days and Hours Reporting Standards/Philippine Accounting
NSSLAs may, with the prior approval of the Standards
appropriate department of the SES, adopt Statement of policy. It is the policy of
such business days and hours as may be the Bangko Sentral to promote fairness,
convenient for them. NSSLAs shall be open transparency and accuracy in financial
for business during business hours and days reporting. It is in this light that the BSP aims

Part I - Page 17
§§ 4161S.2 - 4162S.1
08.12.31
to adopt all PFRS and PAS issued by the The difference between the fair value and
ASC to the greatest extent possible. the net proceeds of the loan shall be
NSSLAs shall adopt the PFRS and PAS recorded under “Unearned Income-
which are in accordance with GAAP in Others”, which shall be amortized over the
recording transactions and in the term of the loan using the effective interest
preparation of financial statements and method.
reports to BSP. However, in cases where The provisions on government grants
there are differences between BSP shall be applied retroactively to all
regulations and PFRS/PAS as when more outstanding government grants received.
than one (1) option are allowed or certain NSSLAs that adopted an accounting
maximum or minimum limits are treatment other than the foregoing shall
prescribed by the PFRS/PAS, the option or consider the adjustment as a change in
limit prescribed by BSP regulations shall accounting policy, which shall be
be adopted by all NSSLA/FIs. accounted for in accordance with PAS 8.
For purposes hereof, the PFRS/PAS Notwithstanding the exceptions in
shall refer to issuances of the ASC and Items “a”, “b” and “c”, the audited annual
approved by the PRC. financial statements required to be
Accounting treatment for prudential submitted to the BSP in accordance with
reporting. For prudential reporting, FIs shall Appendix S-2 shall in all respect be PFRS/
adopt in all respect the PFRS and PAS PAS compliant: Provided, That FIs shall
except as follows: submit to the BSP adjusting entries
a. In preparing consolidated financial reconciling the balances in the financial
statements, only investments in financial statements for prudential reporting with
allied subsidiaries except insurance that in the audited annual financial
subsidiaries shall be consolidated on a line- statements.
by-line basis; while insurance and non- (As amended by Circular No. 572 dated 22 June 2007)
financial allied subsidiaries shall be
accounted for using the equity method. Sec. 4162S Reports. NSSLAs shall submit
Financial/non-financial allied/non-allied to the appropriate department of the SES
associates shall be accounted for using the the reports in prescribed form listed in
equity method in accordance with the Appendix S-2.
provisions of PAS 28 “Investments in
Associates”; § 4162S.1 Categories and signatories
b. For purposes of preparing separate of reports. For purposes of designating the
financial statements, financial/non-financial signatories of reports, certain weekly,
allied/non-allied subsidiaries/associates, monthly, quarterly, semi-annual, and annual
including insurance subsidiaries/associates, statements/reports required to be submitted
shall also be accounted for using the equity to the BSP are hereby grouped into Category
method; and A-1, A-2, A-3 and Category B, as enumerated
c. FIs shall be required to meet the in Appendix S-3.
BSP recommended valuation reserves. Category A-1 reports shall be signed by
Government grants extended in the form the NSSLA’s chief executive officer (who
of loans bearing nil or low interest rates shall may be the president or chairman of the
be measured upon initial recognition at its board, or designated in the by-laws), or in
fair value (i.e., the present value of the his absence, by the executive vice president
future cash flows of the financial instrument or the officer duly authorized under a
discounted using the market interest rate). resolution approved by the board of

Part I - Page 18
§§ 4162S.1 - 4162S.3
08.12.31
trustees and by the chief finance officer the BSP Regional Offices or by sending
(i.e., controller or chief accountant, who them registered mail or special delivery,
shall likewise be duly authorized by the unless otherwise specified in the circular
NSSLA’s board of trustees in a format or memorandum of the Monetary Board or
prescribed in Appendix S-3a. the BSP.
Category A-2 reports of the head office
of the NSSLA shall be signed by the § 4162S.3 Sanctions and procedures for
NSSLA’s president or senior vice- filing and payment of fines. Failure to submit
president/equivalent position. Offices/units the above reports on or before the specified
(such as branch) reports in this category dates shall subject the person responsible
shall be signed by their respective or entity concerned to the penalties provided
managers/officers-in-charge. Likewise, the by law.
signing authority in this category shall be For willful delay in the submission of
contained in a resolution approved by the reports, the following rules shall apply:
board of trustees in the format prescribed a. Definition of Terms. The following
in Appendix S-3b. definitions shall apply:
Category A-3 and B reports are those (1) Report shall refer to all written
required to be submitted to the BSP and are reports/statements required of an NSSLA
not included in Categories A-1 and A-2. They to be submitted to the BSP periodically or
shall be signed by officers or their alternates, within a specified period.
who shall be duly designated by the board of (2) Willful delay in the submission of
trustees. A copy of the board resolution with reports shall refer to the failure of any
format as prescribed in Appendix S-3c, NSSLA to submit on time the report defined
covering the initial designation and subsequent in Item “(1)” above. Failure to submit a
changes in signatories and alternates, shall be report on time due to fortuitous events, such
submitted to the appropriate department of as fire and other natural calamities and
the SES within three (3) days from the date of public disorders, shall not be considered as
resolution. willful delay.
If a report is submitted to the BSP under (3) Examination shall include, but need not
the signature of an officer who is not listed be limited to, the verification, review, audit,
or included in any of the resolutions investigation and inspection of the books and
mentioned above, the appropriate records, business affairs, administration and
department of the SES shall refuse to financial condition of any NSSLA including the
acknowledge the report as valid or consider reproduction of the records as well as the
the report as not having been submitted at taking possession of the books and records and
all. If such a report is not resubmitted by the keeping them under BSP custody after giving
NSSLA under the signature of a duly proper receipts therefore. It shall also include
authorized signing officer, administrative the interview of the directors and personnel
sanctions/penalties shall be imposed on the of any NSSLA.
erring NSSLA for the late reporting or failure (4) Refusal to permit examination shall
to submit the required report, as the case mean any act or omission which impedes,
may be. delays or obstructs the duly authorized BSP
officer/examiner/employee from conducting
§ 4162S.2 Manner of filing. The an examination, including the act of refusing
submission of the reports shall be effected to honor a letter of authority to examine
by filing them personally with the presented by any officer/examiner/
appropriate department of the SES or with employee of the BSP.

Part I - Page 19
§ 4162S.3
08.12.31
b. Fines for willful delay in The provisions of Section 34 of R. A.

submission of reports. NSSLAs incurring No. 7653 shall apply to any agent,
willful delay in the submission of required manager, or other officer-in-charge of any
reports shall pay a fine in accordance with NSSLA who willfully refuses any lawful
the following schedule: examination into the affairs of such NSSLA.
The willful making of a false statement
(1) For Categories A-1, A-2 and A-3 reports or misleading statement on a material fact
Per day of default to department of the BSP charged with the
until the report is filed P180 regulation of NSSLAs or to his examiner
(2) For Category B reports shall be punished in accordance with
Per day of default Section 36 of R. A. No. 7653.
until the report is filed 60 (2) Procedures in imposing the fine
(a) The BSP officer/examiner/employee
Delay or default shall start to run on the shall report the refusal of the NSSLA to
day following the last day required for the permit examination to the head of the
submission of reports. However, should the appropriate department of BSP, who shall
last day of filing fall on a non-working day forthwith make a written demand upon the
in the locality where the reporting NSSLA NSSLA concerned for such examination.
is situated, delay or default shall start to run If the NSSLA continues to refuse said
on the day following the next working day. examination without any satisfactory
The due date/deadline for submission of explanation therefor, the BSP officer/
reports to BSP as prescribed under Sec. examiner/employee concerned shall
4162S governing the frequency and submit a report to that effect to the
deadlines indicated in Appendix S-2 shall appropriate department head.
be automatically moved to the next (b) The fine shall be imposed starting
business day whenever a half-day on the day following the receipt by the
suspension of business operations in appropriate department of the written
government offices is declared due to an report submitted by the BSP officer/
emergency such as typhoon, floods, etc. examiner/employee concerned regarding
For the purpose of establishing delay or the continued refusal of the NSSLA to
default, the date of acknowledgment by the permit the desired examination.
appropriate department of the SES or the BSP d. Manner of payment or collection
Regional Offices/Units appearing on the of fines. The regulations embodied in Sec.
copies of such reports filed or submitted or 4601S shall be observed in the collection of
the date of mailing postmarked on the the fines from NSSLAs.
envelope/the date of registry or special e. Appeal to the Monetary Board.
delivery receipt, as the case may be, shall NSSLAs may appeal to the Monetary Board
be considered as the date of filing. a ruling of the appropriate department
Delayed schedules/attachments and imposing a fine.
amendments shall be considered late f. Other penalties. The foregoing
reporting subject to above penalties. penalties shall not preclude the application
c. Sanctions for willful refusal to permit of, or shall be without prejudice to, other
examination/making of false statement administrative sanctions as well as to the
(1) Any NSSLA which shall willfully filing of criminal case as provided for in
refuse to permit examination shall pay a fine the other provisions of the law, as may be
of P3,000 daily from the day of refusal and warranted by the nature of the offense.
for as long as such refusal lasts. (As amended by Circular No. 585 dated 15 October 2007)

Part I - Page 20
§§ 4163S - 4164S.3
08.12.31
Sec. 4163S (Reserved) f. Review of the system of assessing

capital in relation to the estimate of
Sec. 4164S Internal Audit Function organizational risk;
Internal audit is an independent, objective g. Transaction testing and assessment
assurance and consulting function established of specific internal control procedures; and
to examine, evaluate and improve the h. Review of the compliance system
effectiveness of risk management, internal and the implementation of established
control, and governance processes of an policies and procedures.
organization.
§ 4164S.3 Qualification standards of
§ 4164S.1 Status. The internal audit the internal auditor. The internal auditor
function must be independent of the of a UB or a KB must be a CPA and must
activities audited and from day-to-day have at least five (5) years experience in
internal control process. It must be free to the regular audit (internal or external) of a
report audit results, findings, opinions, UB or KB as auditor-in-charge, senior
appraisals and other information to the auditor or audit manager. He must possess
appropriate level of management. It shall the knowledge, skills, and other
have authority to directly access and competencies to examine all areas in
communicate with any officer or employee, which the institution operates. Professional
to examine any activity or entity of the competence as well as continuing training
institution, as well as to access any records, and education shall be required to face-up
files or data whenever relevant to the to the increasing complexity and diversity
exercise of its assignment. The Audit of the institution’s operations.
Committee or senior management should The internal auditor of a TB, QB, trust
take all necessary measures to provide the entity or national Coop Bank must be a CPA
appropriate resources and staffing that with at least five (5) years experience in
would enable internal audit to achieve its the regular audit (internal or external) of a
objectives. TB, QB, trust entity or national Coop Bank
as auditor-in-charge, senior auditor or audit
§ 4164S.2 Scope. The scope of internal manager or, in lieu thereof, at least three (3)
audit shall include: years experience in the regular audit (internal
a. Examination and evaluation of the or external) of a UB or KB as auditor-in
adequacy and effectiveness of the internal charge, senior auditor or audit manager.
control systems; The internal auditor of an RB, NSSLA or
b. Review of the application and local Coop Bank must be at least an
effectiveness of risk management Accounting graduate with two (2) years
procedures and risk assessment experience in external audit or in the regular
methodologies; audit of an RB, NSSLA or local Coop Bank
c Review of the management and or, in lieu thereof, at least one (1) year
financial information systems, including the experience in the regular audit (internal or
electronic information system and electronic external) of a UB, KB, TB, QB, trust entity
banking services; or national Coop Bank as auditor-in-charge,
d. Assessment of the accuracy and senior auditor or audit manager.
reliability of the accounting system and of A qualified internal auditor of a UB or a
the resulting financial reports; KB shall be qualified to audit TBs, QBs, trust
e. Review of the systems and entities, national cooperative banks, RBs,
procedures of safeguarding assets; NSSLAs, local cooperative banks,

Part I - Page 21
§§ 4164S.3 - 4172S
08.12.31
subsidiaries and affiliates engaged in allied and the appropriate department of the SES
activities, and other FIs under BSP not later than 120 calendar days after the
supervision. close of the calendar year or the fiscal year
A qualified internal auditor of a TB or adopted by the NSSLA. The report to the
national cooperative bank shall likewise be BSP shall be accompanied by the:
qualified to audit QBs, trust entities, RBs, (1) certification by the external auditor on
NSSLAs, local cooperative banks, the: (a) dates of start and termination of
subsidiaries and affiliates engaged in allied audit; (b) date of submission of the financial
activities, and other financial institutions audit report and certification under oath
under BSP supervision. stating that no material weakness or breach
in the internal control and risk
§ 4164S.4 Code of Ethics and Internal management systems was noted in the
Auditing Standards. The internal auditor course of the audit of the NSSLA to the
should conform with the Code of board of directors; and (c) the absence of
Professional Ethics for CPAs and ensure any direct or indirect financial interest and
compliance with sound internal auditing other circumstances that may impair the
standards, such as the Institute of Internal independence of the external auditor; (2)
Auditors’ International Standards for the reconciliation statement between the AFS
Professional Practice of Internal Auditing and the balance sheet and income
(e-mail: standards@theiia.org; Web: http:// statement for NSSLA submitted to the BSP
www.theiia.org.) and other supplemental including copies of adjusting entries on the
standards issued by regulatory authorities/ reconciling items; and (3) other information
government agencies. The Standards address that may be required by the BSP.
independence and objectivity, professional In addition, the external auditor shall
proficiency, scope of work, performance of be required by the NSSLA to submit to the
audit work, management of internal audit, board of directors, a LOC indicating any
quality assurance reviews, communication material weakness or breach in the
and monitoring of results. institution’s internal control and risk
management systems within thirty (30)
Secs. 4165S - 4170S (Reserved) calendar days after submission of the
financial audit report. If no material
K. INTERNAL CONTROL weakness or breach is noted to warrant the
issuance of an LOC, a Certification under
Sec. 4171S External Auditor. NSSLAs except oath stating that no material weakness or
those with total resources of P10.0 million breach in the internal control and risk
or less, shall engage the services of an management systems was noted in the
independent Certified Public Accountant to course of the audit of the NSSLA shall be
audit their books of accounts at least once a submitted in its stead, together with the
year, or as often as necessary. financial audit report.
Material weakness shall be defined as a
Sec. 4172S Financial Audit. NSSLAs shall significant control deficiency, or
cause an annual financial audit by an combination of deficiencies, that results in
external auditor acceptable to the BSP not more than a remote likelihood that a material
later than thirty (30) calendar days after the misstatement of the financial statements will
close of the calendar year or the fiscal year not be detected or prevented by the entity’s
adopted by the NSSLA. Report of such audit internal control. A material weakness does
shall be submitted to the board of directors not mean that a material misstatement has

Part I - Page 22
§ 4172S
08.12.31
occurred or will occur, but that it could That when warranted by supervisory
occur. A control deficiency exists when concern such as material weakness/
the design or operation of a control does breach in internal control and/or risk
not allow management or employees, in management systems, the Monetary Board
the normal course of performing their may, upon recommendation of the
assigned functions, to prevent or detect appropriate department of the SES, require
misstatements on a timely basis. A the financial audit to be conducted by an
significant deficiency is a control external auditor acceptable to the BSP, at
deficiency, or combination of control the expense of the institution concerned:
deficiencies, that adversely affects the Provided further, That when circumstances
entity’s ability to initiate, authorize, such as, but not limited to, loans from
record, process, or report financial data multilateral financial institutions,
reliably in accordance with GAAP. The privatization, or public listing warrant, the
term more than remote likelihood shall financial audit of the concerned institution
mean that future events are likely to occur by an acceptable external auditor may also
or are reasonably possible to occur. be allowed.
The board of directors, in a regular or NSSLAs under the concurrent
special meeting, shall consider and act on jurisdiction of the BSP and COA shall,
the financial audit report and the however, submit a copy of the AAR of the
certification under oath submitted in lieu COA to the appropriate department of the
of the LOC and shall submit, within thirty SES within thirty (30) banking days after
(30) banking days after receipt of the receipt of the report by the board of
reports, a copy of its resolution to the directors. The AAR shall be accompanied
appropriate department of the SES. The by the: (1) certification by the institution
resolution shall show, among other concerned on the date of receipt of the AAR
things, the actions(s) taken on the reports by the board of directors; (2) reconciliation
and the names of the directors present and statement between the AFS in the AAR and
absent. the balance sheet and income statement of
The board shall likewise consider and the NSSLA submitted to the BSP, including
act on the LOC and shall submit, within copies of adjusting entries on the reconciling
thirty (30) banking days after receipt items; and (3) other information that may
thereof, a copy of its resolution together be required by the BSP.
with said LOC to the appropriate The board of directors of said
department of the SES. The resolution institutions, in a regular or special
shall show the action(s) taken on the meeting, shall consider and act on the
findings and recommendations and, the AAR, as well as on the comments and
names of the directors present and absent, observations and shall submit, within
among other things. thirty (30) banking days after receipt of the
The LOC shall be accompanied by the report, a copy of its resolution to the
certification of the external auditor of the appropriate department of the SES. The
date of its submission to the board of resolution shall show the action(s) taken
directors. on the report, including the comments and
NSSLAs under BSP supervision which observations and the names of the
are under the concurrent jurisdiction of directors present and absent, among other
the COA shall be exempt from the things.
aforementioned annual financial audit by NSSLAs as well as external auditors
an acceptable external auditor: Provided, shall strictly observe the requirements in

Part I - Page 23
§§ 4172S - 4180S
09.12.31
the submission of the financial audit report Secs. 4173S - 4179S (Reserved)
and reports required to be submitted under
Appendix Q-33. Sec. 4180S Selection, Appointment,
The audited annual financial statements Reporting Requirements and Delisting of
required to be submitted shall in all respect External Auditors and/or Auditing Firm;
be PFRS/PAS compliant: Provided, That Sanction. Pursuant to Section 58, R.A. No.
NSSLAs shall submit to the BSP adjusting 8791, and the existing provisions of the
entries reconciling the balances in the executed MOA dated 12 August 2009,
financial statements for prudential reporting binding the BSP, SEC, PRC - BOA and the
with that in the audited annual financial IC for a simplified and synchronized
statements. accreditation requirements for external
The reports and certifications of auditor and/or auditing firm, following are
institutions concerned, schedules and the revised rules and regulations that shall
attachments required under this Subsection govern the selection and delisting by
shall be considered Category B reports, the BSP of covered institutions which
delayed submission of which shall be under special laws are subject to BSP
subject to the penalties under Subsec. supervision.
4162S.3 Statement of policy. It is the policy of
(As amended by Circular Nos. 554 dated 22 December 2006 the BSP to ensure effective audit and
and 540 dated 09 August 2006) supervision of banks, QBs, trust entities and/
or NSSLAs including their subsidiaries
§ 4172S.1 Audited Financial Statements and affiliates engaged in allied activities
of NSSLAs. The following rules shall govern and other FIs which under special laws
the utilization and submission of AFS of are subject to BSP supervision, and to
NSSLAs. ensure the reliance by BSP and the public
For purposes of this Section, AFS shall on the opinion of external auditors and
include the balance sheets, income auditing firms by prescribing the rules and
statements, statements of changes in equity, regulations that shall govern the selection,
statements of cash flows and notes to appointment, reporting requirements and
financial statements which shall include delisting for external auditors and auditing
among other information, disclosure of the firms of said institutions, subject to the
volume of past due loans as well as loan- binding provisions of and implementing
loss provisions. On the other hand, financial regulations pursuant to the aforesaid
audit report shall refer to the AFS and the MOA.
opinion of the auditor. The AFS of NSSLAs a. Rules and regulations. The revised
with subsidiaries shall be presented side by rules and regulations that shall govern the
side on a solo basis (parent) and on a selection and delisting by the BSP of covered
consolidated basis (parent and subsidiaries). institutions which under special laws are
(Circular No. 540 dated 09 August 2006) subject to BSP supervision are shown in
Appendix S-8.
§ 4172S.2 Posting of audited financial Sanctions. The applicable sanctions/
statements. NSSLAs shall post in penalties prescribed under Sections 36
conspicuous places in their head offices, all and 37 of R.A. 7653 to the extent
their branches and other offices, as well as applicable shall be imposed on the
in their respective websites, their latest covered institutions, its audit committee
financial audit report. and the directors approving the hiring of
(Circular No. 540 dated 09 August 2006) external auditor/auditing firm who/which

Part I - Page 24
§§ 4180S - 4183S
09.12.31
area not in the BSP list of selected equity method in accordance with the
auditors for covered institutions or for provisions of PAS 28 “Investments in
hiring, and/or retaining the services of Associates”. For purposes of separate
the external auditor/auditing firm in financial statements, investments in
violation of any of the provisions of this financial/non-financial allied/non-allied
Section and for non-compliance with subsidiaries/associates, including insurance
the Monetary Board directive under Item subsidiaries/associates, shall be accounted
“K” in Appendix S-8. Erring external for using the equity method.
auditors/ auditing firm may also be (As amended by Circular No. 494 dated 20 September 2005)
reported by the BSP to the PRC for
appropriate disciplinary action. Sec. 4182S Business Name 1 . NSSLAs
(As amended by Circular Nos. 660 dated 25 August 2009 and organized or operating under R.A. No.
529 dated 11 May 2006) 8367 and licensed by the BSP shall include
in their names the words “Savings and
L. MISCELLANEOUS PROVISIONS Loan Association”. Such NSSLAs shall
display in a conspicuous place at their
Sec. 4181S Publication Requirements business offices a sign including, among
NSSLAs shall, within 120 calendar days other things, the following words:
after the close of the calendar year or their “Authorized by the Bangko Sentral ng
fiscal year, as the case may be, furnish Pilipinas”.
the Monetary Board and post in any of (As amended by CL Nos. 2008-053 dated 21 August 2008 and
the NSSLAs’ bulletin boards or in any 2008-007 dated 05 February 2008)
other conspicuous place a copy of their
financial statements showing, in such Sec. 4183S Prohibitions
form and detail as the Monetary Board a. No person, association, partnership
shall require, the amount and character or corporation shall do business as an
of the assets and liabilities of the NSSLAs NSSLA, or shall use the terms “Savings and
at the end of the preceding fiscal year. Loan Association” or any other title or
The Monetary Board may, in addition to name tending to give the public
the foregoing, require the disclosure of impression that it is engaged in the
such other information as it shall deem operations and activities of an NSSLA
necessary for the protection of the unless so authorized under R.A. No. 8367
members of the NSSLA. and these regulations.
The consolidated statements of b. The use by an NSSLA of any other
condition of an NSSLA and its subsidiaries name or title or combination of names and
and associates shall conform with the titles or any other deviation from the
guidelines of PAS 27 “Consolidated and requirements of this Section shall not be
Separate Financial Statements”, except that authorized except upon prior approval of
for purposes of consolidated financial the Monetary Board.
statements, only investments in financial c. NSSLAs shall not issue, publish or
allied subsidiaries except insurance cause or permit to be issued or published,
subsidiaries shall be consolidated on a any advertisement that it is doing or
line-by-line basis; while insurance and permitted to do business which is
non-financial allied subsidiaries shall be prohibited by law to an NSSLA.
accounted for using the equity method. d. No NSSLA shall advertise or
Financial/non-financial allied/non-allied represent itself to its members or to the
associates shall be accounted for using the public as a bank, or as a trust company.
1
See SEC Circular Nos. 5 dated 17 July 2008 and 14 dated 24 October 2000

Part I - Page 25
§§ 4184S - 4195S
09.12.31
Secs. 4184S - 4189S (Reserved) an NSSLA’s internal risk management

processes are integrated and
Sec. 4190S Duties and Responsibilities of comprehensive. All NSSLAs should
NSSLAs and their Directors/Officers in follow the guidance in risk management
All Cases of Outsourcing of NSSLA efforts.
Functions. The rules on outsourcing of (Circular No. 510 dated 03 February 2006)
banking functions as shown in Appendix
Q-37 shall be adopted in so far as they Sec. 4194S Market Risk Management
are applicable to NSSLAs. The guidelines on market risk
(As amended by Circular Nos. 642 dated 30 January management for QBs as shown in
2009, 610 dated 26 May 2008, 596 dated 11 January Appendix Q-43 shall govern the market
2008, 548 dated 25 September 2006 and 543 dated 08 risk management of NSSLAs to the
September 2006) extent applicable.
The guidelines set forth the
Sec. 4191S (Reserved) expectations of the BSP with respect to
the management of market risk and are
Sec. 4192S Prompt Corrective Action intended to provide more consistency
Framework. The framework for the in how the risk-focused supervision is
enforcement of PCA on banks which is applied to this risk. NSSLAs are
in Appendix Q-40 shall govern the PCA expected to have an integrated approach
taken on NSSLAs to the extent to risk management to identify,
applicable, or by analogy. measure, monitor and control risks.
(Circular No. 523 dated 31 March 2006, as amended by Market risk should be reviewed together
Circular No. 664 dated 15 September 2009) with other risks to determine overall
risk profile.
Sec. 4193S Supervision by Risks. The The BSP is aware of the increasing
guidelines on supervision by risk in diversity of financial products and that
Appendix Q-42 which provide guidance industry techniques for measuring and
on how QBs should identify, measure, managing market risk are continuously
monitor and control risks shall govern evolving. As such, the guidelines are
the supervision by risks of NSSLAs to intended for general application;
the extent applicable. specific application will depend to some
The guidelines set forth the extent on the size, complexity and range
expectations of the BSP with respect to of activities undertaken by NSSLAs.
the management of risks and are (Circular No. 544 dated 15 September 2006)
intended to provide more consistency
in how the risk-focused supervision Sec. 4195S Liquidity Risk Management
function is applied to these risks. The The guidelines on liquidity risk
BSP will review the risks to ensure that management for QBs as shown in

Part I - Page 26
§§ 4195S - 4199S
08.12.31
Appendix Q-44 shall govern the liquidity These guidelines are intended for
risk management of NSSLAs to the general application; specific application
extent applicable. will depend on the size and sophistication
The guidelines set forth the of a particular NSSLA and the nature and
expectations of the BSP with respect to complexity of its activities.
the management of liquidity risk and are (Circular No. 545 dated 15 September 2006)
intended to provide more consistency in
how the risk-focused supervision Secs. 4196S - 4198S (Reserved)
function is applied to this risk. NSSLAs
are expected to have an integrated Sec. 4199S General Provision on
approach to risk management to identify, Sanctions. Unless otherwise provided, any
measure, monitor and control risks. violation of the provisions of this Part shall
Liquidity risk should be reviewed be subject to the sanctions provided in
together with other risks to determine Sections 34, 35, 36 and 37 of R.A. No. 7653,
overall risk profile. whenever applicable.

Part I - Page 27
§§ 4201S - 4240S
08.12.31
PART TWO
DEPOSIT AND BORROWING OPERATIONS
A. DEMAND DEPOSITS may be charged by the NSSLA for every

withdrawal made in excess of the maximum
Section 4201S Checking Accounts. No number allowed in any one (1) month.
NSSLA shall have or carry upon its books
for any person any demand, commercial Sec. 4209S Dormant Savings Deposits
or checking account, or any credit to be NSSLAs may charge a fee, the amount of
withdrawn upon the presentation of any which shall be approved by the BSP for
negotiable check or draft. the maintenance of dormant savings
deposits. Savings deposit shall be classified
Secs. 4202S - 4205S (Reserved) as dormant if no deposit or withdrawal has
been made for the last two (2) years.
B. SAVINGS DEPOSITS
Secs. 4210S – 4215S (Reserved)
Sec. 4206S Definition. Savings deposits
are deposits evidenced by a passbook C. (RESERVED)
consisting of funds deposited to the credit
of one (1) or more individuals with respect Secs. 4216S - 4220S (Reserved)
to which the depositor may withdraw
anytime, unless prior notice in writing of D. TIME DEPOSITS
an intended withdrawal is required by the
NSSLA. Sec. 4221S (Reserved)
Sec. 4207S Minimum Deposit. Savings Sec. 4222S Minimum Term and Size of
deposits with NSSLAs may be opened Time Deposits
with a minimum deposit of P100. a. Term - No time deposit shall be
accepted for a term of less than thirty (30)
Sec. 4208S Withdrawals. Withdrawal days.
from a savings deposit shall be made b. Minimum Size - NSSLAs shall not
through the presentation to the NSSLA of require a minimum amount of time
a duly accomplished withdrawal slip deposit greater than P1,000.
together with the depositor’s passbook.
NSSLAs shall reserve the right to Sec. 4223S Withdrawals of Time
require the depositor to give prior written Deposits. The withdrawal of a time
notice of withdrawal of not more than thirty deposit can be made only by presentation
(30) days. of the certificate of time deposit on the
NSSLAs may limit the number of day of or after its maturity.
withdrawals that a depositor may make:
Provided, That the number of the Secs. 4224S - 4230S (Reserved)
withdrawals allowed shall not be less than
three (3) times a month. A service charge E. - F. (RESERVED)
to be determined by the board of trustees
of the NSSLA and approved by the BSP, Secs. 4231S - 4240S (Reserved)

Part II - Page 1
§§ 4241S - 4261S.5
08.12.31
G. INTEREST ON DEPOSITS deposit account for himself, provided he

has sufficient discretion. However, he
Sec. 4241S Interest on Savings Deposits cannot withdraw therefrom, except
Savings deposits of NSSLAs shall not be through, or with the assistance of a guardian
subject to any interest rate ceiling. authorized to act for him. Parents may
deposit for their minor children, and
Sec. 4242S Interest on Time Deposits guardians for their wards.
Interest on time deposits shall not be subject Notwithstanding the provisions of the
to any interest rate ceiling. preceding paragraph, the cashier,
bookkeeper and their assistants, and other
§ 4242S.1 Time of payment. Interest employees of an NSSLA whose duties entail
on time deposits may be paid at maturity the handling of cash or checks are prohibited
or upon withdrawal or in advance: from opening savings deposit accounts with
Provided, however, That interest paid in the head office or branch of the NSSLA in
advance shall not exceed the interest for which they are assigned as such.
one (1) year.
§ 4261S.2 Identification of member-
§ 4242S.2 Treatment of matured depositors. NSSLAs shall be responsible
time deposits. A time deposit not for the proper identification of their
withdrawn or renewed on its due date shall member-depositors.
be treated as a savings deposit and shall
earn an interest from maturity to the date § 4261S.3 Number of deposit accounts
of actual withdrawal or renewal at a rate A member-depositor may open and have
applicable to savings deposits. more than one (1) savings deposit in his own
name in the same capacity, and he may open
Secs.4243S - 4250S (Reserved) and have various deposits in different
capacities such as guardian, agent, or trustee
for others.
H. (RESERVED)
§ 4261S.4 Signature card. A signature
Secs. 4251S – 4260S (Reserved) card bearing at least three (3) specimen
signatures of each member-depositor shall
I. SUNDRY PROVISIONS ON be required upon opening of a deposit
DEPOSIT OPERATIONS account.
Sec. 4261S Opening and Operation of § 4261S.5 Passbook and certificate

Deposit Accounts. The following are basic of time deposit. A savings deposit
provisions on the opening and operation of passbook, signed by the receiving teller and
deposit accounts of NSSLAs. an authorized officer, shall be issued to a
member-depositor showing, among other
§ 4261S.1 Who may open deposit things, his name and address, account
accounts. Only members who have number, date, amount of deposit, interest
contributed P1,000 or more to the capital credits and balance. NSSLAs shall pre-
of the NSSLA may open deposit accounts number their savings deposit passbooks. In
with NSSLAs. A natural person, although the case of a time deposit, a certificate of
lacking capacity to contract, may time deposit signed by two (2) authorized
nevertheless open a savings or time officers, shall be issued to the member-

Part II - Page 2
§§ 4261S.5 - 4299S
08.12.31
depositor containing, among other things, public lending institution, and from private
his name, amount of deposit, date when banking institutions, and such private
the deposit was made, its due date and lending institutions as may be approved
interest rate. by the Monetary Board: Provided, That
the proceeds of such loan shall be used
§ 4261S.6 Deposits in checks and exclusively to meet the normal credit
other cash items. Checks and other cash requirements of its members. The
items may be accepted for deposit by Monetary Board may, in meritorious
NSSLAs: Provided, That withdrawals cases, raise the ceiling on the borrowing
from such deposits shall not be made until capacity of an NSSLA to not more than
the check or other cash item is collected. thirty percent (30%) of its total assets.
NSSLAs organized by employees of an
Secs. 4262S - 4280S (Reserved) entity or a corporation may borrow funds
from said entity or corporation, but not
J. (RESERVED) vice-versa.
Secs. 4281S - 4285S (Reserved) Secs. 4287S - 4298S (Reserved)
K. OTHER BORROWINGS Sec. 4299S General Provision on

Sanctions. Unless otherwise provided,
Sec. 4286S Borrowings. An NSSLA may any violation of the provisions of this Part
borrow money or incur such obligation up shall be subject to the sanctions provided
to not more than twenty percent (20%) of in Sections 34, 35, 36 and 37 of R.A. No.
the total assets of the NSSLA, from any 7653, whenever applicable.

Part II - Page 3
§§ 4301S - 4302S
08.12.31
PART THREE
LOANS AND INVESTMENTS
A. LOANS IN GENERAL redemption of permissible investments

made by NSSLAs; and
Section 4301S Authority; Loan Limits; (3) Amount of credit available for loan
Maturity of Loans. The board of trustees purposes from government or private FIs.
of NSSLAs shall prescribe their own rules c. Maximum loan maturity. No loan
and regulations governing credit granted by NSSLAs shall have a maturity
operations of the NSSLAs within the date of more than five (5) years except loans
framework of the terms and conditions on the security of unencumbered real estate
embodied in this Section. for the purpose of home building and home
a. Loan limit to a single borrower. An development which may be granted with
NSSLA may grant loans not exceeding the maturities not exceeding twenty-five (25)
amount deposited and/or contributed by the years and medium or long-term loans to
member-borrower plus his twelve (12) finance agricultural projects.
months salary or retirement pension from
his employment, or up to seventy percent Sec. 4302S Basic Requirements in
(70%) of the fair market value of any property Granting Loans
acceptable as collateral on first mortgage that a. Application. A member-borrower
he may put up by way of security: Provided, applying for a loan must submit an application
That direct indebtedness to an NSSLA of any stating the purpose of the loan and such other
member-borrower for money borrowed information as may be required by the
with the exception of money borrowed NSSLA. The loan application and other
against obligations of the BSP or of the required documents shall form part of credit
Philippine Government, or borrowed with information file of the member-borrower in
the full guarantee of the Philippine the NSSLA.
Government in the payment of principal b. Credit investigation. No loan shall
and interest, shall not exceed fifteen be approved unless prior investigation has
percent (15%) of the unimpaired capital been made to determine the credit standing
and surplus of the NSSLA. of the applicant and/or the fair market value
For purposes of this Section, regular of the property offered as security and the
income of persons who are self-employed report thereon shall be made part of the loan
shall be their average monthly income application: Provided, however, That this
during the twelve (12)-month period requirement may be waived by an NSSLA
immediately preceding the date of loan in the case of permanent employee or wage
application. earner who is borrowing an amount not
b. Limitations on lending authority. exceeding his deposit plus his twelve (12)
NSSLAs shall not commit to make any months regular salary or retirement pension.
loan for amounts in excess of the total of c. Credit information file/collateral
the following amounts: file. An NSSLA shall maintain as far as
(1) Amount of cash available for loan practicable, a credit information file which
purposes; must contain, among other things, the
(2) Amount of cash which can be member-borrower’s application and financial
readily realized upon the sale or record. Other information relative to the

Part III - Page 1
§§ 4302S - 4305S.5
08.12.31
member-borrower, where applicable, shall remit such deductions to the NSSLA

also be maintained which must contain concerned and to collect such reasonable fee
among other things, the collateral and other for his services as may be authorized by
documents pertinent to the loan. rules promulgated by the Monetary Board.
d. Loan approvals. Loans shall be
approved by the NSSLA’s board of trustees Sec. 4305S Interest and Other Charges.
or if approved by a body or officer/s duly The following rules shall govern the rates
authorized by the board, such loan must of interest and other charges on loans
be confirmed by the board of trustees. granted by NSSLAs.
e. Loan agreements. For each loan
granted by an NSSLA, a promissory note §§ 4305S.1 - 4305S.2 (Reserved)
must be executed by the member-borrower
in favor of the NSSLA expressing such § 4305S.3 Interest in the absence of
particulars as the amount of the loan, date contract. In the absence of express
granted, due date, interest rate and other contract, the rate of interest for the loan or
similar information. forbearance of any money, goods or credit
f. Inscription of lien. In case of and the rate allowed in judgment shall be
mortgage loans, no release against an twelve percent (12%) per annum.
approved loan shall be made before the
inscription of the mortgage. § 4305S.4 Escalation clause; when
allowable. Parties to an agreement
Sec. 4303S Loan Proceeds. NSSLAs shall pertaining to a loan or forbearance of
in no case require member-borrowers to money, goods or credits may stipulate
deposit a portion of the loan proceeds, that the rate of interest agreed upon may
whether in the form of savings or time be increased in the event that the
deposits. Where, subsequent to the release applicable maximum rate of interest is
of the loan proceeds, member-borrowers increased by the Monetary Board:
open deposit accounts or make additional Provided, That such stipulations are valid
deposits to their existing accounts, no part only if there is also a stipulation in the
of such new deposits shall be covered by a agreement that the rate of interest agreed
stipulation prohibiting or limiting withdrawal upon shall be reduced in the event that
while new portion of their loans are the applicable maximum rate of interest
outstanding: Provided, however, That this is reduced by law or by the Monetary
prohibition shall not apply in cases of loans Board: Provided, further, That the
secured by a hold-out on deposits to the adjustment in the rate of interest agreed
extent of the unencumbered amount of the upon shall take effect on or after the
deposit existing at the time of the filing of effectivity of the increase or decrease in
the above-mentioned loan application. the maximum rate of interest.
Sec. 4304S Loan Repayment. The treasurer, § 4305S.5 Interest accrual on past
cashier or paymaster of the firm due loans. NSSLAs shall not accrue
employing a member-borrower shall be interest income on loans which are already
required, pursuant to R.A. No. 8367, to past due or on loan installments which are
make deductions from the salary, wage, in arrears, regardless of whether the loans
income or retirement pension of the are secured or unsecured. Interest on past
member-borrower in accordance with the due loans or loans installments in arrears
terms of his loan, and all other deductions shall be taken up as income only when
authorized by the member-borrower, to actual payments thereon are received.

Part III - Page 2
§§ 4305S.5 - 4306S.3
08.12.31
Interest income on past due loan arising c. Any due and unpaid loan
from discount amortization (and not from installment or portion hereof, from the time
the contractual interest of the account) shall the obligor defaults for the purpose of
be accrued as provided in PAS 39. obligations as defined in Sec. 4143S(d); and
(As amended by Circular No. 494 dated 20 September 2005) d. All items in litigation as defined in
the Manual of Accounts for NSSLAs.
Sec. 4306S Past Due Accounts. Past due
accounts of an NSSLA shall, as a general § 4306S.2 Extension/renewal of loans
rule, refer to all accounts which are not paid Extension of the period of payment of loans
at maturity. may be allowed under the following
circumstances:
§ 4306S.1 Accounts considered past a. For production loans, the extension
due. The following shall be considered as shall not exceed one-half (1/2) of the original
past due: period: Provided, That thirty percent (30%)
a. A loan or receivable payable on of the loan shall have been paid. A second
demand not paid upon written demand as extension shall not exceed one-half (1/2) of
required herein or within one (1) year from the period of the first extension; and
date of grant or renewal, whichever comes b. For consumer loans, the extension
earlier. shall not exceed one-half (1/2) of the
NSSLAs shall, in case of non-payment original period: Provided, That thirty percent
of a demand loan, make a written demand (30%) of the loan shall have been paid.
within six (6) months following the grant Loans payable in periodic installments
of such loan. The demand shall indicate a may be renewed for the full amount of
period of payment which shall not be later loans: Provided, That at least thirty percent
than six (6) months from date of said (30%) of the loan shall have been paid.
demand.
b. The total outstanding balance of a loan § 4306S.3 Write-off of loans as bad
or receivable payable in installments, in debts. To maximize the protection of
accordance with the following schedules: members of NSSLAs against misfeasance
Mode of Payment Installments in Arrears and malfeasance of the trustees and officers
Monthly 6 or more thereof, the Monetary Board adopted the
Quarterly 2 or more following regulations on writing-off of loans
Semestral 1 or more
by NSSLAs.
Annual 1 or more
a. The term loan shall include all types
Provided, however, That when the total of credit accommodations granted to, and
amount of arrearages reaches twenty advances made by the NSSLA for the
percent (20%) of the total outstanding account of the borrowers/debtors, including
balance of the loan, the entire total the interest thereon recorded in the books.
outstanding balance of the loan shall be b. Writing-off of loans by an NSSLA
considered as past due, irrespective of the shall be made not more than twice a year
number of installments in arrears: Provided, by its board of trustees; and
further, That the modes of payment other c. Notice/application for write-off of
than those listed above (e.g., daily, weekly loans shall be submitted, in the prescribed
or semi-monthly), the entire outstanding form to the appropriate department of the
balance of the loan/receivable shall be SES at least thirty (30) days prior to the
considered as past due when the total intended date of write-off: Provided, That
amount of arrearages reaches ten percent no such loans with an aggregate outstanding
(10%) of the total loan/receivable balance; amount of P15,000 or more, as certified in

Part III - Page 3
§§ 4306S.3 - 4307S.1
08.12.31
said notice/application, shall be written-off (3) Any option, demand, lien, pledge,
without the prior approval of: or other claim against, or for delivery of,
(1) The Monetary Board, in case of property or money;
loans to trustees and officers of the NSSLA, (4) Any purchase, or other acquisition
direct or indirect; or of, or any credit upon the security of any
(2) The head of the appropriate obligation or claim arising out of any of
department of the SES, subject to the foregoing; and
confirmation by the Monetary Board, in (5) Any transaction or series of
case of loans other than those mentioned transactions having a similar purpose or
in Item “(1)” above. effect.
b. Transactions not covered
§ 4306S.4 Updating of information Considering that the specific purpose
provided to credit information bureaus of the law is the full disclosure of the true
NSSLAs which have provided adverse cost of credit, the following categories of
information, such as the past due or credit transactions are outside the scope
litigation status of loan accounts, to credit of the above regulations:
information bureaus, or any organization (1) Credit transactions which do not
performing similar functions, shall submit involve the payment of any finance charge
monthly reports to these bureaus or by the debtor; and
organizations on the full payment or (2) Credit transactions in which the
settlement of the previously reported debtor is the one specifying a definite and
accounts within five (5) business days from fixed set of credit terms such as bank deposits,
the end of the month when such full insurance contracts, sale of bonds, etc.
payment was received. For this purpose,
it shall be the responsibility of the § 4307S.1 Definition of terms
reporting NSSLAs to ensure that their a. Creditor (who shall furnish the
disclosure of any information about their information) means any person engaged
borrowers/clients is with the consent of in a finance charge.
borrowers concerned. The term creditor shall include, but shall
(Circular No. 589 dated 18 December 2007) not be limited to, banks and banking
institutions, insurance and bonding
Sec. 4307S “Truth in Lending Act” companies, savings and loan associations,
Disclosure Requirements. NSSLAs are credit unions, financing companies,
required to strictly adhere to the provisions installment houses, real estate dealers,
of R. A. No. 3765, otherwise known as lending investors, pawnshops, and any
the “Truth in Lending Act,” and shall make other person or entity engaged in the
the true and effective cost of borrowing an business of extending credit who requires
integral part of every loan contract. as an incident to the extension of credit,
a. Transactions covered the payment of a finance charge.
(1) Any loan, mortgage, deed of trust, b. Person means any individual,
advance and discount; corporation, partnership, NSSLA, or other
(2) Any conditional sales contract, any organized group of persons, or the legal
contract to sell, or sale or contract of sale successor or representative of the foregoing,
of property or services, either for present and includes the Philippine Government or
or future delivery, under which, part or all any agency thereof, or any other
of the price is payable subsequent to the government, or any of its political
making of such sale or contract; subdivisions, or any agency of the foregoing.

Part III - Page 4
§ 4307S.1
08.12.31
c. Cash price or delivered price (in the debtor, and (ii) the sum of the cash price
case of trade transactions) is the amount of and non-finance charges.
money which would constitute full i. Simple annual rate is the uniform
payment upon delivery of the property percentage which represents the ratio, on
(except money) or service purchased at the an annual basis, between the finance
creditor’s place of business. In the case of charges and the amount to be financed.
financial transactions, cash price represents In the case of single payment upon
the amount of money received by the maturity, the simple annual rate (R) in
debtor upon consummation of the credit percent is determined by the following
transaction, net of finance charges method:
collected at the time the credit is finance charge 12
extended(if any). R = amount to x maturity period x 100
d. Down payment represents the amount be financed in months
paid by the debtor at the time of the
transaction in partial payment for the In the case of the normal installment
property or service purchased. type of credit of at least one (1) year in
e. Trade-in represents the value of an duration, where installment payments of
asset, agreed upon by the creditor and equal amount are made in regular time
debtor, given at the time of the transaction periods spaced not more than one (1) year
in partial payment for the property or apart, R in percent is computed by the
service purchased. following method:
f. Non-finance charges correspond to No. of payments
the amounts advanced by the creditor for finance charge in a year
items normally associated with the R = 2 x amount to x total number x 100
be financed of payments
ownership of the property or of the plus one
availment of the service purchased which
are not incident to the extension of credit. In cases where the credit matures in less
For example, in the case of the purchase than one (1) year [e.g., installment payments
of an automobile on credit, the creditor are required every month for six (6) months],
may advance the insurance premium as the same formula will apply except that the
well as the registration fee for the account number of payments in a year would refer
of the debtor. to the number of installment periods, as
g. Amount to be financed consists of defined in the credit contract, as if the credit
the cash price plus non-finance charges less matures in one (1) year. For example, the
the amount of the down payment and value number of payments in a year would be
of the trade-in. twelve (12) for this purpose in cases where
h. Finance charge represents the six (6) monthly installment payments are
amount to be paid by the debtor incident called for in the credit transaction1.
to the extension of credit such as interest In cases where credit terms provide for
or discounts, collection fees, credit premium or penalty charges depending on,
investigation fees, attorney’s fees, and say, the timelines of the debtor’s payments,
other service charges. The total finance the annual rate to be disclosed in writing shall
charge represents the difference between be the rate for regular payments, i.e., the
(i) the aggregate consideration (down premium and penalty need not be taken into
payment plus installments) on the part of account in the determination of the annual
1
This can be determined by dividing twelve (12), the number of months in a year, by the number or fraction of months
between installment payments.

Part III - Page 5
§§ 4307S.1 - 4307S.5
08.12.31
rate. Such premium or penalty charges shall, § 4307S.3 Inspection of contracts

however, be indicated in the credit contract. covering credit transactions. NSSLAs shall
keep in their office or place of business copies
§ 4307S.2 Information to be disclosed of contracts covering all credit transactions
NSSLAs shall furnish to each person to entered into by them which involve the
whom credit is extended, prior to the extension of credit to another and the
consummation of the transaction, a clear payment of finance charges therefor. Such
statement in writing setting forth the copies shall be available for inspection or
following information to be disclosed. examination by the appropriate
a. The cash price or delivered price department of the SES.
of the property or service to be acquired;
b. The amounts, if any, to be credited § 4307S.4 Posters. An abstract of
as down payment and/or trade-in; R.A. No. 3765 (Appendix S-5) shall be
c. The difference between the reproduced in a format which is sixty (60)
amounts set forth under Items “a” and “b”; cm. wide and seventy-five (75) cm. long,
d. The charges, individually itemized, and posted on a conspicuous place in the
which are paid or to be paid by such person NSSLAs’ place(s) of business.
in connection with the transaction but which
are not incident to the extension of credit; § 4307S.5 Penal provisions
e. The total amount to be financed; a. NSSLAs which in connection with
f. The finance charges expressed in any credit transaction fail to disclose to any
terms of pesos and centavos; and person any information in violation of this
g. The percentage that the finance charge Section or any regulation issued hereafter
bears to the total amount to be financed shall be liable to such person in the amount
expressed as a simple annual rate on the of P100 or in an amount equal to twice the
outstanding unpaid balance of the obligation. finance charge required by such NSSLAs
The contract covering the credit in connection with such transactions,
transaction, or any other document to be whichever is the greater, except that such
acknowledged and signed by the debtor, liability shall not exceed P2,000 on any
shall indicate the above seven (7) items of credit transaction. Action to recover such
information. In addition, the contract or penalty may be brought by such person
document shall specify additional charges, within one (1) year from the date of the
if any, which will be collected in case occurrence of the violation, in any court of
certain stipulations in the contract are not competent jurisdiction. In any action under
met by the debtor. this Subsection in which any person is
In case the seven (7) items of entitled to a recovery, the NSSLAs shall
information mentioned in this Subsection be liable for reasonable attorney’s fees and
are not disclosed in the contract covering court costs as determined by the court.
the credit transaction, said items to the b. Except as specified in Item “a”
extent applicable, shall be disclosed in above, nothing contained in this rule shall
another document in the form (Appendix affect the validity or enforceability of any
S-4) prescribed by the Monetary Board, to contract or transaction.
be signed by the debtor and appended to c. Any person who willfully violates
the main contract. A copy of the disclosure any provision of this Section or regulation
statement shall be furnished the borrower. issued hereafter shall be fined by not less

Part III - Page 6
§§ 4307S.5 - 4358S
08.12.31
than P1,000 nor more than P5,000 or of sixty percent (60%) of the value of the
imprisonment for not less than six (6) months, farm holdings: Provided, That a
nor more than one (1) year or both. certification shall be first secured from the
d. No punishment or penalty office of the Registry of Deeds to the effect
provided by this Section shall apply to the that the Land Transfer Certificate being
Philippine Government or any agency or presented is valid; and
any political subdivision thereof. h. Other securities as may be
approved by the Monetary Board.
Secs. 4308S – 4311S (Reserved)
Sec. 4312S Grant of Loans and Other
Credit Accomodations. (Deleted by Circular C. - D. (RESERVED)
No. 622 dated 16 September 2008)
§ 4312S.1 General guidelines. (Deleted
by Circular No. 622 dated 16 September 2008) E. LOANS/CREDIT
ACCOMMODATIONS TO TRUSTEES,
§§ 4312S.2 - 4312S.3 (Reserved) OFFICERS, STOCKHOLDERS AND
THEIR RELATED INTERESTS
§ 4312S.4 Signatories. (Deleted by
Circular No. 622 dated 16 September 2008) Sec. 4356S General Policy. The transactions
of all trustees or officers with the NSSLA
Secs. 4313S – 4320S (Reserved) shall not be under terms more favorable
than those transacted with other members.
B. SECURED LOANS
Sec. 4357S Direct/Indirect Borrowings;
Sec. 4321S Kinds of Security. Loans by Ceilings. No NSSLA shall directly or
an NSSLA may be secured by any or all of indirectly make any loan to any trustee or
the following: officer of such NSSLA, either for himself or
a. Mortgages on registered real estate; as agent or as partner of another, except with
b. Chattel mortgages on harvested or the written approval of the majority of the
stored crops of non-perishable character; trustees of the NSSLA, excluding the trustee
c. Chattel mortgages on livestock, concerned: Provided, That the aggregate
tools, equipment or machinery, supplies loans to such trustees and officers shall not
or materials, merchandise and other exceed twenty percent (20%) of the total
personal properties; capital contributions of the NSSLA.
d. Assignment of quedans which
gives the right of disposal of readily Sec. 4358S Records; Reports. In all cases
marketable products; of accommodations granted to trustees and
e. Time and/or savings deposits and/or officers under Sec. 4357S, the written
capital contribution; approval of the majority of the trustees of
f. Pledge of bonds, stock and other the NSSLA, excluding the trustee
securities of the GOCC and other bonds, concerned, shall be entered upon the
stocks or securities which are non-speculative records of the NSSLA and a copy of such
in nature; entry shall be transmitted forthwith to the
g. Land transfer certificates issued by appropriate department of the SES within
the government to tenant farmers, under twenty (20) business days from the date of
the agrarian reform program to the extent approval.

Part III - Page 7
§§ 4359S - 4398S
08.12.31
Secs. 4359S - 4369S (Reserved) b. In real property, in an aggregate

amount not exceeding at any one time five
Sec. 4370S Sanctions. The office of any trustee percent (5%) of the total assets of such
or officer of an NSSLA who violates the NSSLA; and
provisions of these rules on accommodations c. In furniture, fixtures, furnishings and
granted to trustee and officers shall equipment, and leasehold improvements for
immediately become vacant and said trustees its offices, in amount not exceeding at any
or officer shall be punished by imprisonment one time ten percent (10%), of its total capital
of not more than one (1) year nor more than contribution.
ten (10) years and by a fine of not less than
P5,000 nor more than P50,000 pursuant to §§ 4391S.1 - 4391S.2 (Reserved)
Section 15 of R.A. No. 8367.
§ 4391S.3 Investments in debt and
F. - I. (RESERVED) marketable equity securities. The
classification, accounting procedures,
Secs. 4371S - 4390S (Reserved) valuation, sales and transfers of
investments in debt securities and
J. OTHER OPERATIONS marketable equity securities shall be in
accordance with the guidelines in
Sec. 4391S Fund Investments. An NSSLA Appendices Q-20 and Q-20-a.
may invest its funds in any or all of the Penalties and sanctions. The
following: following penalties and sanctions shall
a. In bonds and securities in an be imposed on FIs and concerned
aggregate amount not exceeding ten percent officers found to violate the provisions
(10%) of its total assets; any investment in of these regulations:
excess of ten percent (10%) shall require the a. Fines of P2,000/banking day to be
prior approval of the BSP: Provided, That imposed on NSSLAs for each violation,
NSSLAs may invest available funds in excess reckoned from the date the violation was
of ten percent (10%) of total assets in sound committed up to the date it was
non-speculative enterprise, particularly in corrected; and
readily marketable and high grade b. Sanctions to be imposed on
commercial papers, bonds and securities concerned officers:
issued by the Government of the Philippines (1) First offense – reprimand the
or any of its political subsidiaries, officers responsible for the violation; and
instrumentalities or corporations including (2) Subsequent offenses–suspension-
GOCCs, subject to the following conditions: of ninety (90) days without pay for officers
(1) The credit needs of the members responsible for the violation.
shall be served/satisfied first; (Circular No. 476 dated 16 February 2005 as amended by
(2) The investment in any one (1) Circular Nos. 628 dated 31 October 2008 and 626 dated
corporation (excluding the Government of 23 October 2008)
the Philippines, any of its political
subdivisions, instrumentalities, or §§ 4391S.4 - 4391S.10 (Reserved)
corporations including GOCCs), shall not
exceed twenty-five percent (25%) of the Secs. 4392S - 4395S (Reserved)
NSSLA’s combined capital accounts; and
(3) The additional investment may be up K. MISCELLANEOUS PROVISIONS
to another ten percent (10%) of the NSSLA’s
total assets; Secs. 4396S - 4398S (Reserved)

Part III - Page 8
§ 4399S
08.12.31
Sec. 4399S General Provision on Part shall be subject to the sanctions

Sanctions. Unless otherwise provided, provided in Sections 34, 35, 36 and 37
any violation of the provisions of this of R.A. No. 7653, whenever applicable.

Part III - Page 9
§§ 4401S - 4499S
08.12.31
PART FOUR
Sections 4401S - 4499S (Reserved)

Part IV - Page 1
§§ 4501S - 4599S
08.12.31
PART FIVE
Sections 4501S - 4599S (Reserved)

Part V - Page 1
§§ 4601S - 4601S.1
09.12.31
PART SIX
MISCELLANEOUS
A. OTHER OPERATIONS (1)-time monetary penalty on a per

transaction basis.
Section 4601S Fines and Other Charges. The (3) Continuing penalty refers to the
following regulations shall govern monetary penalty imposed on continuing
imposition of monetary penalties on offenses/violations on a per calendar day
NSSLAs, their trustees and/or officers and basis reckoned from the time the offense/
payment of such penalties or fines and other violation occurred or was committed until
charges by NSSLAs. the same was corrected/rectified.
(As amended by Circualr No. 585 dated 15 October 2007) (4) Transactional penalty refers to a
one (1)-time penalty imposed on a
§ 4601S.1 Guidelines on the imposition transactional offense/violation.
of monetary penalties; payment of penalties b. Basis for the computation of the
or fines. The following are the guidelines period or duration of penalty. The
on the imposition of monetary penalties on computation of the period or duration of all
NSSLAs, their trustees and/or officers and penalties shall be based on calendar days.
the payment of such penalties or fines and For this purpose the terms “per banking
other charges: day”, “per business day”, “per day”
a. Definition of terms. For purposes of and/or “a day” as used in this Manual, and
the imposition of monetary penalties, the other BSP rules and regulations shall mean
following definitions are adopted: “per calendar day” and/or “calendar day”
(1) Continuing offenses/violations are as the case may be.
acts, ommisions or transactions entered c. Additional charge for late payment
into, in violation of laws, BSP rules and of monetary penalty. Late payment of
regulations, Monetary Board directives, monetary penalty shall be subject to an
and orders of the Governor which persist additional charge of six percent (6%) per
from the time the particular acts were annum to be reckoned from the business
committed or omitted or the transactions day immediately following the day said
were entered into until the same were penalty becomes due and payable up to the
corrected/rectified by subsequent acts or day of actual payment.
transactions. They shall be penalized on d. Appeal or request for reconsideration.
a per calendar day basis from the time the A one (1)-time appeal or request for
acts were committed/omitted or the reconsideration on the monetary penalty
transactions were effected up to the time approved by the Governor/Monetary Board
they were corrected/rectified. to be imposed on the NSSLA, its directors
(2) Transactional offenses/violations are and/or officers shall be allowed: Provided,
acts, omissions or transactions entered into That the same is filed with the appropriate
in violation of laws, BSP rules and department of the SES within fifteen (15)
regulations, Monetary Board directives, and calendar days from receipt of the Statement
orders of the Governor which cannot be of Account/billing letter. The appropriate
corrected/rectified by subsuquent acts or department of the SES shall evaluate the
transactions. They shall be meted with one appeal or request for reconsideration of

Part VI - Page 1
§§ 4601S.1 - 4631S
09.12.31
the NSSLA/individual and make Sec. 4631S Revocation/Suspension of

recommendations thereon within thirty (30) Non-Stock Savings and Loan Association
calendar days from receipt thereof. The License. In reference to Section 22 of
appeal or request for reconsideration on the R.A. No. 8367 or the “Revised Non-Stock
monetary penalty approved by the Savings and Loan Association Act of 1997”,
Governor/Monetary Board shall be elevated the Monetary Board, upon due notice and
to the Monetary Board for resolution/ hearing, has the authority to either revoke
decision. The running of the penalty period or suspend the license of any NSSLA for
in case of continuing penalty and/or the such period as it deems necessary, based
period for computing additonal charge shall on any of the following grounds:
be interrupted from the time the appeal or a. Suspension of license:
request for reconsideration was received by (1) Repeated violations [uncorrected
the appropriate department of the SES up to similar examination findings for the last two
the time that the notice of the Monetary (2) examinations, regular or special] of any
Board decision was received by the NSSLA/ of the provisions of R.A. No. 8367, and/or
individual concerned. any rules or regulations promulgated to
e. Due date; payment of penalty or implement said law, or BSP directives
fines. The penalty approved by the and/or instructions; and
Governor/MB to be imposed on the NSSLA, (2) Paid-up capital is impaired by
its directors and/or officers shall become due continuing losses for the last two (2) fiscal
and payable fifteen (15) calendar days from years.
receipt of the Statement of Account from the Lifting of the suspension of license shall
BSP. For NSSLAs which maintain DDA with be approved by the Monetary Board upon
the BSP, penalties which remain unpaid after recommendation of the appropriate BSP
the lapse of the fifteen-day period shall be supervising department.
automatically debited against their b. Revocation of license:
corresponding DDA on the following (1) When the solvency of the NSSLA is
business day without additional charge. If imperiled by losses and irregularities;
the balance of the concerned NSSLA’s DDA (2) When the NSSLA willfully violates
is insufficient to cover the amount of the any provision of R.A. No. 8367, any rule or
penalty, said penalty shall already be subject regulation promulgated to implement said
to an additional charge of six percent (6%) law and BSP directives and/or instructions;
per annum to be reckoned from the business (3) When the NSSLA is conducting
day immediately following the end of said business in an unsafe and unsound manner;
fifteen (15)-day period up to the day of actual (4) When it is unable to pay its
payment. liabilities as they become due in the ordinary
Failure to settle the full amount of the course of business;
fines within the period or on the day (5) When it has insufficient realizable
prescribed herein shall, in addition to the assets, as determined by the BSP, to meet
additonal penalty as provided in item “c” its liabilities;
above, make an NSSLA, its trustees and (6) When it cannot continue in
officers liable to the sanctions imposed business without involving probable losses
under Sec. 4199S. to its members or creditors; and
(As amended by Circular Nos. 662 dated 09 September 2009 and (7) When it has willfully violated a cease
585 dated 15 October 2007) and desist order of the Monetary Board
involving acts or transactions which amount to
Secs. 4602S - 4630S (Reserved) fraud or a dissipation of assets of the institution.

Part VI - Page 2
§§ 4631S - 4642S.2
09.12.31
As to the effects of the revocation/ money (e-money) and the operations of

suspension of license of the NSSLA, the electronic money issuers (EMIs).
NSSLA is prohibited from engaging in the (Circular No. 649 dated 09 March 2009)
business of accumulating the savings of its
members and using such accumulations for § 4642S.1 Declaration of policy. It is
loans to its members, subject to applicable the policy of the BSP to foster the
sanctions and penalties provided by law in development of efficient and convenient
case of violation thereof. After the cessation retail payment and fund transfer mechanism
of its operations due to revocation of its in the Philippines. The availability and
license, the NSSLA should proceed with its acceptance of e-money as a retail payment
dissolution, in acccordance with the medium will be promoted by providing the
provisions under the Corporation Code. The necessary safeguards and controls to
dissolution of a corporation involves the mitigate the risks associated in an e-money
termination of its corporate existence, at business.
least, as far as the right to go on doing (Circular No. 649 dated 09 March 2009)
ordinary business is concerned, and the
winding up of its affairs, the payments of § 4642S.2 Definitions
its debts and distribution of its assets among E-money shall mean monetary value as
the members or stakeholders or other represented by a claim on its issuer, that is -
persons involved. The board of trustees of a. electronically stored in an
the corporation also has the option of instrument or device;
adopting a plan for the distribution of its b. issued against receipt of funds of an
assets, as stated under Section 95 of the amount not lesser in value than the
Corporation Code. monetary value issued;
After the revocation/suspension of its c. accepted as a means of payment
license, the Monetary Board may direct the by persons or entities other than the
board of trustees of the NSSLA to proceed issuer;
with the voluntary dissolution of the d. withdrawable in cash or cash
corporation. In the event that the board of equivalent; and
trustees refuses to effectuate such e. issued in accordance with this
dissolution, the Monetary Board may refer Section.
the matter to the Solicitor General for the Electronic money issuer shall be
filing of a quo warranto case against the classified as follows:
corporation in accordance with the a. Banks (hereinafter called EMI-
provisions of the Corporation Code. Bank);
b. NBFI supervised by the BSP
Secs. 4632S - 4640S (Reserved) (hereinafter called EMI-NBFI); and
c. Non-bank institutions registered
Sec. 4641S Electronic Services. The with the BSP as a money transfer agent
guidelines concerning electronic activities, under Sec. 4511N of the MORNBFI
as may be applicable, are found in Sec. (hereinafter called EMI-Others).
4701Q and its Subsections. For purposes of this Section:
(Circular No. 649 dated 09 March 2009) a. Electronic instruments or devices
shall mean cash cards, e-wallets accessible
Sec. 4642S Issuance and Operations of via mobile phones or other access device,
Electronic Money. The following guidelines stored value cards, and other similar
shall govern the issuance of electronic products.

Part VI - Page 3
§§ 4642S.2 - 4642S.4
09.12.31
b. E-money issued by NSSLAs shall e. It is the responsibility of EMIs to

not be considered as deposits. ensure that their distributors/e-money agents
(Circular No. 649 dated 09 March 2009) comply with all applicable requirements of
the Anti-Money Laundering laws, rules and
§ 4642S.3 Prior Bangko Sentral approval regulations.
NSSLAs planning to be an EMI-NBFI shall f. EMIs shall provide an acceptable
comply with the requirements of Sec. 4641S redress mechanism to address the
and with Sec. 4190Q, when applicable. complaints of its customers.
(Circular No. 649 dated 09 March 2009) g. EMIs shall disclose in writing and its
customers shall signify agreement to the
§ 4642S.4 Common provisions. The information embodied in Item “c” above upon
following provisions are applicable to all their participation in the e-money system. In
EMIs: addition, it shall provide clear guidance in
a. E-money instrument issued shall be English and Filipino on consumers’ right of
subject to aggregate monthly load limit of redemption, including conditions and fees for
P100,000 unless a higher amount has been redemption, if any. Information on available
approved by the BSP. In case an EMI issues redress procedures for complaints together
several e-money instruments to a person (e- with the address and contact information of
money holder), the total amount loaded in the issuer shall also be provided.
all the e-money instruments shall be h. Prior to the issuance of e-money,
consolidated in determining compliance EMIs should ensure that the following
with the aggregate monthly load limit; minimum systems and controls are in place:
b. EMIs shall put in place a system to (1) Sound and prudent management,
maintain accurate and complete record of administrative and accounting procedures
e-money instruments issued, the identity of and adequate internal control mechanisms;
e-money holders, and the individual and (2) Properly-designed computer
consolidated balances thereof. The system systems which are thoroughly tested prior
must have the capability to monitor the to implementation;
movement of e-money transactions and link (3) Appropriate security policies and
e-money instruments issued to common measures intended to safeguard the integrity,
e-money holders. The susceptibility of a authenticity and confidentiality of data and
system to intentional or unintentional operating processes;
misreporting of transaction and balances (4) Adequate business continuity and
shall be sufficient ground for imposition by disaster recovery plan; and
the BSP of sanctions, as may be applicable. (5) Effective audit function to provide
c. E-money may only be redeemed at periodic review of the security control
face value. It shall not earn interest nor rewards environment and critical systems.
and other similar incentives convertible to i. EMIs shall provide the SDC
cash, nor be purchased at a discount. quarterly statements containing, among
E-money is not considered a deposit, hence, others, information on investments,
it is not insured with the PDIC. volume of transactions, total outstanding
d. EMIs shall not ensure that e-money e-money balances, and liquid assets in
instruments clearly identify the issuer who such forms as may be prescribed later on.
is ultimately responsible to the e-money j. EMIs shall notify the BSP in writing
holders. This shall be communicated to the of any change or enhancement in the
client who shall acknowledge the same in e-money facility thirty (30) days prior to
writing. implementation. If said change or

Part VI - Page 4
§§ 4642S.4 - 4652S
09.12.31
enhancement requires prior BSP approval, Nature of Violation/ Sanction/Penalties

the same shall be evaluated accordingly. Exception
Any change or enhancement that shall 3. Violation/s of Penalties and sanctions
expand the scope or change the nature of this Section under the
abovementioned laws
the e-money instrument shall be subject to
and other applicable
prior approval of the Deputy Governor, SES.
laws, rules and
These changes or enhancements may regulations
include the following:
(1) Additional capabilities of the In addition, the susceptibility of a
e-money instrument/s, like access to new system to intentional or unintentional
channels (e.g. inclusion of internet misreporting of transactions and balances
channel in addition to merchant Point of shall be sufficient ground for appropriate
Sale terminals); BSP action or imposition of sanctions,
(2) Change in technology service whenever applicable.
providers and other major partners in the (Circular No. 649 dated 09 March 2009)
e-money business (excluding partner
merchants), if any; and § 4642S.7 Transitory provisions
(3) Other changes or enhancements.
EMI-NBFIs granted authority to issue e-money
(Circular No. 649 dated 09 March 2009)
prior to 26 March 2009 may continue to
exercise such authority: Provided, That it shall
§ 4642S.5 Quasi-bank license
submit to the BSP, within one (1) month from
requirement. EMI-NBFIs and EMI-Others
26 March 2009 a certification signed by the
that engage in lending activities must secure
President or Officer with equivalent rank and
a quasi-banking license from the BSP.
function that it is in compliance with all the
applicable requirements of this Section.
§ 4642S.6 Sanctions. Monetary Otherwise, they are required to submit within
penalties and other sanctions for the the same period the measures they will
following violations committed by EMI- undertake, with the corresponding timelines,
NBFIs shall be imposed: to conform to the provisions that they have
not complied with, subject to BSP approval.
Nature of Violation/ Sanction/Penalties (Circular No. 649 dated 09 March 2009)
Exception
1. Issuing e-money Applicable penalties Secs. 4643S - 4650S (Reserved)
without prior BSP under Sections 36 &
approval 37 of R.A. No. 7653; B. SUNDRY PROVISIONS
Watchlisting of
owners/partners/ Sec. 4651S Notice of Dissolution. NSSLAs
principal officers contemplating to dissolve shall give written
2. Violation of any Applicable penalties
notice thereof to the Monetary Board
of the provisions of prescribed under
R.A. No. 9160 (Anti- the Act
through the appropriate department of the
Money Laundering SES at least thirty (30) days before taking
Law of 2001 as steps to effect dissolution.
amended by R.A.
No. 9194) and its Sec. 4652S Confidential Information. No
implementing rules trustee, officer or employee of NSSLAs or
and regulations of the BSP shall disclose any information

Part VI - Page 5
§§ 4652S - 4657S.2
08.12.31
relating to member-borrowers and their Sec. 4655S Annual Fees. For purposes of
applications or to the operations of the computing the annual fees chargeable
NSSLAs unless permitted by the Monetary against NSSLAs, the term Total Assessable
Board of the BSP: Provided, however, That Assets shall be the amount referred to as
in the case of NSSLAs under examination, the total assets under Section 28 of R.A. No.
the head of the appropriate department of 7653 (end-of-quarter total assets per balance
the SES may furnish findings of examination sheet, after deducting cash on hand and
to the office or firm where such NSSLAs do amounts due from banks, including the BSP
business. and banks abroad).
All deposits of whatever nature with Average Assessable Assets (AAAs) shall
NSSLAs are considered absolutely be the summation of end-of-quarter total
confidential in nature, and may not be assessable assets divided by the number of
examined, inquired or looked into by any quarters in operation during the particular
person, government official, bureau or office, assessment period.
except upon written permission of the The prescribed rate of annual fees for
depositor, or in cases of impeachment, or NSSLAs, assessable only when actual
upon order of competent court in cases of examination is conducted for the year, shall
bribery or dereliction of duty of public be one-fortieth of one percent (1/40 of 1%)
officials or in cases where the money of AAAs for 2002 or P100,000 whichever
deposited or invested is the subject matter is lower, payable within thirty (30) days
of litigation. from receipt of the bill. Failure to pay the
No official or employee of NSSLAs bill within the prescribed period shall
shall disclose to any person any subject the NSSLAs to administrative
information concerning said deposits, sanctions.
except in cases mentioned in the
preceding paragraph. Any official or Sec. 4656S Basic Law Governing Non-
employee of NSSLAs who violates this Stock Savings and Loan Associations
Section shall be punished under R.A. No. 8367, as amended, known as the
R.A. No. 1405, as amended. "Revised Non-Stock Savings and Loan
Association Act of 1997", regulates the
Sec. 4653S Examination by the Bangko organization and operation of NSSLAs.
Sentral. The head of the appropriate
department of the SES, personally or by Sec. 4657S Non-Stock Savings and Loan
deputy, shall make at least once a year and Associations Premises and Other Fixed
at such other times as he or the Monetary Assets. The following rules shall govern
Board may deem necessary and expedient, the premises and other fixed assets of
an examination, inspection or investigation NSSLAs.
of the books and records, business affairs,
administration and financial condition of § 4657S.1 Accounting for non-stock
NSSLAs. savings and loans associations premises;
other fixed assets. NSSLAs premises,
Sec. 4654S Applicability of Other Rules furniture, fixture and equipment shall be
Other rules and regulations applicable accounted for using the cost model under
to the examination of thrift banks, PAS 16 "Property, Plant and Equipment".
insofar as they are applicable and not (Circular No. 494 dated 20 September 2005)
inconsistent with these rules shall apply
to NSSLAs. § 4657S.2 (Reserved)

Part VI - Page 6
§§ 4657S.3 - 4660S
08.12.31
§ 4657S.3 Reclassification of real and utilities may be renovated or altered to

other properties acquired as non-stock enable the disabled persons to have access
savings and loans association premises to them.
ROPA reclassified either as Real Property-
Land or Real Property-Building shall be Secs. 4658S - 4659S (Reserved)
booked at their ROPA balance, net of any
valuation reserves: Provided, That only such Sec. 4660S Disclosure of Remittance
acquired asset or a portion thereof that will Charges and Other Relevant Information
be immediately used or earmarked for It is the policy of the BSP to promote the
future use may be reclassified and booked efficient delivery of competitively-priced
as Real Property-Land/Building. remittance services by banks and other
NSSLAs, prior to the reclassification of remittance service providers by promoting
their ROPA accounts to Real Property-Land/ competition and the use of innovative
Building, shall first secure prior BSP payment systems, strengthening the
approval before effecting the reclassification financial infrastructure, enhancing access to
and shall submit, in case of future use, formal remittance channels in the source
justification and plans for expansion/use. and destination countries, deepening the
financial literacy of consumers, and
§§ 4657S.4 - 4657S.8 (Reserved) improving transparency in remittance
transactions, consistent with sound
§ 4657S.9 Batas Pambansa Blg. 344 - practices.
An Act to Enhance the Mobility of Disabled Towards this end, NBFIs under BSP
Persons by Requiring Certain Buildings, supervision, including FXDs/MCs and
Institutions, Establishments and Public RAs, providing overseas remittance
Utilities to Install Facilities and Other services shall disclose to the remittance
Devices. In order to promote the realization sender and to the recipient/beneficiary, the
of the rights of disabled persons to following minimum items of information
participate fully in the social life and the regarding remittance transactions, as
development of the societies in which they defined herein:
live and the enjoyment of the opportunities a. Transfer/remittance fee - charge for
available to other citizens, no license or processing/sending the remittance from the
permit for the construction, repair or country of origin to the country of
renovation of public and private buildings destination and/or charge for receiving the
for public use, educational institutions, remittance at the country of destination;
airports, sports and recreation centers and b. Exchange rate - rate of conversion
complexes, shopping centers or from foreign currency to local currency,
establishments, public parking places, e.g., peso-dollar rate;
workplaces, public utilities, shall be granted c. Exchange rate differential/spread -
or issued unless the owner or operator foreign exchange mark-up or the difference
thereof shall install and incorporate in such between the prevailing BSP reference/
building, establishment or public utility, guiding rate and the exchange/conversion
such architectural facilities or structural rate;
features as shall reasonably enhance the d. Other currency conversion charges
mobility of disabled persons such as - commisions or service fees, if any;
sidewalks, ramps, railings, and the like. If e. Other related charges - e.g.,
feasible, all such existing buildings, surcharges, postage, text message or
institutions, establishments, or public telegram;

Part VI - Page 7
§§ 4660S - 4695S
09.12.31
f. Amount/currency paid out in the b. Without prejudice to the criminal

recipient country - exact amount of money sanctions prescribed above against the
the recipient should receive in local currency culpable persons, the Monetary Board may,
or foreign currency; and at its discretion, impose upon any covered
g. Delivery time to recipients/ institution, its directors and/or officers for any
beneficiaries - delivery period of remittance violation of Section 9 of R.A. No. 9160, as
to beneficiary stated in number of days, amended, the administrative sanctions
hours or minutes. provided under Section 37 of R.A. No. 7653.
Non-bank remittance service providers
shall likewise post said information in their Secs. 4692S - 4694S (Reserved)
respective websites and display them
prominently in conspicuous places within Sec. 4695S Valid Identification Cards for
their premises and/or remittance/service Financial Transactions. The following
centers. guidelines govern the acceptance of valid
(Circular No. 534 dated 26 June 2006) ID cards for all types of financial
transactions by NSSLAs, including financial
Secs. 4661S - 4690S (Reserved) transactions involving OFWs, in order to
promote access of Filipinos to services
Sec. 4691S Anti-Money Laundering offered by formal FIs, particularly those
Regulations. Banks, OBUs, QBs, trust residing in the remote areas, as well as to
entities, NSSLAs, pawnshops, and all other encourage and facilitate remittances of
institutions, including their subsidiaries and OFWs through the banking system:
affiliates supervised and/or regulated by the a. Clients who engage in a financial
BSP, otherwise known as "covered transaction with covered institutions for the
institutions" shall comply with the first time shall be required to present the
provisions of R.A. No. 9160, as amended, original and submit a clear copy of at least
otherwise known as the "Anti-Money one (1) valid photo-bearing ID document
Laundering Act of 2001" and its Revised issued by an official authority.
IRRs in Appendix S-7. For this purpose, the term official
(As amended by Circular Nos. 661 dated 01 September 2009 authority shall refer to any of the following:
and 612 dated 13 June 2008) (1) Government of the Republic of the
Philippines;
§§ 4691S.1 - 4691S.8 (Reserved) (2) Its political subdivisions and
instrumentalities;
§ 4691S.9 Sanctions and penalties (3) GOCCs; and
a. Whenever a covered institution (4) Private entities or institutions
violates the provisions of Section 9 of registered with or supervised or regulated
R.A. No. 9160, as amended, or of this either by the BSP or SEC or IC.
Section, the officer(s) or other persons Valid IDs include the following:
responsible for such violation shall be (a) Passport;
punished by a fine of not less than P50 (b) Driver's license;
thousand nor more than P200 thousand or (c) PRC ID;
by imprisonment of not less than two (2) (d) NBI clearance;
years nor more than ten (10) years, or both, (e) Police clearance;
at the discretion of the court pursuant to (f) Postal ID;
Section 36 of R.A. No. 7653, otherwise (g) Voter's ID;
known as "The New Central Bank Act". (h) Barangay certification;

Part VI - Page 8
§§ 4695S - 4699S
09.12.31
(i) GSIS e-card; They shall require their clients to submit

(j) SSS card; an updated photo and other relevant
(k) Senior Citizen card; information whenever the need for it arises.
(l) OWWA ID; The foregoing shall be in addition to the
(m) OFW ID; customer identification requirements under
(n) Seaman's Book; Rule 9.1.c of the Revised IRRs of R.A. No.
(o) Alien Certification of Registration/ 9160, as amended (Appendix S-7)
Immigrant Certificate of Registration; For purposes of this Section, financial
(p) Government office and GOCC ID transactions may include remittances,
(e.g., AFP, HDMF IDs); among others, as falling under the definition
(q) Certification from the NCWDP; of financial transaction. Under the Anti-
(r) DSWD certification; Money Laundering Act of 2001, as
(s) IBP ID; amended, a financial transaction is any act
(t) Company IDs issued by private establishing any right or obligation or giving
entities or institutions registered with or rise to any contractual or legal relationship
supervised or regulated either by the BSP, between the parties thereto. It also includes
SEC, or IC; and any movement of funds by any means with
(u) Passports issued by foreign a covered institution.
governments. (Circular No. 564 dated 03 April 2007 as amended by Circular
b. Students who are beneficiaries of Nos. 657 dated 16 June 2009 and 608 dated 20 May 2008)
remittances/fund transfers who are not yet
of voting age may be allowed to present the Secs. 4696S - 4698S (Reserved)
original and submit a clear copy of one (1)
valid photo-bearing school ID duly signed Sec. 4699S General Provision on Sanctions
by the principal or head of the school. Unless otherwise provided, any violation
c. NSSLAs shall require their clients to of the provisions of this Part shall be subject
submit a clear copy of one (1) valid ID on a to the sanctions provided in Sections 34,
one-time basis only, or at the 35, 36 and 37 of R. A. No. 7653, whenever
commencement of a business relationship. applicable.

Part VI - Page 9
APP. S-1
08.12.31
SAFEGUARDS IN BONDING OF NSSLA ACCOUNTABLE

OFFICERS AND EMPLOYEES
(Appendix to Sec. 4145S)
1. The Teller. He should not be depository bank will accept them and
allowed to accumulate more than a specific solely for deposit to its account. Thus, even
maximum amount to be determined by the in the remote possibility that someone
association but in no case to exceed presents a COCI stolen from the association
P10,000 in cash at any given time while in to one of its depository banks, it will not be
the performance of his duties. The accepted for encashment.
procedures in this regard are as follows: 2. The COCIs Clerk. In view of the
a. Cash. All cash in excess of the fact that all COCIs received by the tellers
maximum amount determined by the are stamped “non-negotiable” as detailed
association shall be turned over to the above, the COCIs clerk who records and
cashier. When deposits received by a teller processes these checks carries no
will increase his cash in excess of the accountabilities whatsoever. From the
maximum limit, the teller shall moment that a check is received up to the
immediately make a cash turn-over of, at moment that it is deposited to the account
least, the excess. Thus, although his of the association with one of its depository
transactions during the day may total more banks, that check is just a piece of paper to
than the maximum limit, the amount of be processed and recorded. It will only
money directly in his custody at any given reassume its negotiability upon its receipt
time will never exceed the limit. by the association’s depository bank. In
b. Checks and Other Cash Items cases, however, where checks are
(COCIs). All COCIs received by a teller received by mail, the COCIs clerk shall be
should be stamped as “non-negotiable.” charged with the duty of stamping the
The stamping should be made diagonally checks as “non-negotiable.”
on the face of the check. Thus, all checks 3. As an added precautionary
that are received by the tellers lose their measure, the manager/accountant/loan
further negotiability. There should, officer should check from time to time
however, be an agreement with the whether all COCIs received are stamped
association’s depository banks whereby “non-negotiable.” In the event that a COCI
they will accept for deposit only to the is not so stamped and it results in financial
account of the association the COCI loss on the part of the association, the
previously stamped by the tellers as “non- employee charged with the duty to stamp
negotiable.” Therefore, only the association and who failed to do so, shall be held
and nobody else can further negotiate these personally responsible, together with the
checks, and only the association’s manager/accountant/loan officer, for the loss.

Appendix S-I - Page 1
Manual of Regulations for Non-Bank Financial Institutions
LIST OF REPORTS REQUIRED FROM NON-STOCK SAVINGS AND LOAN ASSOCIATIONS
Submission Submission
Category Form No. MOR Ref. Report Title Frequency Deadline Procedure
A-2 BSP 7-26-02H 4162S Consolidated Statement of Condition Quarterly on or before the end of Original to SDC
(As the immediate following
amended month
by M-029
dated
09.24.07)
A-2 Unnumbered 4691S Report on Suspicious Transactions As 10th business day from Original and duplicate -
(Rev. May transaction date of transaction/ Anti-Money Laundering
2002, as occurs knowledge Council (AMLC)
amended
by Cir.
No. 612
dated
06.03.08)
A-2 Unnumbered 4691S Report on Covered Transactions -do- -do- -do-
A-3 BSP 7-26-03H 4162S Consolidated Statement of Income and Expenses Quarterly on or before the end of Original to SDC
(As the immediate following
amended month
by M-029
dated
09.24.07)
A-3 BSP 7-26-18.1H 4358S Copy of entry in NSSLA records of written approval of As 20th business day from Original - ISD I
Appendix S-2 - Page 1
majority of directors on credit accommodation to approved date of approval

directors and officers with accompanying Certification
on Loans Granted to Directors/Officers
S Regulations
09.12.31
APP. S-2
09.12.31
APP. S-2
S Regulations
A-3 Unnumbered 4162S Report on Borrowings of BSP Personnel Quarterly 15th banking days after Original to SDC
(CL-050 end of reference quarter
dated
10.04.07
and
CL-059
dated
11.28.07)
B 4172S Audited/Unaudited Financial Statements required in Annually 120th/60th day after Original - ISD I
Sec. 4181S accompanied by annual report 1 (to end of fiscal year as
members, if any) required in Sec. 4181S
4162S Biographical Data of Directors/Officers Annually2 January 31st and 15th Electronic mail or diskette
SES II - If submitted in diskette form - Notarized first page of and as business day from the form to SDC or if hard copy
Form 15 each of the directors'/officers' bio-data saved in diskette changes date of the meeting of original to appropriate
(NP08- and control prooflist occur the board of directors in department of the SES,
TB) As - If sent by electronic mail - Notarized first page of which the directors/ duplicate to SDC
amended Biographical Data or Notarized list of names of officers are elected or
by M-024 Directors/Officers whose Biographical Data were appointed
dated submitted thru electronic mail to be faxed to SDC (CL
07.31.08 dated 01.09.01)
B BSP 7-26-20H 4162S Report on Crimes/Losses As crime/ See Annex S-2-a for -do-
incident guidelines on reporting
occurs crimes and losses
B - 4306S.3 Notice/Application for Write-Off of Loans As write-off 30th day prior to the -do-
occurs intended date of write-off
1
Required of NSSLAs with total resources of P 10 million or more
2
Not required where no change occurs

B - 4162S Board Resolution on NSSLA's signatories to reports As 3rd day from date of Electronic mail or diskette
submitted to Bangko Sentral authorized resolution form to SDC or if hard copy
original to appropriate
department of the SES,
duplicate to SDC
Unnumbered 4691S Certification of compliance with existing anti-money Annually 20th business day after -do-
(no prescribed laundering regulations end of reference year
form)
B General Information Sheet Annually 30th day from date of Drop Box - SEC Central
annual stockholders' Receiving Section
meeting Original - SEC
Duplicate - BSP
B Form I M-031 Report on Electronic Money Transactions Quarterly 15 banking days after e-mail -
Schedule 1 dated Quarterly Statement of E-Money Transactions - end of refernce quarter sdcothers-emoney@
09.11.09 Volume and Amount of E-Money Transactions bsp.gov.ph
and Cir. Quarterly Statement of LIquidity Cover Hardcopy- SDC
No. 649 Schedules
dated 1 - E-Money Balances
03.09.09
S Regulations
09.12.31
APP. S-2
APP. S-2
08.12.31
Annex S-2-a
REPORTING GUIDELINES ON CRIMES/LOSSES
1. NSSLAs shall report on the a crime, when the amount involved per
following matters through the incident is P20,000 or more.
appropriate supervising and examining 2. The following guidelines shall be
department: observed in the preparation and
a. Crimes whether consummated, submission of the report.
frustrated or attempted against property/ a. The report shall be prepared in
facilities (such as robbery, theft, two (2) copies and shall be submitted
swindling or estafa, forgery and other within five (5) business days from
deceits) and other crimes involving loss/ knowledge of the crime or incident, the
destruction of property of the NSSLA original to the appropriate supervising
when the amount involved in each crime department and the duplicate to the BSP
is P20,000 or more. Security Coordinator, thru the Director,
Crimes involving NSSLA personnel, Security Investigation and Transport
regardless of whether or not such crimes Department.
involve the loss/destruction of property b. Where a thorough investigation
of the NSSLA, even if the amount and evaluation of facts is necessary to
involved is less than those above complete the report, an initial report
specified, shall likewise be reported to submitted within the five (5)-business day
the BSP. deadline may be accepted: Provided,
b. Incidents involving material loss, That a complete report is submitted not
destruction or damage to the institution’s later than fifteen (15) business days from
property/facilities, other than arising from termination of investigation.

APP. S-3
08.12.31
GUIDELINES ON PRESCRIBED REPORTS SIGNATORIES

AND SIGNATORY AUTHORIZATION
(Appendix to Subsec. 4162S.1)
Category A-1 reports shall be signed managers/officers in-charge. Likewise, the

by the chief executive officer, or in his signing authority in this category shall be
absence, by the executive vice-president, contained in a resolution approved by the
and by the comptroller, or in his absence, board of directors in the format prescribed
by the chief accountant, or by officers in Annex S-3-b.
holding equivalent positions. The
designated signatories in this category, Categories A-3 and B reports shall be
including their specimen signatures, shall signed by officers or their alternates, who
be contained in a resolution approved by shall be duly designated by the board of
the board of directors in the format directors. A copy of the board resolution,
prescribed in Annex S-3-a. with format as prescribed in Annex S-3-c.
Category A-2 reports of head offices Copies of the board resolutions on the
shall be signed by the president, executive report signatory designations shall be
vice-presidents, vice-presidents or officers submitted to the appropriate supervising
holding equivalent positions. Such reports and examining department of the BSP
of other offices/units (such as branches) within three (3) business days from the date
shall be signed by their respective of resolution.

APP. S-3
08.12.31
Annex S-3-a
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY A-1 REPORTS
Resolution No. _____
Whereas, it is required under Subsec. 4162S.1 that Category A-1 reports be signed by the
Chief Executive Officer, or in his absence, by the Executive Vice-President, and by the
Comptroller, or in his absence, by the Chief Accountant, or by officers holding equivalent positions.
Whereas, it is also required that aforesaid officers of the institution be authorized under
a resolution duly approved by the institution's Board of Directors;
Whereas, we, the members of the Board of Directors of (Name of Institution) ,
are conscious that, in designating the officials who would sign said Category A-1 reports,
we are actually empowering and authorizing said officers to represent and act for or in behalf
of the Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's Chief Executive
Officer, Executive Vice-President, Comptroller and Chief Accountant, as the case may be,
and, therefore, assumes responsibility for all the acts which may be performed by aforesaid
officers under their delegated authority;
Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby
resolved that:
1. Mr.____________ President _________________
Specimen Signature
or
Executive
2. Mr.____________ Vice-President _________________
Specimen Signature
and
3. Mr.____________ Comptroller _________________
Specimen Signature
or
Chief
4. Mr.____________ Accountant _________________
Specimen Signature
are hereby authorized to sign Category A-1 reports of (Name of Institution) .
Done in the City of ________________ Philippines, this ____day of , 20____.
CHAIRMAN OF THE BOARD
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
______________________
CORPORATE SECRETARY

APP. S-3
08.12.31
Annex S-3-b
Whereas, it is required under Subsec. 4162S.1 that Category A-2 reports of head offices
be signed by the President, Executive Vice-Presidents, Vice-Presidents or officers holding
equivalent positions, and that such reports of other offices be signed by the respective
managers/officers-in-charge;
Whereas, we, the members of the Board of Directors of (Name of Institution) , are
conscious that, in designating the officials who would sign said Category A-2 reports, we are
actually empowering and authorizing said officers to represent and act for or in behalf of the
Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's President (and/or
the Executive Vice-President, etc., as the case may be) and, therefore, assumes responsibility
for all the acts which may be performed by aforesaid officers under their delegated authority;
resolved that:
Name of Officer Specimen Signature Position Title Report No.
_____________ ________________ __________ _________
are hereby authorized to sign the Category A-2 reports of (Name of Institution) .
Done in the City of ________________ Philippines, this ____day of ____, 20____.
_________________________
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP. S-3
08.12.31
Annex S-3-c
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORIES

A-3 AND B REPORTS
Whereas, it is required under Subsec. 4162S.1 that Categories A-3 and B reports be
signed by officers or their alternates;
Whereas, we the members of the Board of Directors of (Name of Institution) , are
conscious that, in designating the officials who would sign said Categories A-3 and B reports,
we are actually empowering and authorizing said officers to represent and act for or in
behalf of the Board of Directors in particular and (Name of Institution) in general;
Whereas, this Board has full faith and confidence in the institution's authorized signatories
resolved that:
Name of Authorized Signatory/Alternate Specimen Signature Position Title Report
1. Authorized
(Alternate)
2. Authorized
(Alternate)
etc.
are hereby authorized to sign the Category A-2 reports of (Name of Institution) .
_________________________
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP S-4
08.12.31
FORMAT-DISCLOSURE STATEMENT OF LOAN/CREDIT TRANSACTION

(Business Name of Creditor)
DISCLOSURE STATEMENT OF LOAN/CREDIT TRANSACTION (SINGLE PAYMENT

OR INSTALLMENT PLAN)
(As required under R.A. 3765, Truth in Lending Act)
Name of Borrower
Address
1. Cash/Purchase Price ________________or Net Proceeds of Loan P

(Item Purchased)
2. LESS: Downpayment and/or Trade-in Value (Not applicable for loan

transaction)
3. Unpaid Balance of Cash/Purchase Price or Net Proceeds of Loan
4. Non-Finance Charges [Advanced by Seller/Creditor]:

a. Insurance Premium P
b. Taxes
c. Registration Fees
d. Documentary/Science Stamps
e. Notarial Fees
f. Others:
Total Non-Finance Charges
5. Amount to be Financed (Items 3 + 4) P

APP. S-4
08.12.31
6. Finance Charges1
a. Interest _______% p.a.
from ________ to ________
P
[ ] Simple [ ] Monthly
[ ] Compound [ ] Quarterly
[ ] Semi-Annual
[ ] Annual
b. Discounts
c. Service/Handling Charges
d. Collection Charges
e. Credit Investigation Fees
f. Appraisal Fees
g. Attorney’s/Legal Fees
h. Other charges incidental to the
extension of credit (specify):
_______________
_______________
_______________
Total Non-Finance Charges P
7. Percentage of Finance Charges to Total Amount Financed

(Computed in accordance with Subsec. 4307S.1) _______________%
8. Effective Interest Rate _______________%

(Method of computation attached)
9. Payment
a. Single Payment due ____________________ P
(Date)
b. Total Installment Payments
(Payable in __________ weeks/months @ P__________) P
1
Time price differential should be disclosed as a finance charge. If an itemization cannot be made, a lump-sum figure may
be reported under Other charges incidental to the extension of credit in Item 6h.

APP S-4
08.12.31
10. Additional charges in case certain stipulations in the contract are not met by the
debtor:
Nature Rate Amount
CERTIFIED CORRECT:
_______________________
(Signature of Creditor/
Authorized Representative
Over Printed Name)
_________________________
Position
I ACKNOWLEDGE RECEIPT OF A COPY OF THIS STATEMENT PRIOR TO THE

CONSUMMATION OF THE CREDIT TRANSACTION AND THAT I UNDERSTAND AND
FULLY AGREE TO THE TERMS AND CONDITIONS THEREOF.
(Signature of Buyer/Borrower
Over Printed Name)
DATE ____________________
NOTICE TO BUYER/BORROWER: YOU ARE ENTITLED TO A COPY

OF THIS PAPER WHICH YOU SHALL SIGN.

APP. S-5
08.12.31
ABSTRACT OF “TRUTH IN LENDING ACT” (Republic Act No. 3765)

Section 1. This Act shall be known as the (7) the percentage that the finance
“Truth in Lending Act.” charge bears to the total amount to be
financed expressed as a simple annual rate
Sec. 2. Declaration of Policy. It is hereby on the outstanding unpaid balance of the
declared to be the policy of the State to protect obligation.
its citizens from a lack of awareness of the
xxx xxx xxx
true cost of credit to the user by assuring a
full disclosure of such cost with a view of
Sec. 6. (a) Any creditor who in connection
preventing the uninformed use of credit to
with any credit transaction fails to disclose to
the detriment of the national economy.
any person any information in violation of
xxx xxx xxx this Act or any regulation issued thereunder
shall be liable to such person in the amount
Sec. 3. As used in this Act, the term - of P100 or in an amount equal to twice the
finance charge required by such creditor in
xxx xxx xxx
connection with such transaction, whichever
(3) “Finance charge” includes interest, fees, is the greater, except that such liability shall
service charges, discounts, and such other not exceed P2,000 on any credit transaction.
charges incident to the extension of credit
xxx xxx xxx
as the Board may by regulation prescribe.
(c) Any person who willfully violates
xxx xxx xxx
any provision of this Act or any regulation
issued thereunder shall be fined by not less
Sec. 4. Any creditor shall furnish to each
than P1,000 nor more than P5,000 or
person to whom credit is extended, prior
imprisonment for not less than 6 months
to the consummation of the transaction a
nor more than one year or both.
clear statement in writing setting forth, to
xxx xxx xxx
the extent applicable and in accordance
with rules and regulations prescribed by (d) Any final judgment hereafter
the Board, the following information: rendered in any criminal proceeding under
(1) the cash price or delivered price this Act to the effect that a defendant has
of the property or service to be acquired; willfully violated this Act shall be prima
(2) the amounts, if any, to be credited facie evidence against such defendant in
as down payment and/or trade-in; an action or proceeding brought by any
(3) the difference between the other party against such defendant under
amounts set forth under clauses (1) and (2); this Act as to all matters respecting which
(4) the charges, individually itemized, said judgment would be an estoppel as
which are paid or to be paid by such person between the parties thereto.
in connection with the transaction but which
are not incident to the extension of credit; Sec. 7. This Act shall become effective
(5) the total amount to be financed; upon approval.
(6) the finance charge expressed in
terms of pesos and centavos; and Approved, 22 June 1963.

APP. S-6
08.12.31
ANTI-MONEY LAUNDERING REGULATIONS

(Appendix to Section 4691S)
Banks, QBs, trust entities and all other (2) Verification of the authority and
institutions, and their subsidiaries and identification of the person purporting to
affiliates supervised or regulated by the BSP act on behalf of the client.
(covered institutions) shall strictly comply b. In case of doubt as to whether
with the provisions of Section 9 of R.A. their purported clients or customers are
No. 9160 and the following rules and acting for themselves or for another,
regulations on anti-money laundering. reasonable measures should be taken to
obtain the true identity of the persons on
1. Customer identification. Covered whose behalf an account is opened or a
institutions shall establish and record the transaction conducted.
true identity of its clients based on official c. The provisions of existing laws to
documents. They shall maintain a system the contrary notwithstanding, anonymous
of verifying the true identity of their accounts, accounts under fictitious names,
clients and, in case of corporate clients, and all other similar accounts shall be
require a system of verifying their legal absolutely prohibited. In case where
existence and organizational structure, as numbered accounts is allowed (i.e., peso
well as the authority and identification of and foreign currency non-checking
all persons purporting to act on their numbered accounts), covered institutions
behalf. should ensure that the client is identified
When establishing business relations in an official or other identifying
or conducting transactions (particularly documents.
opening of deposit accounts, accepting The BSP may conduct annual testing
deposit substitutes, entering into trust and solely limited to the determination of the
other fiduciary transactions, renting of existence and the identity of the owners
safety deposit boxes, performing of such accounts.
remittances and other large cash Covered institutions shall phase out
transactions) covered institutions should within a period of one (1) year from 2 April
take reasonable measures to establish and 2001 or upon their maturity, whichever is
record the true identity of their clients. earlier, anonymous accounts or accounts
Said client identification may be based on under fictitious names as well as
official or other reliable documents and numbered accounts being kept or
records. managed by them, which are not
a. In cases of corporate and other expressly allowed under existing law.
legal entities, the following measures d. The identity of existing clients or
should be taken, when necessary: beneficial owners of deposits and other
(1) Verification of the legal existence funds held or being managed by the
and structure of the client from the covered institutions should be renewed/
appropriate agency or from the client itself updated at least every other year.
or both, proof of incorporation, including e. All records of all transactions of
information concerning the customer’s covered institutions shall be maintained
name, legal form, address, directors, and safely stored for five (5) years from
principal officers and provisions regulating the dates of transactions. With respect to
the power behind the entity. closed accounts, the records on customer

APP. S-6
08.12.31
identification, account files and business 4. Required reporting of certain

correspondence, shall be preserved and transactions. If there is reasonable ground
safely stored for at least five (5) years from to believe that the funds are proceeds of
the dates when they were closed. an unlawful activity as defined under R.A.
Such records must be sufficient to permit No. 9160 and/or its IRRs, the transactions
reconstruction of individual transactions so involving such funds or attempts to transact
as to provide, if necessary, evidence for the same, should be reported to the Anti-
prosecution of criminal behaviour. Money Laundering Council (AMLC) in
f. Special attention should be given accordance with Rules 5.2 and 5.3 of the
to all complex, unusual large transactions, AMLA IRRs.
and all unusual patterns of transactions, a. Report on suspicious transactions.1
which have no apparent or visible lawful Banks shall report covered transactions and
purpose. The background and purpose of suspicious transactions, as defined in Rules
such transactions should, as far as possible, 5.2 and 5.3 of the AMLA IRRs, to the AMLC
be examined, the findings established in using the forms prescribed by the AMLC.
writing, and be available to help Reportable transactions shall include the
supervisors, auditors and law enforcement following:
agencies. (1) Outward remittances without
g. Covered institutions should not, or visible lawful purpose;
should at least avoid, transacting business (2) Inward remittances without visible
with criminals. Reasonable measures lawful purpose or without underlying trade
should be adopted to prevent the use of transactions;
their facilities for laundering of proceeds (3) Unusual purchases of foreign
of crimes and other illegal activities. exchange without visible lawful purpose;
(4) Unusual sales of foreign exchange
2. Programs against money whose sources are not satisfactorily
laundering. Programs against money established;
laundering should be developed. These (5) Complex, unusual large
programs, should include, as a minimum: transactions, and all unusual patterns of
a. The development of internal transactions, which have no apparent or
policies, procedures and controls, visible lawful purpose;
including the designation of compliance (6) Funds being managed or held as
officers at management level, and deposit substitutes if there is reasonable
adequate screening procedures to ensure ground to believe that the same are proceeds
high standards when hiring employees; of criminal and other illegal activities; and
b. An ongoing employee training (7) Suspicious Transaction Indicators
program; and or “Red Flags” as a Guide in the
c. An audit function to test the system. Submission to the AMLC of Reports of
Suspicious Transactions Relating To
3. Submission of plans of action Potential or Actual Financing of Terrorism.
Covered institutions shall submit a plan of (a) Wire transfers between accounts,
action on how to comply with the without visible economic or business
requirements of App. S-6 nos. 1, 2 and 4 purpose, especially if the wire transfers are
within thirty (30) business days from 31 effected through countries which are
July 2000 or from opening of the identified or connected with terrorist
institution. activities.
1
Amended by AMLC Resolution No. 292 dated 11.20.03 (Annex S-6-b)

APP. S-6
08.12.31
(b) Sources and/or beneficiaries of wire (o) Incongruities between apparent

transfers are citizens of countries which are sources and amount of funds raised or
identified or connected with terrorist moved by the NGO.
activities. (p) Any other transaction that is similar,
(c) Repetitive deposits or withdrawals identical or analogous to any of the
that cannot be explained or do not make foregoing.
sense. (8) All other suspicious transactions/
(d) Value of the transaction is over and activities which can be reported without
above what the client is capable of earning. violating any law.
(e) Client is conducting a transaction The report on suspicious transactions
that is out of the ordinary for his known shall provide the following minimum
business interest. information:
(f) Deposits being made by (a) Name or names of the parties
individuals who have no known involved.
connection or relation with the account (b) A brief description of the
holder. transaction or transactions.
(g) An individual receiving remittances, (c) Date or date the transaction(s)
but has no family members working in the occurred.
country from which the remittance is (d) Amount(s) involved in every
made. transaction.
(h) Client was reported and/or (e) Such other relevant information
mentioned in the news to be involved in which can be of help to the authorities
terrorist activities. should there be an investigation.
(i) Client is under investigation by law b. Exemption from Bank Secrecy
enforcement agencies for possible Law. When reporting covered transactions
involvement in terrorist activities. to the AMLC, covered institutions and their
(j) Transactions of individuals, officers, employees, representatives,
companies or non-governmental agents, advisors, consultants or associates
organizations (NGOs) that are affiliated or shall not be deemed to have violated R.A.
related to people suspected of being No. 1405, as amended; R.A. No. 6426, as
connected to a terrorist group or a group amended; R.A. No. 8791 and other similar
that advocates violent overthrow of a laws, but are prohibited from
government. communicating, directly or indirectly, in
(k) Transactions of individuals, any manner or by any means, to any person
companies or NGOs that are suspected as the fact that a covered transaction report
being used to pay or receive funds from was made, the contents thereof, or any
revolutionary taxes. other information in relation thereto. In
(l) The NGO does not appear to have case of violation thereof, the concerned
expenses normally related to relief or officer, employee, representative, agent,
humanitarian effort. advisor, consultant or associate of the
(m) The absence of contributions from covered institution, shall be criminally
donors located within the country of origin liable. However, no administrative,
of the NGO. criminal or civil proceedings, shall lie
(n) A mismatch between the pattern against any person for having made a
and size of financial transactions on the one covered transaction report in the regular
hand and the stated purpose and activity performance of his duties and in good faith,
of the NGO on the other. whether or not such reporting results in any

APP. S-6
08.12.31
criminal prosecution under R.A. No. 9160 concerned officer, employee, representative,
or any other Philippine law. agent, advisor, consultant or associate of the
c. Prohibition from disclosure of the covered institution, or media shall be held
covered transaction report. When criminally liable.
reporting covered transactions to the
AMLC, covered institutions and their 5. Certification of compliance with
officers, employees, representatives, anti-money laundering regulations.
agents, advisors, consultants or associates Covered institution shall submit annually
are prohibited from communicating, to the BSP thru the appropriate supervising
directly or indirectly, in any manner or by and examining department a certification
any means, to any person, entity, the (Annex S-6-a) signed by the President or
media, the fact that a covered transaction officer of equivalent rank and by their
report was made, the contents thereof, or Compliance Officer to the effect that they
any other information in relation thereto. have monitored compliance with existing
Neither may such reporting be published anti-money laundering regulations.
or aired in any manner or form by the mass The certification shall be submitted in
media, electronic mail, or other similar accordance with Appendix S-2 and shall
devices. In case of violation thereof, the be considered a Category A-2 report.

APP. S-6
08.12.31
Annex S-6-a
CERTIFICATION OF COMPLIANCE
WITH ANTI-MONEY LAUNDERING REGULATIONS
CERTIFICATION
Pursuant to the provisions of Section 2 of BSP Circular No. 279 dated 2 April 2001, we
hereby certify:
1. That we have monitored (Name of NSSLA)’s compliance with R.A. No. 9160
(Anti-Money Laundering Act of 2001) as well as with BSP Circular Nos. 251, 253,
259 and 302;
2. That the NSSLA is complying with the required customer identification, documentation
of all new clients, and continued monitoring of customer’s activities;
3. That the NSSLA is also complying with the requirement to record all transactions
and to maintain such records including the record of customer identification for at
least five (5) years;
4. That the NSSLA does not maintain anonymous or fictitious accounts; and
5. That we conduct regular anti-money laundering training sessions for all NSSLA
officers and selected staff members holding sensitive positions.
(Name of President or officer (Name of Compliance Officer)

of equivalent rank)
SUBSCRIBED AND SWORN to before me, _____ this ____ day of ____________,
affiant/s exhibiting to me their Residence Certificates as follows:
Community Date/Place
Name Tax Cert. No Issued
Doc. No. _________; Notary Public

Page No. _________;
Book No. _________;
Series of 20___

APP. S-6
08.12.31
Annex S-6-b
AMLC Resolution No. 292
RULES ON SUBMISSION OF COVERED TRANSACTION REPORTS AND

SUSPICIOUS TRANSACTION REPORTS BY COVERED INSTITUTIONS1
(Annex to Appendix S-6)
1. All covered institutions are required their respective transaction amounts, said
to file Suspicious Transaction Reports (STRs) covered institutions shall be required to file
on transactions involving all kinds of CTRs on its clients whose transactions
monetary instruments or property. exceed P500,000 and are included in the
2. Banks shall file covered transaction bulk transactions.
reports (CTRs) on transactions involving all 5. With respect to insurance
kinds of monetary instruments or property, companies, when the total amount of the
i.e., in cash or non-cash, whether in premiums for the entire year, regardless
domestic or foreign currency. of the mode of payment (monthly,
3. Covered institutions, other than quarterly, semi-annually or annually),
banks, shall file CTRs on transactions in exceeds P500,000, such amount shall be
cash or foreign currency or other monetary reported as a covered transaction, even if
instruments (other than checks) or the amounts of the amortizations are less
properties. Due to the nature of the than the threshold amount. The CTR shall
transactions in the stock exchange, only the be filed upon payment of the first premium
brokers-dealers shall be required to file amount, regardless of the mode of
CTRs and STRs. The PSE, PCD, SCCP and payment. Under this rule, the insurance
transfer agents are exempt from filing CTRs. company shall file the CTR only once every
They, are however, required to file STRs year until the policy matures or rescinded,
when the transactions that pass through whichever comes first.
them are deemed to be suspicious. 6. The submission of CTRs is deferred
4. Where the covered institution until the AMLC directs otherwise.
engages in bulk transactions with a bank, Submission of STRs, however, are not
i.e., deposits of premium payments in bulk deferred and covered institutions are
or settlements of trade, and the bulk mandated to submit such STRs when the
transactions do not distinguish clients and circumstances so require.
1
a. The Anti-Money Laundering Council (AMLC), in the exercise of its authority under Sections 7(1) and 9 of Republic Act
No. 9160, otherwise known as the “Anti-Money Laundering Act of 2001”, as amended, and its Revised Implementing Rules and
Regulations, resolved to:
(1) Defer reporting by covered institutions to AMLC of the following “non-cash, no/low risk covered transactions:
· Transactions between banks and the BSP;
· Transactions between banks operating in the Philippines;
· Internal operating expenses of the banks;
· Transactions between banks and government agencies;
· Transactions involving transfer of funds from one deposit account to another deposit account of the same person within
the same bank;
· Roll-overs of placements of time deposits; and
· Loan interest/principal payment debited against borrower’s deposit account maintained with the lending bank.
(2) Request the BSP-supervised institutions, through the Association of Bank Compliance Officers (ABCOMP), to determine
and report to AMLC the specific transactions falling within the purview of the aforesaid BSP-identified categories on “non-cash,
no/low risk” covered transactions.
b. All covered institutions should:
(1) Submit corresponding electronic copy versions, in the required format, of those STRs previously submitted in hard copy
or the hard copy version of those submitted only in electronic form, as the case may be, retroactive to 05 January 2004; and
(2) Re-submit in required electronic form, those CTRs that have been submitted previously in hard copy or in diskette not
in the required format, retroactive to 23 March 2003.

APP. S-7
08.12.31
REVISED IMPLEMENTING RULES AND REGULATIONS

R.A. NO. 9160, AS AMENDED BY R.A. NO. 9194
RULE 1 savings and loan associations, pawnshops,

TITLE and all other institutions, including their
subsidiaries and affiliates supervised and/
Rule 1.a. Title. - These Rules shall be or regulated by the Bangko Sentral ng
known and cited as the “Revised Rules Pilipinas (BSP).
and Regulations Implementing (a) A subsidiary means an entity more
R.A. No. 9160”, (the Anti-Money than fifty percent (50%) of the outstanding
Laundering Act of 2001 [AMLA]), as voting stock of which is owned by a bank,
amended by R.A. No. 9194. quasi-bank, trust entity or any other
institution supervised or regulated by the
Rule 1.b. Purpose. - These Rules are BSP.
promulgated to prescribe the procedures (b) An affiliate means an entity at
and guidelines for the implementation of least twenty percent (20%) but not
the AMLA, as amended by R.A. No. 9194. exceeding fifty percent (50%) of the
voting stock of which is owned by a
RULE 2 bank, quasi-bank, trust entity, or any
DECLARATION OF POLICY other institution supervised and/or
regulated by the BSP.
Rule 2. Declaration of Policy. - It is
hereby declared the policy of the State Rule 3.a.2. Insurance companies,
to protect the integrity and confidentiality insurance agents, insurance brokers,
of bank accounts and to ensure that the professional reinsurers, reinsurance
Philippines shall not be used as a money- brokers, holding companies, holding
laundering site for the proceeds of any company systems and all other persons
unlawful activity. Consistent with its and entities supervised and/or regulated by
foreign policy, the Philippines shall the Insurance Commission (IC).
extend cooperation in transnational (a) An insurance company includes
investigations and prosecutions of those entities authorized to transact
persons involved in money laundering insurance business in the Philippines,
activities wherever committed. whether life or non-life and whether
domestic, domestically incorporated or
RULE 3 branch of a foreign entity. A contract of
DEFINITIONS insurance is an agreement whereby one
undertakes for a consideration to
Rule 3. Definitions. – For purposes of this indemnify another against loss, damage
Act, the following terms are hereby defined or liability arising from an unknown or
as follows: contingent event. Transacting insurance
business includes making or proposing
Rule 3.a. Covered Institution refers to: to make, as insurer, any insurance
contract, or as surety, any contract of
Rule 3.a.1. Banks, offshore banking suretyship as a vocation and not as
units, quasi-banks, trust entities, non-stock merely incidental to any other legitimate

APP. S-7
08.12.31
business or activity of the surety, doing (f) A holding company includes any
any kind of business specifically person who directly or indirectly controls
recognized as constituting the doing of any authorized insurer. A holding company
an insurance business within the system includes a holding company
meaning of Presidential Decree (P.D.) together with its controlled insurers and
No. 612, as amended, including a controlled persons.
reinsurance business and doing or
proposing to do any business in Rule 3.a.3. (i) Securities dealers,
substance equivalent to any of the brokers, salesmen, associated persons of
foregoing in a manner designed to evade brokers or dealers, investment houses,
the provisions of P.D. No. 612, as investment agents and consultants, trading
amended. advisors, and other entities managing
(b) An insurance agent includes securities or rendering similar services, (ii)
any person who solicits or obtains mutual funds or open-end investment
insurance on behalf of any insurance companies, close-end investment
company or transmits for a person companies, common trust funds, pre-need
other than himself an application for a companies or issuers and other similar
policy or contract of insurance to or entities; (iii) foreign exchange corporations,
from such company or offers or money changers, money payment,
assumes to act in the negotiation of remittance, and transfer companies and
such insurance. other similar entities, and (iv) other entities
(c) An insurance broker includes any administering or otherwise dealing in
person who acts or aids in any manner in currency, commodities or financial
soliciting, negotiating or procuring the derivatives based thereon, valuable
making of any insurance contract or in objects, cash substitutes and other similar
placing risk or taking out insurance, on monetary instruments or property
behalf of an insured other than himself. supervised and/or regulated by the
(d) A professional reinsurer includes Securities and Exchange Commission
any person, partnership, association or (SEC).
corporation that transacts solely and (a) A securities broker includes a
exclusively reinsurance business in the person engaged in the business of buying
Philippines, whether domestic, and selling securities for the account of
domestically incorporated or a branch of others.
a foreign entity. A contract of reinsurance (b) A securities dealer includes any
is one by which an insurer procures a person who buys and sells securities for
third person to insure him against loss or his/her account in the ordinary course of
liability by reason of such original business.
insurance. (c) A securities salesman includes a
(e) A reinsurance broker includes natural person, employed as such or as an
any person who, not being a duly agent, by a dealer, issuer or broker to buy
authorized agent, employee or officer of and sell securities.
an insurer in which any reinsurance is (d) An associated person of a broker
effected, acts or aids in any manner in or dealer includes an employee thereof
negotiating contracts of reinsurance or who directly exercises control or
placing risks of effecting reinsurance, for supervisory authority, but does not include
any insurance company authorized to do a salesman, or an agent or a person whose
business in the Philippines. functions are solely clerical or ministerial.

APP. S-7
08.12.31
(e) An investment house includes an or on an isolated basis, in the sale and

enterprise which engages or purports to purchase of foreign currency notes and such
engage, whether regularly or on an other foreign-currency denominated
isolated basis, in the underwriting of non-bank deposit transactions as may be
securities of another person or enterprise, authorized under its articles of
including securities of the Government and incorporation.
its instrumentalities. (k) Investment Advisor/Agent/
(f) A mutual fund or an open-end Consultant shall refer to any person:
investment company includes an (1) who for an advisory fee is
investment company which is offering engaged in the business of advising
for sale or has outstanding, any others, either directly or through
redeemable security of which it is the circulars, reports, publications or
issuer. writings, as to the value of any security
(g) A closed-end investment company and as to the advisability of trading in any
includes an investment company other security; or
than open-end investment company. (2) who for compensation and as part
(h) A common trust fund includes a of a regular business, issues or
fund maintained by an entity authorized promulgates, analyzes reports concerning
to perform trust functions under a written the capital market, except:
and formally established plan, (a) any bank or trust company;
exclusively for the collective investment (b) any journalist, reporter, columnist,
and reinvestment of certain money editor, lawyer, accountant,
representing participation in the plan teacher;
received by it in its capacity as trustee, (c) the publisher of any bonafide
for the purpose of administration, holding newspaper, news, business or
or management of such funds and/or financial publication of general
properties for the use, benefit or and regular circulation, including
advantage of the trustor or of others their employees;
known as beneficiaries. (d) any contract market;
(i) A pre-need company or issuer (e) such other person not within the
includes any corporation supervised and/ intent of this definition, provided
or regulated by the SEC and is authorized that the furnishing of such service
or licensed to sell or offer for sale pre-need by the foregoing persons is solely
plans. Pre-need plans are contracts which incidental to the conduct of their
provide for the performance of future business or profession.
service(s) or payment of future monetary (3) any person who undertakes the
consideration at the time of actual need, management of portfolio securities of
payable either in cash or installment by investment companies, including the
the planholder at prices stated in the arrangement of purchases, sales or
contract with or without interest or exchanges of securities.
insurance coverage and includes life, (l) A moneychanger includes any
pension, education, internment and other person in the business of buying or selling
plans, which the Commission may, from foreign currency notes.
time to time, approve. (m) A money payment, remittance and
(j) A foreign exchange corporation transfer company includes any person offering
includes any enterprise which engages to pay, remit or transfer or transmit money
or purports to engage, whether regularly on behalf of any person to another person.

APP. S-7
08.12.31
(n) “Customer” refers to any person or laundering activity or offense under this act
entity that keeps an account, or otherwise that is about to be, is being or has been
transacts business, with a covered committed; or
institution and any person or entity on (7) Any transaction that is similar,
whose behalf an account is maintained or analogous or identical to any of the
a transaction is conducted, as well as the foregoing.
beneficiary of said transactions. A
customer also includes the beneficiary of Rule 3.c. Monetary Instrument refers to:
a trust, an investment fund, a pension fund (1) Coins or currency of legal tender
or a company or person whose assets are of the Philippines, or of any other country;
managed by an asset manager, or a grantor (2) Drafts, checks and notes;
of a trust. It includes any insurance policy (3) Securities or negotiable
holder, whether actual or prospective. instruments, bonds, commercial papers,
(o) “Property” includes any thing or deposit certificates, trust certificates,
item of value, real or personal, tangible or custodial receipts or deposit substitute
intangible, or any interest therein or any instruments, trading orders, transaction
benefit, privilege, claim or right with respect tickets and confirmations of sale or
thereto. investments and money market
instruments;
Rule 3.b. Covered Transaction is a (4) Contracts or policies of
transaction in cash or other equivalent insurance, life or non-life, and contracts
monetary instrument involving a total of suretyship; and
amount in excess of Php500,000.00 within (5) Other similar instruments where
one (1) banking day. title thereto passes to another by
endorsement, assignment or delivery.
Rule 3.b.1.Suspicious transactions are
transactions, regardless of amount, where any Rule 3.d. Offender refers to any person
of the following circumstances exists: who commits a money laundering
(1) There is no underlying legal or offense.
trade obligation, purpose or economic
justification; Rule 3.e. Person refers to any natural or
(2) The client is not properly identified; juridical person.
(3) The amount involved is not
commensurate with the business or Rule 3.f. Proceeds refers to an amount
financial capacity of the client; derived or realized from an unlawful
(4) Taking into account all known activity. It includes:
circumstances, it may be perceived that (1) All material results, profits, effects
the client’s transaction is structured in and any amount realized from any
order to avoid being the subject of unlawful activity;
reporting requirements under the act; (2) All monetary, financial or
(5) Any circumstance relating to the economic means, devices, documents,
transaction which is observed to deviate papers or things used in or having any
from the profile of the client and/or the relation to any unlawful activity; and
client’s past transactions with the covered (3) All moneys, expenditures,
institution; payments, disbursements, costs, outlays,
(6) The transaction is in any way related charges, accounts, refunds and other
to an unlawful activity or any money similar items for the financing,

APP. S-7
08.12.31
operations, and maintenance of any (12)Cultivation of plants which are

unlawful activity. sources of prohibited drugs
(13)Culture of plants which are sources
Rule 3.g. Supervising Authority refers to of prohibited drugs
the BSP, the SEC and the IC. Where the
BSP, SEC or IC supervision applies only to (C) Section 3 paragraphs b, c, e, g, h
the registration of the covered institution, and i of R.A. No. 3019, as amended,
the BSP, the SEC or the IC, within the limits otherwise known as the Anti-Graft and
of the AMLA, shall have the authority to Corrupt Practices Act;
require and ask assistance from the (14)Directly or indirectly requesting or
government agency having regulatory receiving any gift, present, share,
power and/or licensing authority over said percentage or benefit for himself or for any
covered institution for the implementation other person in connection with any
and enforcement of the AMLA and these contract or transaction between the
Rules. Government and any party, wherein the
public officer in his official capacity has to
Rule 3.h. Transaction refers to any act intervene under the law;
establishing any right or obligation or giving (15) Directly or indirectly requesting
rise to any contractual or legal relationship or receiving any gift, present or other
between the parties thereto. It also includes pecuniary or material benefit, for himself
any movement of funds by any means with or for another, from any person for whom
a covered institution. the public officer, in any manner or
capacity, has secured or obtained, or will
Rule 3.i. Unlawful activity refers to any act secure or obtain, any government permit
or omission or series or combination thereof or license, in consideration for the help
involving or having relation, to the following: given or to be given, without prejudice to
Section 13 of R.A. No. 3019;
(A) Kidnapping for ransom under Article (16) Causing any undue injury to any
267 of Act No. 3815, otherwise known as party, including the government, or giving
the Revised Penal Code, as amended; any private party any unwarranted benefits,
(1) Kidnapping for ransom advantage or preference in the discharge
of his official, administrative or judicial
(B) Sections 4, 5, 6, 8, 9, 10, 12, 13, functions through manifest partiality,
14, 15 and 16 of R.A. No. 9165, otherwise evident bad faith or gross inexcusable
known as the Comprehensive Dangerous negligence;
Drugs Act of 2002; (17) Entering, on behalf of the
(2) Importation of prohibited drugs; government, into any contract or transaction
(3) Sale of prohibited drugs; manifestly and grossly disadvantageous to
(4) Administration of prohibited drugs; the same, whether or not the public officer
(5) Delivery of prohibited drugs profited or will profit thereby;
(6) Distribution of prohibited drugs (18) Directly or indirectly having
(7) Transportation of prohibited drugs financial or pecuniary interest in any
(8) Maintenance of a Den, Dive or business contract or transaction in
Resort for prohibited users connection with which he intervenes or
(9) Manufacture of prohibited drugs takes part in his official capacity, or in
(10)Possession of prohibited drugs which he is prohibited by the Constitution
(11)Use of prohibited drugs or by any law from having any interest;

APP. S-7
08.12.31
(19) Directly or indirectly becoming (E) Robbery and extortion under

interested, for personal gain, or having Articles 294, 295, 296, 299, 300, 301 and
material interest in any transaction or act 302 of the Revised Penal Code, as
requiring the approval of a board, panel or amended;
group of which he is a member, and which (26) Robbery with violence or
exercise of discretion in such approval, intimidation of persons;
even if he votes against the same or he (27) Robbery with physical injuries,
does not participate in the action of the committed in an uninhabited place and by
board, committee, panel or group. a band, or with use of firearms on a street,
road or alley;
(D) Plunder under R.A. No. 7080, as (28) Robbery in an uninhabited house
amended; or public building or edifice devoted to
(20) Plunder through misappropriation, worship.
conversion, misuse or malversation of
public funds or raids upon the public (F) Jueteng and Masiao punished as
treasury; illegal gambling under P.D. No. 1602;
(21) Plunder by receiving, directly or (29) Jueteng;
indirectly, any commission, gift, share, (30) Masiao.
percentage, kickbacks or any other form of
pecuniary benefit from any person and/or (G) Piracy on the high seas under the
entity in connection with any government Revised Penal Code, as amended and P.D.
contract or project or by reason of the office No. 532;
or position of the public officer concerned; (31) Piracy on the high seas;
(22) Plunder by the illegal or fraudulent (32) Piracy in inland Philippine waters;
conveyance or disposition of assets (33) Aiding and abetting pirates and
belonging to the National Government or brigands.
any of its subdivisions, agencies,
instrumentalities or government-owned or (H) Qualified theft under Article 310
controlled corporations or their subsidiaries; of the Revised Penal Code, as amended;
(23) Plunder by obtaining, receiving or (34) Qualified theft.
accepting, directly or indirectly, any shares
of stock, equity or any other form of interest (I) Swindling under Article 315 of the
or participation including the promise of Revised Penal Code, as amended;
future employment in any business (35) Estafa with unfaithfulness or abuse
enterprise or undertaking; of confidence by altering the substance,
(24) Plunder by establishing agricultural, quality or quantity of anything of value
industrial or commercial monopolies or other which the offender shall deliver by virtue
combinations and/or implementation of of an obligation to do so, even though such
decrees and orders intended to benefit obligation be based on an immoral or illegal
particular persons or special interests; consideration;
(25) Plunder by taking undue (36) Estafa with unfaithfulness or abuse
advantage of official position, authority, of confidence by misappropriating or
relationship, connection or influence to converting, to the prejudice of another,
unjustly enrich himself or themselves at the money, goods or any other personal
expense and to the damage and prejudice property received by the offender in trust or
of the Filipino people and the republic of on commission, or for administration, or
the Philippines. under any other obligation involving the

APP. S-7
08.12.31
duty to make delivery or to return the same, (49) Receiving smuggled article after
even though such obligation be totally or fraudulent importation;
partially guaranteed by a bond; or by (50) Concealing smuggled article after
denying having received such money, fraudulent importation;
goods, or other property; (51) Buying smuggled article after
(37) Estafa with unfaithfulness or fraudulent importation;
abuse of confidence by taking undue (52) Selling smuggled article after
advantage of the signature of the offended fraudulent importation;
party in blank, and by writing any (53) Transportation of smuggled article
document above such signature in blank, after fraudulent importation;
to the prejudice of the offended party or (54) Fraudulent practices against
any third person; customs revenue.
(38) Estafa by using a fictitious name,
or falsely pretending to possess power, (K) Violations under R.A. No. 8792,
influence, qualifications, property, credit, otherwise known as the Electronic
agency, business or imaginary Commerce Act of 2000;
transactions, or by means of other similar K.1. Hacking or cracking, which refers to:
deceits; (55) unauthorized access into or
(39) Estafa by altering the quality, interference in a computer system/server or
fineness or weight of anything pertaining information and communication system; or
to his art or business; (56) any access in order to corrupt, alter,
(40) Estafa by pretending to have steal, or destroy using a computer or other
bribed any government employee; similar information and communication
(41) Estafa by postdating a check, or devices, without the knowledge and consent
issuing a check in payment of an obligation of the owner of the computer or information
when the offender has no funds in the bank, and communications system, including
or his funds deposited therein were not (57) the introduction of computer
sufficient to cover the amount of the check; viruses and the like, resulting in the
(42) Estafa by inducing another, by corruption, destruction, alteration, theft or
means of deceit, to sign any document; loss of electronic data messages or
(43) Estafa by resorting to some electronic document;
fraudulent practice to ensure success in a
gambling game; K.2. Piracy, which refers to:
(44) Estafa by removing, concealing or (58) the unauthorized copying,
destroying, in whole or in part, any court reproduction,
record, office files, document or any other (59) the unauthorized dissemination,
papers. distribution,
(60) the unauthorized importation,
(J) Smuggling under R.A. Nos. 455 (61) the unauthorized use, removal,
and 1937; alteration, substitution, modification,
(45) Fraudulent importation of any vehicle; (62) the unauthorized storage,
(46) Fraudulent exportation of any uploading, downloading, communication,
vehicle; making available to the public, or
(47) Assisting in any fraudulent (63) the unauthorized broadcasting, of
importation; protected material, electronic signature or
(48) Assisting in any fraudulent copyrighted works including legally
exportation; protected sound recordings or phonograms

APP. S-7
08.12.31
or information material on protected works, (80) Violation of price tag

through the use of telecommunication requirements;
networks, such as, but not limited to, the (81) Mislabeling consumer products;
internet, in a manner that infringes (82) False, deceptive or misleading
intellectual property rights; advertisements;
(83) Violation of required disclosures
K.3. Violations of the Consumer Act or on consumer loans;
R.A. No. 7394 and other relevant or (84) Other violations of the provisions
pertinent laws through transactions of the E-Commerce Act;
covered by or using electronic data
messages or electronic documents: (L) Hijacking and other violations
(64) Sale of any consumer product that under R.A. No. 6235; destructive arson
is not in conformity with standards under and murder, as defined under the Revised
the Consumer Act; Penal Code, as amended, including those
(65) Sale of any product that has been perpetrated by terrorists against non-
banned by a rule under the Consumer Act; combatant persons and similar targets;
(66) Sale of any adulterated or mislabeled (85) Hijacking;
product using electronic documents; (86) Destructive arson;
(67) Adulteration or misbranding of any (87) Murder;
consumer product; (88) Hijacking, destructive arson or
(68) Forging, counterfeiting or murder perpetrated by terrorists against
simulating any mark, stamp, tag, label or non-combatant persons and similar targets;
other identification device;
(69) Revealing trade secrets; (M) Fraudulent practices and other
(70) Alteration or removal of the violations under R.A. No. 8799, otherwise
labeling of any drug or device held for sale; known as the Securities Regulation Code
(71) Sale of any drug or device not of 2000;
registered in accordance with the (89) Sale, offer or distribution of
provisions of the E-Commerce Act; securities within the Philippines without a
(72) Sale of any drug or device by any registration statement duly filed with and
person not licensed in accordance with the approved by the SEC;
provisions of the E-Commerce Act; (90) Sale or offer to the public of any
(73) Sale of any drug or device beyond pre-need plan not in accordance with the
its expiration date; rules and regulations which the SEC shall
(74) Introduction into commerce of prescribe;
any mislabeled or banned hazardous (91) Violation of reportorial
substance; requirements imposed upon issuers of
(75) Alteration or removal of the securities;
labeling of a hazardous substance; (92) Manipulation of security prices by
(76) Deceptive sales acts and practices; creating a false or misleading appearance of
(77) Unfair or unconscionable sales active trading in any listed security traded in
acts and practices; an Exchange or any other trading market;
(78) Fraudulent practices relative to (93) Manipulation of security prices by
weights and measures; effecting, alone or with others, a series of
(79) False representations in transactions in securities that raises their
advertisements as the existence of a prices to induce the purchase of a security,
warranty or guarantee; whether of the same or different class, of

APP. S-7
08.12.31
the same issuer or of a controlling, controlled (100) Execution of short sales or stop-
or commonly controlled company by loss order in connection with the purchase
others; or sale of any security not in accordance
(94) Manipulation of security prices by with such rules and regulations as the SEC
effecting, alone or with others, a series of may prescribe as necessary and appropriate
transactions in securities that depresses in the public interest or the protection of
their price to induce the sale of a security, the investors;
whether of the same or different class, of (101) Employment of any device,
the same issuer or of a controlling, scheme or artifice to defraud in
controlled or commonly controlled connection with the purchase and sale of
company by others; any securities;
(95) Manipulation of security prices by (102) Obtaining money or property in
effecting, alone or with others, a series of connection with the purchase and sale of
transactions in securities that creates active any security by means of any untrue
trading to induce such a purchase or sale statement of a material fact or any omission
though manipulative devices such as marking to state a material fact necessary in order
the close, painting the tape, squeezing the to make the statements made, in the light
float, hype and dump, boiler room of the circumstances under which they
operations and such other similar devices; were made, not misleading;
(96) Manipulation of security prices by (103) Engaging in any act, transaction,
circulating or disseminating information that practice or course of action in the sale and
the price of any security listed in an purchase of any security which operates
Exchange will or is likely to rise or fall or would operate as a fraud or deceit upon
because of manipulative market operations any person;
of any one or more persons conducted for (104) Insider trading;
the purpose of raising or depressing the (105) Engaging in the business of buying
price of the security for the purpose of and selling securities in the Philippines as a
inducing the purchase or sale of such broker or dealer, or acting as a salesman, or
security; an associated person of any broker or dealer
(97) Manipulation of security prices by without any registration from the
making false or misleading statements with Commission;
respect to any material fact, which he knew (106) Employment by a broker or
or had reasonable ground to believe was dealer of any salesman or associated
so false and misleading, for the purpose of person or by an issuer of any salesman,
inducing the purchase or sale of any security not registered with the SEC;
listed or traded in an Exchange; (107) Effecting any transaction in any
(98) Manipulation of security prices by security, or reporting such transaction, in
effecting, alone or with others, any series an Exchange or using the facility of an
of transactions for the purchase and/or sale Exchange which is not registered with the
of any security traded in an Exchange for SEC;
the purpose of pegging, fixing or stabilizing (108) Making use of the facility of a
the price of such security, unless otherwise clearing agency which is not registered
allowed by the Securities Regulation Code with the SEC;
or by the rules of the SEC; (109) Violations of margin requirements;
(99) Sale or purchase of any security (110) Violations on the restrictions on
using any manipulative deceptive device or borrowings by members, brokers and
contrivance; dealers;

APP. S-7
08.12.31
(111) Aiding and Abetting in any money laundering referred to in paragraph

violations of the Securities Regulation (a) above.
Code; (c) Any person knowing that any
(112) Hindering, obstructing or monetary instrument or property is
delaying the filing of any document required under this Act to be disclosed and
required under the Securities Regulation filed with the Anti-Money Laundering
Code or the rules and regulations of the Council (AMLC), fails to do so.
SEC;
(113) Violations of any of the provisions RULE 5
of the implementing rules and regulations JURISDICTION OF MONEY
of the SEC; LAUNDERING CASES AND MONEY
(114) Any other violations of any of the LAUNDERING INVESTIGATION
provisions of the Securities Regulation Code. PROCEDURES
(N) Felonies or offenses of a similar
nature to the afore-mentioned unlawful Rule 5.1. Jurisdiction of Money
activities that are punishable under the penal Laundering Cases. - The Regional Trial
laws of other countries. Courts shall have the jurisdiction to try all
In determining whether or not a felony cases on money laundering. Those
or offense punishable under the penal laws committed by public officers and private
of other countries, is “of a similar nature”, persons who are in conspiracy with such
as to constitute the same as an unlawful public officers shall be under the
activity under the AMLA, the nomenclature jurisdiction of the Sandiganbayan.
of said felony or offense need not be
identical to any of the predicate crimes Rule 5.2. Investigation of Money
listed under Rule 3.i. Laundering Offenses. - The AMLC shall
investigate:
RULE 4 (a) Suspicious transactions;
MONEY LAUNDERING OFFENSE (b) Covered transactions deemed sus-
picious after an investigation conducted
Rule 4.1. Money Laundering Offense. - by the AMLC;
Money laundering is a crime whereby the (c) Money laundering activities; and
proceeds of an unlawful activity as herein (d) Other violations of this act.
defined are transacted, thereby making
them appear to have originated from Rule 5.3. Attempts at Transactions. -
legitimate sources. It is committed by the Section 4 (a) and (b) of the AMLA provides
following: that any person who attempts to transact any
(a) Any person knowing that any monetary instrument or property
monetary instrument or property represents, representing, involving or relating to the
involves, or relates to, the proceeds of any proceeds of any unlawful activity shall be
unlawful activity, transacts or attempts to prosecuted for a money laundering offense.
transact said monetary instrument or Accordingly, the reports required under
property. Rule 9.3 (a) and (b) of these Rules shall
(b) Any person knowing that any include those pertaining to any attempt by
monetary instrument or property involves any person to transact any monetary
the proceeds of any unlawful activity, instrument or property representing,
performs or fails to perform any act as a involving or relating to the proceeds of any
result of which he facilitates the offense of unlawful activity.

APP. S-7
08.12.31
RULE 6 represents, involves, or relates to the

PROSECUTION OF MONEY proceeds of an unlawful activity or that any
LAUNDERING monetary instrument or property is required
under the AMLA to be disclosed and filed
Rule 6.1. Prosecution of Money Laundering with the AMLC, may be established by direct
(a) Any person may be charged with evidence or inferred from the attendant
and convicted of both the offense of money circumstances.
laundering and the unlawful activity as
defined under Rule 3 (i) of the AMLA. Rule 6.6. All the elements of every money
(b) Any proceeding relating to the laundering offense under Section 4 of the
unlawful activity shall be given precedence AMLA must be proved by evidence
over the prosecution of any offense or beyond reasonable doubt, including the
violation under the AMLA without prejudice element of knowledge that the monetary
to the application Ex-Parte by the AMLC instrument or property represents, involves
to the Court of Appeals for a Freeze Order or relates to the proceeds of any unlawful
with respect to the monetary instrument activity.
or property involved therein and resort to other
remedies provided under the AMLA, the rules Rule 6.7. No element of the unlawful
of court and other pertinent laws and rules. activity, however, including the identity
of the perpetrators and the details of the
Rule 6.2. When the AMLC finds, after actual commission of the unlawful
investigation, that there is probable cause activity need be established by proof
to charge any person with a money beyond reasonable doubt. The elements
laundering offense under Section 4 of the of the offense of money laundering are
AMLA, it shall cause a complaint to be separate and distinct from the elements
filed, pursuant to Section 7 (4) of the AMLA, of the felony or offense constituting the
before the Department of Justice or the unlawful activity.
Ombudsman, which shall then conduct
the preliminary investigation of the case. RULE 7
CREATION OF ANTI-MONEY
Rule 6.3. After due notice and hearing in LAUNDERING COUNCIL (AMLC)
the preliminary investigation proceedings
before the Department of Justice, or the Rule 7.1.a. Composition. - The Anti-
Ombudsman, as the case may be, and the Money Laundering Council is hereby
latter should find probable cause of a created and shall be composed of the
money laundering offense, it shall file the Governor of the BSP as Chairman, the
necessary information before the Regional Commissioner of the Insurance
Trial Courts or the Sandiganbayan. Commission and the Chairman of the
SEC as members.
Rule 6.4. Trial for the money laundering
offense shall proceed in accordance with Rule 7.1.b. Unanimous Decision. - The
the Code of Criminal Procedure or the Rules AMLC shall act unanimously in discharging
of Procedure of the Sandiganbayan, as the its functions as defined in the AMLA and in
case may be. these Rules. However, in the case of the
incapacity, absence or disability of any
Rule 6.5. Knowledge of the offender that member to discharge his functions, the
any monetary instrument or property officer duly designated or authorized to

APP. S-7
08.12.31
discharge the functions of the Governor of AMLA to establish an information sharing

the BSP, the Chairman of the SEC or the system that will enable the AMLC to store,
Insurance Commissioner, as the case may track and analyze money laundering
be, shall act in his stead in the AMLC. transactions for the resolute prevention,
detection and investigation of money
Rule 7.2. Functions. - The functions of laundering offenses. For this purpose,
the AMLC are defined hereunder: the AMLC shall install a computerized
(1) to require and receive covered or system that will be used in the creation
suspicious transaction reports from and maintenance of an information
covered institutions; database;
(2) to issue orders addressed to the (8) to receive and take action in respect
appropriate Supervising Authority or the of any request from foreign states for
covered institution to determine the true assistance in their own anti-money
identity of the owner of any monetary laundering operations as provided in the
instrument or property subject of a covered AMLA. The AMLC is authorized under
or suspicious transaction report, or request Sections 7 (8) and 13 (b) and (d) of the AMLA
for assistance from a foreign State, or to receive and take action in respect of
believed by the Council, on the basis of any request of foreign states for assistance
substantial evidence, to be, in whole or in in their own anti-money laundering
part, wherever located, representing, operations, in respect of conventions,
involving, or related to, directly or resolutions and other directives of the
indirectly, in any manner or by any means, United Nations (UN), the UN Security
the proceeds of an unlawful activity; Council, and other international
(3) to institute civil forfeiture organizations of which the Philippines is
proceedings and all other remedial a member. However, the AMLC may
proceedings through the Office of the refuse to comply with any such request,
Solicitor General; convention, resolution or directive where
(4) to cause the filing of complaints the action sought therein contravenes the
with the Department of Justice or the provisions of the Constitution, or the
Ombudsman for the prosecution of execution thereof is likely to prejudice the
money laundering offenses; national interest of the Philippines.
(5) to investigate suspicious (9) to develop educational programs
transactions and covered transactions on the pernicious effects of money
deemed suspicious after an investigation laundering, the methods and techniques
by the AMLC, money laundering activities used in money laundering, the viable means
and other violations of this Act; of preventing money laundering and the
(6) to apply before the Court of effective ways of prosecuting and punishing
Appeals, Ex-Parte, for the freezing of any offenders.
monetary instrument or property alleged (10) to enlist the assistance of any
to be proceeds of any unlawful activity as branch, department, bureau, office,
defined under Section 3(i) hereof; agency or instrumentality of the
(7) to implement such measures as government, including government-
may be inherent, necessary, implied, owned and -controlled corporations, in
incidental and justified under the AMLA to undertaking any and all anti-money
counteract money laundering. Subject to laundering operations, which may include
such limitations as provided for by law, the the use of its personnel, facilities and
AMLC is authorized under Rule 7 (7) of the resources for the more resolute

APP. S-7
08.12.31
prevention, detection and investigation of Rule 8.2. Composition. - In organizing the

money laundering offenses and Secretariat, the AMLC may choose from
prosecution of offenders. The AMLC may those who have served, continuously or
require the intelligence units of the cumulatively, for at least five (5) years in
Armed Forces of the Philippines, the the BSP, the SEC or the IC. All members
Philippine National Police, the of the Secretariat shall be considered
Department of Finance, the Department regular employees of the BSP and shall
of Justice, as well as their attached be entitled to such benefits and subject to
agencies, and other domestic or such rules and regulations as are
transnational governmental or non- applicable to BSP employees of similar
governmental organizations or groups rank.
to divulge to the AMLC all information
that may, in any way, facilitate the Rule 8.3. Detail and Secondment. - The
resolute prevention, investigation and AMLC is authorized under Section 7 (10) of
prosecution of money laundering the AMLA to enlist the assistance of the BSP,
offenses and other violations of the the SEC or the IC, or any other branch,
AMLA. department, bureau, office, agency or
(11) To impose administrative instrumentality of the government, including
sanctions for the violation of laws, rules, government-owned and controlled
regulations and orders and resolutions corporations, in undertaking any and all anti-
issued pursuant thereto. money laundering operations. This includes
the use of any member of their personnel
Rule 7.3. Meetings. - The AMLC shall who may be detailed or seconded to the
meet every first Monday of the month, or AMLC, subject to existing laws and Civil
as often as may be necessary at the call of Service Rules and Regulations. Detailed
the Chairman. personnel shall continue to receive their
salaries, benefits and emoluments from their
RULE 8 respective mother units. Seconded personnel
CREATION OF A SECRETARIAT shall receive, in lieu of their respective
compensation packages from their respective
Rule 8.1. The Executive Director. - The mother units, the salaries, emoluments and
Secretariat shall be headed by an all other benefits to which their AMLC
Executive Director who shall be appointed Secretariat positions are entitled to.
by the AMLC for a term of five (5) years.
He must be a member of the Philippine Rule 8.4. Confidentiality Provisions. - The
Bar, at least thirty-five (35) years of age, members of the AMLC, the Executive
must have served at least five (5) years Director, and all the members of the
either at the BSP, the SEC or the IC and of Secretariat, whether permanent, on detail or
good moral character, unquestionable on secondment, shall not reveal, in any
integrity and known probity. He shall be manner, any information known to them by
considered a regular employee of the BSP reason of their office. This prohibition shall
with the rank of Assistant Governor, and apply even after their separation from the
shall be entitled to such benefits and AMLA. In case of violation of this provision,
subject to such rules and regulations, as the person shall be punished in accordance
well as prohibitions, as are applicable to with the pertinent provisions of the Central
officers of similar rank. Bank Act.

APP. S-7
08.12.31
RULE 9 Rule 9.1.c. Minimum Information/

PREVENTION OF MONEY Documents Required for Individual
LAUNDERING; CUSTOMER Customers. - Covered institutions shall
IDENTIFICATION REQUIREMENTS require customers to produce original
AND RECORD KEEPING documents of identity issued by an official
authority, bearing a photograph of the
Rule 9.1. Customer Identification customer. Examples of such documents
Requirements are identity cards and passports. The
following minimum information/
Rule 9.1.a. Customer Identification. - documents shall be obtained from
Covered institutions shall establish and individual customers:
record the true identity of its clients (1) Name;
based on official documents. They shall (2) Present address;
maintain a system of verifying the true (3) Permanent address;
identity of their clients and, in case of (4) Date and place of birth;
corporate clients, require a system of (5) Nationality;
verifying their legal existence and (6) Nature of work and name of
organizational structure, as well as the employer or nature of self-employment/
authority and identification of all persons business;
purporting to act on their behalf. Covered (7) Contact numbers;
institutions shall establish appropriate (8) Tax identification number, Social
systems and methods based on Security System number or Government
internationally compliant standards and Service and Insurance System number;
adequate internal controls for verifying (9) Specimen signature;
and recording the true and full identity (10) Source of fund(s); and
of their customers. (11) Names of beneficiaries in case of
insurance contracts and whenever
Rule 9.1.b. Trustee, Nominee and applicable.
Agent Accounts. - When dealing with
customers who are acting as trustee, Rule 9.1.d. Minimum Information/
nominee, agent or in any capacity for and Documents Required for Corporate and
on behalf of another, covered institutions Juridical Entities. - Before establishing
shall verify and record the true and full business relationships, covered
identity of the person(s) on whose behalf institutions shall endeavor to ensure that
a transaction is being conducted. the customer is a corporate or juridical
Covered institutions shall also establish entity which has not been or is not in
and record the true and full identity of the process of being, dissolved, wound
such trustees, nominees, agents and up or voided, or that its business or
other persons and the nature of their operations has not been or is not in the
capacity and duties. In case a covered process of being, closed, shut down,
institution has doubts as to whether such phased out, or terminated. Dealings
persons are being used as dummies in with shell companies and corporations,
circumvention of existing laws, it shall being legal entities which have no
immediately make the necessary business substance in their own right but
inquiries to verify the status of the through which financial transactions
business relationship between the may be conducted, should be
parties. undertaken with extreme caution. The

APP. S-7
08.12.31
following minimum information/ Rules are obtained and recorded by the

documents shall be obtained from covered institution. No peso and foreign
customers that are corporate or juridical currency non-checking accounts shall be
entities, including shell companies and allowed without the establishment of such
corporations: identity and in the manner herein provided.
(1) Articles of Incorporation/ The BSP may conduct annual testing for
Partnership; the purpose of determining the existence
(2) By-laws; and true identity of the owners of such
(3) Official address or principal accounts. The SEC and the IC may conduct
business address; similar testing more often than once a year
(4) List of directors/partners; and covering such other related purposes
(5) List of principal stockholders as may be allowed under their respective
owning at least two percent (2%) of the charters.
capital stock;
(6) Contact numbers; Rule 9.2. Record Keeping Requirements
(7) Beneficial owners, if any; and
(8) Verification of the authority and Rule 9.2.a. Record Keeping: Kinds of
identification of the person purporting to Records and Period for Retention. – All
act on behalf of the client. records of all transactions of covered
institutions shall be maintained and safely
Rule 9.1.e. Prohibition Against Certain stored for five (5) years from the dates of
Accounts. Covered institutions shall transactions. Said records and files shall
maintain accounts only in the true and full contain the full and true identity of the
name of the account owner or holder. The owners or holders of the accounts involved
provisions of existing laws to the contrary in the covered transactions and all other
notwithstanding, anonymous accounts, customer identification documents.
accounts under fictitious names, and all Covered institutions shall undertake the
other similar accounts shall be absolutely necessary adequate security measures to
prohibited. ensure the confidentiality of such file.
Covered institutions shall prepare and
Rule 9.1.f. Prohibition Against Opening maintain documentation, in accordance
of Accounts Without Face-to-face with the aforementioned client
Contact. - No new accounts shall be identification requirements, on their
opened and created without face-to-face customer accounts, relationships and
contact and full compliance with the transactions such that any account,
requirements under Rule 9.1.c of these Rules. relationship or transaction can be so
reconstructed as to enable the AMLC, and/
Rule 9.1.g. Numbered Accounts. - Peso or the courts to establish an audit trail for
and foreign currency non-checking money laundering.
numbered accounts shall be allowed:
Provided, That the true identity of the Rule 9.2.b. Existing and New Accounts
customers of all peso and foreign currency and New Transactions. - All records of
non-checking numbered accounts are existing and new accounts and of new
satisfactorily established based on official transactions shall be maintained and safely
and other reliable documents and records, stored for five (5) years from 17 October
and that the information and documents 2001 or from the dates of the accounts or
required under the provisions of these transactions, whichever is later.

APP. S-7
08.12.31
Rule 9.2.c. Closed Accounts.- With respect configure their respective computer
to closed accounts, the records on customer systems; provided that, all covered
identification, account files and business transactions during said deferment
correspondence shall be preserved and period shall be submitted thereafter.
safely stored for at least five (5) years from
the dates when they were closed. Rule 9.3.b. Covered and Suspicious
Transaction Report Forms. - The Covered
Rule 9.2.d. Retention of Records in Case Transaction Report (CTR) and the
a Money Laundering Case has been Filed Suspicious Transaction Report (STR) shall
in Court. – If a money laundering case be in the forms prescribed by the AMLC.
based on any record kept by the covered
institution concerned has been filed in Rule 9.3.b.1. Covered institutions shall
court, said file must be retained beyond the use the existing forms for Covered
period stipulated in the three (3) immediately Transaction Reports and Suspicious
preceding sub-Rules, as the case may be, Transaction Reports, until such time as
until it is confirmed that the case has been the AMLC has issued new sets of forms.
finally resolved or terminated by the court.
Rule 9.3.b.2. Covered Transaction
Rule 9.2.e. Form of Records. – Records Reports and Suspicious Transaction
shall be retained as originals in such forms Reports shall be submitted in a secured
as are admissible in court pursuant to manner to the AMLC in electronic form,
existing laws and the applicable rules either via diskettes, leased lines, or
promulgated by the Supreme Court. through internet facilities, with the
corresponding hard copy for suspicious
Rule 9.3. Reporting of Covered transactions. The final flow and
Transactions. - procedures for such reporting shall be
mapped out in the manual of operations
Rule 9.3.a. Period of Reporting Covered to be issued by the AMLC.
Transactions and SuspiciousTransactions.
- Covered institutions shall report to the Rule 9.3.c. Exemption from Bank
AMLC all covered transactions and Secrecy Laws. – When reporting
suspicious transactions within five (5) covered or suspicious transactions to the
working days from occurrence thereof, AMLC, covered institutions and their
unless the supervising authority concerned officers and employees, shall not be
prescribes a longer period not exceeding deemed to have violated R.A. No. 1405,
ten (10) working days. as amended, R.A. No. 6426, as
Should a transaction be determined to amended, R.A. No. 8791 and other
be both a covered and a suspicious similar laws, but are prohibited from
transaction, the covered institution shall communicating, directly or indirectly, in
report the same as a suspicious any manner or by any means, to any
transaction. person the fact that a covered or
The reporting of covered transactions suspicious transaction report was made,
by covered institutions shall be deferred the contents thereof, or any other
for a period of sixty (60) days after the information in relation thereto. In case
effectivity of R.A. No. 9194, or as may be of violation thereof, the concerned
determined by the AMLC, in order to officer and employee of the covered
allow the covered institutions to institution, shall be criminally liable.

APP. S-7
08.12.31
Rule 9.3.d. Confidentiality Provisions. – thereof prior to the institution or in the course
When reporting covered transactions or of, the criminal proceedings involving the
suspicious transactions to the AMLC, unlawful activity to which said monetary
covered institutions and their officers, instrument or property is any way related.
employees, representatives, agents, (b) Considering the intricate and
advisors, consultants or associates are diverse web of related and interlocking
prohibited from communicating, directly accounts pertaining to the monetary
or indirectly, in any manner or by any instrument(s) or property(ies) that any
means, to any person, entity, or the media, person may create in the different covered
the fact that a covered transaction report institutions, their branches and/or other
was made, the contents thereof, or any units, the AMLC may apply to the Court of
other information in relation thereto. Appeals for the freezing, not only of the
Neither may such reporting be published monetary instruments or properties in the
or aired in any manner or form by the mass names of the reported owner(s)/holder(s),
media, electronic mail, or other similar and monetary instruments or properties
devices. In case of violation hereof, the named in the application of the AMLC but
concerned officer, employee, also all other related web of accounts
representative, agent, advisor, consultant pertaining to other monetary instruments
or associate of the covered institution, or and properties, the funds and sources of
media shall be held criminally liable. which originated from or are related to the
monetary instrument(s) or property(ies)
Rule 9.3.e. Safe Harbor Provisions. – No subject of the freeze order(s).
administrative, criminal or civil (c) The freeze order shall be effective
proceedings, shall lie against any person for twenty (20) days unless extended by
for having made a covered transaction the Court of Appeals upon application by
report or a suspicious transaction report in the AMLC.
the regular performance of his duties and
in good faith, whether or not such Rule 10.2. Definition of Probable Cause
reporting results in any criminal - Probable cause includes such facts and
prosecution under this Act or any other circumstances which would lead a
Philippine law. reasonably discreet, prudent or cautious
man to believe that an unlawful activity
RULE 10 and/or a money laundering offense is about
APPLICATION FOR FREEZE ORDERS to be, is being or has been committed and
that the account or any monetary instrument
Rule 10.1. When the AMLC May Apply or property subject thereof sought to be
for the Freezing of Any Monetary frozen is in any way related to said unlawful
Instrument or Property. - activity and/or money laundering offense.
(a) After an investigation conducted by
the AMLC and upon determination that Rule 10.3. Duty of Covered Institution
probable cause exists that a monetary Upon Receipt Thereof. –
instrument or property is in any way related
to any unlawful activity as defined under Rule 10.3.a. Upon receipt of the notice of
Section 3 (i), the AMLC may file an Ex-Parte the freeze order, the covered institution
application before the Court of Appeals for concerned shall immediately freeze the
the issuance of a freeze order on any monetary instrument or property and
monetary instrument or property subject related web of accounts subject thereof.

APP. S-7
08.12.31
Rule 10.3.b. The covered institution shall shall freeze these related web of accounts
likewise immediately furnish a copy of the wherever these funds may be found.
notice of the freeze order upon the owner The return of the covered institution
or holder of the monetary instrument or as required under rule 10.3.c shall include
property or related web of accounts subject the fact of such freezing and an explanation
thereof. as to the grounds for the identification of
the related web of accounts.
Rule 10.3.c. Within twenty-four (24) hours
from receipt of the freeze order, the covered Rule 10.5. Extension of the Freeze Order. -
institution concerned shall submit to the Before the twenty (20) day period of the
Court of Appeals and the AMLC, by personal freeze order issued by the court of appeals
delivery, a detailed written return on the expires, the AMLC may apply in the same
freeze order, specifying all the pertinent and court for an extension of said period. Upon
relevant information which shall include the the timely filing of such application and
following: pending the decision of the Court of
1. The account number(s); Appeals to extend the period, said period
2. The name(s) of the account owner(s) shall be deemed suspended and the freeze
or holder(s); order shall remain effective.
3. The amount of the monetary However, the covered institution shall
instrument, property or related web of not lift the effects of the freeze order without
accounts as of the time they were frozen; securing official confirmation from the
4. All relevant information as to the AMLC.
nature of the monetary instrument or
property; Rule 10.6. Prohibition Against Issuance
5. Any information on the related web of Freeze Orders Against Candidates for
of accounts pertaining to the monetary an Electoral Office During Election
instrument or property subject of the freeze Period. - No assets shall be frozen to the
order; and prejudice of a candidate for an electoral
6. The time when the freeze thereon office during an election period.
took effect.
RULE 11
Rule 10.4. Definition of Related Web of AUTHORITY TO INQUIRE INTO
Accounts. - BANK DEPOSITS
Related Web of Accounts pertaining to
the money instrument or property subject of Rule 11.1. Authority to Inquire into Bank
the freeze order is defined as those accounts, Deposits with Court Order. -
the funds and sources of which originated Notwithstanding the provisions of R.A. No.
from and/or are materially linked to the 1405, as amended; R.A. No. 6426, as
monetary instrument(s) or property(ies) amended; R.A. No. 8791, and other laws,
subject of the freeze order(s). the AMLC may inquire into or examine
Upon receipt of the freeze order issued any particular deposit or investment with any
by the court of appeals and upon banking institution or non-bank financial
verification by the covered institution that institution and their subsidiaries and affiliates
the related web of accounts originated from upon order of any competent court in cases
and/or are materially linked to the of violation of this Act, when it has been
monetary instrument or property subject established that there is probable cause that
of the freeze order, the covered institution the deposits or investments involved are

APP. S-7
08.12.31
related to an unlawful activity as defined Rule 11.2.b. Duty of the banking institution
in Section 3 (i) hereof or a money or non- banking institution upon receipt of
laundering offense under Section 4 the AMLC Resolution. - The banking
hereof; except in cases as provided institution or the non-banking financial
under Rule 11.2. institution and their subsidiaries and
affiliates shall, immediately upon receipt of
Rule 11.2. Authority to Inquire into the AMLC Resolution, allow the AMLC and/
Bank Deposits Without Court Order. or its authorized representative(s) full access
- The AMLC may inquire into or to all records pertaining to the deposit or
examine deposit and investments with investment account.
any banking institution or non-bank
financial institution and their Rule 11.3. - BSP Authority to Examine
subsidiaries and affiliates without a deposits and investments; Additional
Court Order where any of the Exception to the Bank Secrecy Act. -
following unlawful activities are To ensure compliance with this act, the
involved: BSP may inquire into or examine any
(a) Kidnapping for ransom under particular deposit or investment with
Article 267 of Act No. 3815, otherwise any banking institution or non-bank
known as the Revised Penal Code, as financial institution and their
amended; subsidiaries and affiliates when the
(b) Sections 4,5,6, 8, 9, 10. 12, 13, 14, examination is made in the course of
15 and 16 of R.A. No. 9165, otherwise a periodic or special examination, in
known as the Comprehensive Dangerous accordance with the rules of
Drugs Act of 2002; examination of the BSP.
(c) Hijacking and other violations
under R.A. No. 6235; destructive arson Rule 11.3.a. BSP Rules of Examination
and murder, as defined under the - The BSP shall promulgate its rules of
Revised Penal Code, as amended, examination for ensuring compliance
including those perpetrated by terrorists by banks and non-bank financial
against non-combatant persons and institutions and their subsidiaries and
similar targets. affiliates with the AMLA and these
rules.
Rule 11.2.a. Procedure For Examination Any findings of the BSP which may
Without A Court Order. - Where any of constitute a violation of any provision of
the unlawful activities enumerated under this act shall be transmitted to the AMLC
the immediately preceding Rule 11.2 are for appropriate action.
involved, and there is probable cause
that the deposits or investments with any RULE 12
banking or non-banking financial FORFEITURE PROVISIONS
institution and their subsidiaries and
affiliates are in anyway related to these Rule 12.1. Authority to Institute Civil
unlawful activities the AMLC shall issue Forfeiture Proceedings. – The AMLC is
a resolution authorizing the inquiry into authorized under Section 7 (3) of the
or examination of any deposit or AMLA to institute civil forfeiture
investment with such banking or non- proceedings and all other remedial
banking financial institution and their proceedings through the Office of the
subsidiaries and affiliates concerned. Solicitor General.

APP. S-7
08.12.31
Rule 12.2. When Civil Forfeiture May be avoid forfeiture thereof, or it is located
Applied. – When there is a Suspicious outside the Philippines or has been placed
Transaction Report or a Covered or brought outside the jurisdiction of the
Transaction Report deemed suspicious after court, or it has been commingled with
investigation by the AMLC, and the court other monetary instruments or property
has, in a petition filed for the purpose, belonging to either the offender himself
ordered the seizure of any monetary or a third person or entity, thereby
instrument or property, in whole or in part, rendering the same difficult to identify or
directly or indirectly, related to said report, be segregated for purposes of forfeiture,
the Revised Rules of Court on civil forfeiture the court may, instead of enforcing the
shall apply. order of forfeiture of the monetary
instrument or property or part thereof or
Rule 12.3. Claim on Forfeited Assets. - interest therein, accordingly order the
Where the court has issued an order of convicted offender to pay an amount equal
forfeiture of the monetary instrument or to the value of said monetary instrument
property in a criminal prosecution for any or property. This provision shall apply in
money laundering offense under Section 4 both civil and criminal forfeiture.
of the AMLA, the offender or any other
person claiming an interest therein may RULE 13
apply, by verified petition, for a declaration MUTUAL ASSISTANCE AMONG
that the same legitimately belongs to him, STATES
and for segregation or exclusion of the
monetary instrument or property Rule 13.1. Request for Assistance from a
corresponding thereto. The verified petition Foreign State. - Where a foreign state
shall be filed with the court which rendered makes a request for assistance in the
the judgment of conviction and order of investigation or prosecution of a money
forfeiture within fifteen (15) days from the laundering offense, the AMLC may
date of the order of forfeiture, in default of execute the request or refuse to execute
which the said order shall become final and the same and inform the foreign state of
executory. This provision shall apply in both any valid reason for not executing the
civil and criminal forfeiture. request or for delaying the execution
thereof. The principles of mutuality and
Rule 12.4. Payment in Lieu of Forfeiture reciprocity shall, for this purpose, be at all
- Where the court has issued an order of times recognized.
forfeiture of the monetary instrument or
property subject of a money laundering Rule 13.2. Powers of the AMLC to Act on
offense under Section 4 of the AMLA, and a Request for Assistance from a Foreign
said order cannot be enforced because any State. - The AMLC may execute a request
particular monetary instrument or property for assistance from a foreign state by: (1)
cannot, with due diligence, be located, or tracking down, freezing, restraining and
it has been substantially altered, destroyed, seizing assets alleged to be proceeds of
diminished in value or otherwise rendered any unlawful activity under the procedures
worthless by any act or omission, directly laid down in the AMLA and in these Rules;
or indirectly, attributable to the offender, (2) giving information needed by the
or it has been concealed, removed, foreign state within the procedures laid
converted or otherwise transferred to down in the AMLA and in these Rules; and
prevent the same from being found or to (3) applying for an order of forfeiture of any

APP. S-7
08.12.31
monetary instrument or property in the and the order of forfeiture are final and that
court: Provided, That the court shall not no further appeal lies in respect of either.
issue such an order unless the application
is accompanied by an authenticated copy Rule 13.4. Limitations on Requests for
of the order of a court in the requesting state Mutual Assistance. - The AMLC may refuse
ordering the forfeiture of said monetary to comply with any request for assistance
instrument or property of a person who has where the action sought by the request
been convicted of a money laundering contravenes any provision of the Constitution
offense in the requesting state, and a or the execution of a request is likely to
certification or an affidavit of a competent prejudice the national interest of the
officer of the requesting state stating that Philippines, unless there is a treaty between
the conviction and the order of forfeiture the Philippines and the requesting state
are final and that no further appeal lies in relating to the provision of assistance in
respect of either. relation to money laundering offenses.
Rule 13.3. Obtaining Assistance from Rule 13.5. Requirements for Requests for
Foreign States. - The AMLC may make a Mutual Assistance from Foreign States. -
request to any foreign state for assistance A request for mutual assistance from a
in (1) tracking down, freezing, restraining foreign state must (1) confirm that an
and seizing assets alleged to be proceeds investigation or prosecution is being
of any unlawful activity; (2) obtaining conducted in respect of a money
information that it needs relating to any launderer named therein or that he has
covered transaction, money laundering been convicted of any money laundering
offense or any other matter directly or offense; (2) state the grounds on which
indirectly related thereto; (3) to the extent any person is being investigated or
allowed by the law of the foreign state, prosecuted for money laundering or the
applying with the proper court therein for details of his conviction; (3) give
an order to enter any premises belonging sufficient particulars as to the identity of
to or in the possession or control of, any or said person; (4) give particulars sufficient
all of the persons named in said request, to identify any covered institution
and/or search any or all such persons named believed to have any information,
therein and/or remove any document, document, material or object which may
material or object named in said request: be of assistance to the investigation or
Provided, That the documents prosecution; (5) ask from the covered
accompanying the request in support of the institution concerned any information,
application have been duly authenticated document, material or object which may
in accordance with the applicable law or be of assistance to the investigation or
regulation of the foreign state; and (4) prosecution; (6) specify the manner in
applying for an order of forfeiture of any which and to whom said information,
monetary instrument or property in the document, material or object obtained
proper court in the foreign state: Provided, pursuant to said request, is to be
That the request is accompanied by an produced; (7) give all the particulars
authenticated copy of the order of the necessary for the issuance by the court in
Regional Trial Court ordering the forfeiture the requested state of the writs, orders or
of said monetary instrument or property processes needed by the requesting state;
of a convicted offender and an affidavit of and (8) contain such other information as
the clerk of court stating that the conviction may assist in the execution of the request.

APP. S-7
08.12.31
Rule 13.6. Authentication of Documents - of foreign states for assistance in their own
For purposes of Section 13 (f) of the AMLA anti-money laundering operations. It is also
and Section 7 of the AMLA, a document is authorized under Section 7 (7) of the AMLA
authenticated if the same is signed or to cooperate with the National
certified by a judge, magistrate or equivalent Government and/or take appropriate
officer in or of, the requesting state, and action in respect of conventions,
authenticated by the oath or affirmation of resolutions and other directives of the
a witness or sealed with an official or public United Nations (UN), the UN Security
seal of a minister, secretary of state, or Council, and other international
officer in or of, the government of the organizations of which the Philippines is a
requesting state, or of the person member. However, the AMLC may refuse
administering the government or a to comply with any such request,
department of the requesting territory, convention, resolution or directive where
protectorate or colony. The certificate of the action sought therein contravenes the
authentication may also be made by a provision of the Constitution or the
secretary of the embassy or legation, execution thereof is likely to prejudice the
consul general, consul, vice consul, national interest of the Philippines.
consular agent or any officer in the foreign
service of the Philippines stationed in the Rule 13.8. Extradition. – The Philippines shall
foreign state in which the record is kept, negotiate for the inclusion of money
and authenticated by the seal of his office. laundering offenses as defined under Section
4 of the AMLA among the extraditable
Rule 13.7. Suppletory Application of the offenses in all future treaties. With respect,
Revised Rules of Court. – however, to the state parties that are
signatories to the United Nations Convention
Rule 13.7.1. For attachment of Philippine Against Transnational Organized Crime that
properties in the name of persons was ratified by the Philippine Senate on 22
convicted of any unlawful activity as October 2001, money laundering is deemed
defined in Section 3 (i) of the AMLA, to be included as an extraditable offense in
execution and satisfaction of final judgments any extradition treaty existing between said
of forfeiture, application for examination of state parties, and the Philippines shall include
witnesses, procuring search warrants, money laundering as an extraditable offense
production of bank documents and other in every extradition treaty that may be
materials and all other actions not specified concluded between the Philippines and any
in the AMLA and these Rules, and assistance of said state parties in the future.
for any of the aforementioned actions, which
is subject of a request by a foreign state, RULE 14
resort may be had to the proceedings PENAL PROVISIONS
pertinent thereto under the Revised Rules
of Court. Rule 14.1. Penalties for the Crime of
Money Laundering.
Rule 13.7.2. Authority to Assist the United
Nations and other International Rule 14.1.a. Penalties under Section 4 (a)
Organizations and Foreign States. – The of the AMLA. - The penalty of imprisonment
AMLC is authorized under Section 7 (8) ranging from seven (7) to fourteen (14) years
and 13 (b) and (d) of the AMLA to receive and a fine of not less than Php3.0 Million
and take action in respect of any request but not more than twice the value of the

APP. S-7
08.12.31
monetary instrument or property involved be imposed on a person convicted under

in the offense, shall be imposed upon a Section 9 (b) of the AMLA.
person convicted under Section 4 (a) of the
AMLA. Rule 14.3. Penalties for Malicious
Reporting. - Any person who, with malice,
Rule 14.1.b. Penalties under Section 4 (b) or in bad faith, reports or files a completely
of the AMLA. - The penalty of unwarranted or false information relative
imprisonment from four (4) to seven (7) to money laundering transaction against
years and a fine of not less than Php1.5 any person shall be subject to a penalty of
Million but not more than Php3.0 Million, six (6) months to four (4) years
shall be imposed upon a person convicted imprisonment and a fine of not less than
under Section 4 (b) of the AMLA. Php100,000.00 but not more than
Php500,000.00, at the discretion of the
Rule 14.1.c. Penalties under Section 4 (c) court: Provided, That the offender is not
of the AMLA. - The penalty of entitled to avail the benefits of the
imprisonment from six (6) months to four Probation Law.
(4) years or a fine of not less than
Php100,000.00 but not more than Rule 14.4. Where Offender is a Juridical
Php500,000.00, or both, shall be imposed Person. - If the offender is a corporation,
on a person convicted under Section 4(c) association, partnership or any juridical
of the AMLA. person, the penalty shall be imposed upon
the responsible officers, as the case may
Rule 14.1.d. Administrative Sanctions. - (1) be, who participated in, or allowed by their
After due notice and hearing, the AMLC shall, gross negligence the commission of the
at its discretion, impose fines upon any crime. If the offender is a juridical person,
covered institution, its officers and employees, the court may suspend or revoke its license.
or any person who violates any of the If the offender is an alien, he shall, in addition
provisions of R.A. No. 9160, as amended by to the penalties herein prescribed, be
R.A. No. 9194 and rules, regulations, orders deported without further proceedings after
and resolutions issued pursuant thereto. The serving the penalties herein prescribed. If the
fines shall be in amounts as may be offender is a public official or employee, he
determined by the council, taking into shall, in addition to the penalties prescribed
consideration all the attendant circumstances, herein, suffer perpetual or temporary
such as the nature and gravity of the violation absolute disqualification from office, as the
or irregularity, but in no case shall such fines case may be.
be less than Php100,000.00 but not to exceed
Php500,000.00. The imposition of the Rule 14.5. Refusal by a Public Official or
administrative sanctions shall be without Employee to Testify. - Any public official
prejudice to the filing of criminal charges or employee who is called upon to testify
against the persons responsible for the and refuses to do the same or purposely
violations. fails to testify shall suffer the same penalties
prescribed herein.
Rule 14.2. Penalties for Failure to Keep
Records - The penalty of imprisonment Rule 14.6. Penalties for Breach of
from six (6) months to one (1) year or a Confidentiality. – The punishment of
fine of not less than Php100,000.00 but not imprisonment ranging from three (3) to
more than Php500,000.00, or both, shall eight (8) years and a fine of not less than

APP. S-7
08.12.31
Php500,000.00 but not more than Php1.0 assets shall be forfeited to the prejudice
Million, shall be imposed on a person of a candidate for an electoral office during
convicted for a violation under Section 9(c). an election period.
In case of a breach of confidentiality that is
published or reported by media, the RULE 16
responsible reporter, writer, president, RESTITUTION
publisher, manager and editor-in-chief shall
be liable under this act. Rule 16. Restitution. - Restitution for any
aggrieved party shall be governed by the
RULE 15 provisions of the New Civil Code.
PROHIBITIONS AGAINST POLITICAL
HARASSMENT RULE 17
IMPLEMENTING RULES AND
Rule 15.1. Prohibition against Political REGULATIONS AND MONEY
Persecution. - The AMLA and these Rules LAUNDERING PREVENTION
shall not be used for political persecution or PROGRAMS
harassment or as an instrument to hamper
competition in trade and commerce. No case Rule 17.1. Implementing Rules and
for money laundering may be filed to the Regulations. –
prejudice of a candidate for an electoral office (a) Within thirty (30) days from the
during an election period. effectivity of R.A. No. 9160, as amended
by R.A. No. 9194, the BSP, the Insurance
Rule 15.2. Provisional Remedies Commission and the Securities and
Application; Exception. – Exchange Commission shall promulgate
the Implementing Rules and Regulations
Rule 15.2.a. - The AMLC may apply, in the of the AMLA, which shall be submitted to
course of the criminal proceedings, for the Congressional Oversight Committee
provisional remedies to prevent the for approval.
monetary instrument or property subject (b) The Supervising Authorities, the
thereof from being removed, concealed, BSP, the SEC and the IC shall, under their
converted, commingled with other own respective charters and regulatory
property or otherwise to prevent its being authority, issue their Guidelines and
found or taken by the applicant or Circulars on anti-money laundering to
otherwise placed or taken beyond the effectively implement the provisions of R.A.
jurisdiction of the court. However, no No. 9160, as amended by R.A. No. 9194.
assets shall be attached to the prejudice of
a candidate for an electoral office during Rule 17.2. Money Laundering Prevention
an election period. Programs. –
Rule 15.2.b. - Where there is conviction Rule 17.2.a. Covered institutions shall
for money laundering under Section 4 of formulate their respective money
the AMLA, the court shall issue a laundering prevention programs in
judgment of forfeiture in favor of the accordance with Section 9 and other
Government of the Philippines with pertinent provisions of the AMLA and these
respect to the monetary instrument or Rules, including, but not limited to,
property found to be proceeds of one or information dissemination on money
more unlawful activities. However, no laundering activities and their prevention,

APP. S-7
08.12.31
detection and reporting, and the training of Rule 17.3. Training of Personnel. - Covered
responsible officers and personnel of institutions shall provide all their responsible
covered institutions, subject to such officers and personnel with efficient and
guidelines as may be prescribed by their effective training and continuing education
respective supervising authority. Every programs to enable them to fully comply with
covered institution shall submit its own all their obligations under the AMLA and
money laundering program to the these Rules.
supervising authority concerned within the
non-extendible period that the supervising Rule 17.4. Amendments. - These Rules or
authority has imposed in the exercise of any portion thereof may be amended by
its regulatory powers under its own unanimous vote of the members of the
charter. AMLC and submitted to the Congressional
Oversight Committee as provided for
Rule 17.2.b. Every money laundering under Section 19 of R.A. No. 9160, as
program shall establish detailed amended by R.A. No. 9194.
procedures implementing a
comprehensive, institution-wide “know- RULE 18
your-client” policy, set-up an effective CONGRESSIONAL OVERSIGHT
dissemination of information on money COMMITTEE
laundering activities and their prevention,
detection and reporting, adopt internal Rule 18.1. Composition of Congressional
policies, procedures and controls, Oversight Committee. - There is hereby
designate compliance officers at created a Congressional Oversight
management level, institute adequate Committee composed of seven (7)
screening and recruitment procedures, and members from the Senate and seven (7)
set-up an audit function to test the system. members from the House of
Representatives. The members from the
Rule 17.2.c. Covered institutions shall adopt, Senate shall be appointed by the Senate
as part of their money laundering programs, President based on the proportional
a system of flagging and monitoring representation of the parties or coalitions
transactions that qualify as suspicious therein with at least two (2) Senators
transactions, regardless of amount or covered representing the minority. The members
transactions involving amounts below the from the House of Representatives shall be
threshold to facilitate the process of appointed by the Speaker also based on
aggregating them for purposes of future proportional representation of the parties or
reporting of such transactions to the AMLC coalitions therein with at least two (2)
when their aggregated amounts breach the members representing the minority.
threshold. All covered institutions, including
banks insofar as non-deposit and non- Rule 18.2. Powers of the Congressional
government bond investment transactions Oversight Committee. - The Oversight
are concerned, shall incorporate in their Committee shall have the power to
money laundering programs the provisions promulgate its own rules, to oversee the
of these Rules and such other guidelines for implementation of this Act, and to review
reporting to the AMLC of all transactions that or revise the implementing rules issued by
engender the reasonable belief that a money the Anti-Money Laundering Council within
laundering offense is about to be, is being, thirty (30) days from the promulgation of
or has been committed. the said rules.

APP. S-7
08.12.31
RULE 19 held to be invalid, the other provisions of

APPROPRIATIONS FOR AND BUDGET these Rules, and the application of such
OF THE AMLC provision or Rule to other persons or
circumstances, shall not be affected
Rule 19.1. Budget. – The budget of 25 thereby.
Million Pesos appropriated by Congress
under the AMLA shall be used to defray the RULE 21
initial operational expenses of the AMLC. REPEALING CLAUSE
Appropriations for succeeding years shall
be included in the General Appropriations Rule 21. Repealing Clause. – All laws,
Act. The BSP shall advance the funds decrees, executive orders, rules and
necessary to defray the capital outlay, regulations or parts thereof, including the
maintenance and other operating expenses relevant provisions of R.A. No. 1405, as
and personnel services of the AMLC subject amended; R.A. No. 6426, as amended;
to reimbursement from the budget of the R.A. No. 8791, as amended, and other
AMLC as appropriated under the AMLA and similar laws, as are inconsistent with the
subsequent appropriations. AMLA, are hereby repealed, amended or
modified accordingly.
Rule 19.2. Costs and Expenses. - The budget
shall answer for indemnification for legal RULE 22
costs and expenses reasonably incurred for EFFECTIVITY OF THE RULES
the services of external counsel in
connection with any civil, criminal or Rule 22. Effectivity. – These Rules shall take
administrative action, suit or proceedings to effect after its approval by the Congressional
which members of the AMLC and the Oversight Committee and fifteen (15) days
Executive Director and other members of after its complete publication in the Official
the Secretariat may be made a party by Gazette or in a newspaper of general
reason of the performance of their functions circulation.
or duties. The costs and expenses incurred
in defending the aforementioned action, suit RULE 23
or proceeding may be paid by the AMLC in TRANSITORY PROVISIONS
advance of the final disposition of such
action, suit or proceeding upon receipt of Rule 23.1. - Transitory Provisions. - Existing
an undertaking by or on behalf of the freeze orders issued by the AMLC shall
member to repay the amount advanced remain in force for a period of thirty (30)
should it be ultimately determined that said days after effectivity of this act, unless
member is not entitled to such extended by the Court of Appeals.
indemnification.
Rule 23.2. - Effect of R.A. No. 9194 on
RULE 20 Cases for Extension of Freeze Orders
SEPARABILITY CLAUSE Resolved by the Court of Appeals. - All
existing freeze orders which the Court of
Rule 20. Separability Clause. – If any Appeals has extended shall remain
provision of these Rules or the application effective, unless otherwise dissolved by
thereof to any person or circumstance is the same court.

APP. S-8
09.12.31
GUIDELINES TO GOVERN THE SELECTION, APPOINTMENT, REPORTING

REQUIREMENTS AND DELISTING OF EXTERNAL AUDITORS AND/OR
AUDITING FIRM OF COVERED ENTITIES
(Appendix to Secs. 4180S and 4190S)
Pursuant to Section 58 of the Republic categorized below, and their external

Act No. 8791, otherwise known as "The auditors:
General Banking Law of 2000", and the 1. Category A
existing provisions of the executed a. UBs/KBs;
Memorandum of Agreement (hereinafter b. Foreign banks and branches or
referred to as the MOA) dated 12 August subsidiaries of foreign banks, regardless of
2009, binding the Bangko Sentral ng unimpaired capital; and
Pilipinas (BSP), Securities and Exchange c. Banks, trust department of qualified
Commission (SEC), Professional Regulation banks and other trust entities with additional
Commission (IC) - Board of Accountancy derivatives authority, pursuant to Sec. X611
(BOA) and the Insurance Commission (IC) regardless of classification, category and
for a simplified and synchronized capital position.
accreditation requirements for external 2. Category B
auditor and/or auditing firm, the Monetary a. TBs;
Board, in its Resolution No. 950 dated b. QBs;
02 July 2009, approved the following c. Trust department of qualified banks
revised rules and regulations that shall and other trust entities;
govern the selection and delisting by the BSP d. National Coop Banks; and
of covered institution which under special e. NBFIs with quasi-banking functions.
laws are subject to BSP supervision. 3. Category C
a. RBs;
A. STATEMENT OF POLICY b. NSSLAs;
It is the policy of the BSP to ensure c. Local Coop Banks; and
effective audit and supervision of banks, d. Pawnshops.
QBs, trust entities and/or NSSLAs including The above categories include their
their subsidiaries and affiliates engaged in subsidiaries and affiliates engaged in allied
allied activities and other FIs which under activities and other FIs which are subject to
special laws are subject to BSP supervision, BSP risk-based and consolidated supervision:
and to ensure reliance by BSP and the public Provided, That an external auditor who has
on the opinion of external auditors and been selected by the BSP to audit entities
auditing firms by prescribing the rules and under Category B and C and if selected by
regulations that shall govern the selection, the BSP to audit covered entities under
appointment, reporting requirements and Category B is automatically qualified to audit
delisting for external auditors and auditing entities under Category C.
firms of said institutions, subject to the
binding provisions and implementing C. DEFINITION OF TERMS
regulations of the aforesaid MOA. The following terms shall be defined as
follows:
B. COVERED ENTITIES 1. Audit – an examination of the
The proposed amendment shall apply financial statements of any issuer by an
to the following supervised institution, as external auditor in compliance with the rules

APP. S-8
09.12.31
of the BSP or the SEC in accordance with consolidated total assets of the company by
then applicable generally accepted auditing five percent (5%). It may involve:
and accounting principles and standards, for a. Mathematical or clerical mistakes
the purpose of expressing an opinion on in the underlying records and accounting
such statements. data;
2. Non-audit services – any b. Oversight or misinterpretation of
professional services provided to the facts; or
covered institution by an external auditor, c. Unintentional misapplication of
other than those provided to a covered accounting policies.
institution in connection with an audit or a 6. Gross negligence - wanton or
review of the financial statements of said reckless disregard of the duty of due care in
covered institution. complying with generally accepted auditing
3. Professional Standards - includes: standards.
(a) accounting principles that are 7. Material fact/information - any fact/
(1) established by the standard setting body; information that could result in a change in
and (2) relevant to audit reports for particular the market price or value of any of the
issuers, or dealt with in the quality control issuer’s securities, or would potentially affect
system of a particular registered public the investment decision of an investor.
accounting firm; and (b) auditing standards, 8. Subsidiary - a corporation or firm
standards for attestation engagements, more than fifty percent (50%) of the
quality control policies and procedures, outstanding voting stock of which is directly
ethical and competency standards, and or indirectly owned, controlled or held with
independence standards that the BSP or SEC power to vote by a bank, QB, trust entity or
determines (1) relate to the preparation or NSSLA.
issuance of audit reports for issuers; and 9. Affiliate - a corporation, not more
(2) are established or adopted by the BSP or than fifty percent (50%) but not less than
promulgated as SEC rules. ten percent (10%) of the outstanding voting
4. Fraud – an intentional act by one (1) stock of which is directly or indirectly owned,
or more individuals among management, controlled or held with power to vote by a
employees, or third parties that results in a bank, QB, trust entity or NSSLA and a juridical
misrepresentation of financial statements, person that is under common control with the
which will reduce the consolidated total bank, QB, trust entity or NSSLA.
assets of the company by five percent (5%). 10. Control - exists when the parent
It may involve: owns directly or indirectly more than one
a. Manipulation, falsification or half of the voting power of an enterprise
alteration of records or documents; unless, in exceptional circumstance, it can
b. Misappropriation of assets; be clearly demonstrated that such ownership
c. Suppression or omission of the does not constitute control.
effects of transactions from records or Control may also exist even when
documents; ownership is one half or less of the voting
d. Recording of transactions without power of an enterprise when there is:
substance; a. Power over more than one half of
e. Intentional misapplication of the voting rights by virtue of an agreement
accounting policies; or with other stockholders;
f. Omission of material information. b. Power to govern the financial and
5. Error - an intentional mistake in operating policies of the enterprise under a
financial statements, which will reduce the statute or an agreement;

APP. S-8
09.12.31
c. Power to appoint or remove the shall be engaged by all the covered

majority of the members of the board of institutions detailed in Item "B". The external
directors or equivalent governing body; or auditor and/or auditing firm to be hired shall
d. Power to cast the majority votes at also be in-charge of the audit of the entity’s
meetings of the board of directors or subsidiaries and affiliates engaged in allied
equivalent governing body. activities: Provided, That the external auditor
11. External auditor - means a single and/or auditing firm shall be changed or the
practitioner or a signing partner in an lead and concurring partner shall be rotated
auditing firm. every five (5) years or earlier: Provided
12. Auditing firm – includes a further, That the rotation of the lead and
proprietorship, partnership limited liability concurring partner shall have an interval of
company, limited liability partnership, at least two (2) years.
corporation (if any), or other legal entity, 2. Category A covered entities which
including any associated person of any of have engaged their respective external
these entities, that is engaged in the practice auditors and/or auditing firm for a
of public accounting or preparing or issuing consecutive period of five (5) years or more
audit reports. as of 18 September 2009 shall have a one
13. Associate – any director, officer, (1)-year period from said date within which
manager or any person occupying a similar to either change their external auditors
status or performing similar functions in the and/or auditing firm or to rotate the lead
audit firm including employees performing and/or concurring partner.
supervisory role in the auditing process. 3. The selection of the external auditors
14. Partner - all partners including those and/or auditing firm does not exonerate the
not performing audit engagements. covered institution or said auditors from
15. Lead partner – also referred to as their responsibilities. Financial statements
engagement partner/partner-in-charge/ filed with the BSP are still primarily the
managing partner who is responsible for responsibility of the management of the
signing the audit report on the consolidated reporting institution and accordingly, the
financial statements of the audit client, and fairness of the representations made
where relevant, the individual audit report therein is an implicit and integral part of
of any entity whose financial statements the institution’s responsibility. The
form part of the consolidated financial independent certified public accountant’s
statements. responsibility for the financial statements
16. Concurring partner - the partner required to be filed with the BSP is
who is responsible for reviewing the audit confined to the expression of his opinion,
report. or lack thereof, on such statements which
17. Auditor-in-charge – refers to the he has audited/examined.
team leader of the audit engagement. 4. The BSP shall not be liable for any
damage or loss that may arise from its
D. GENERAL CONSIDERATION AND selection of the external auditors and/or
LIMITATIONS OF THE SELECTION auditing firm to be engaged by banks for
PROCEDURES regular audit or non-audit services.
1. Subject to mutual recognition 5. Pursuant to paragraph (5) of the
provision of the MOA and as implemented MOA, SEC, BSP and IC shall mutually
in this regulation, only external auditors and recognize the accreditation granted by any
auditing firms included in the list of BSP of them for external auditors and firms of
selected external auditors and auditing firms Group C or D companies under SEC,

APP. S-8
09.12.31
Category B and C under BSP, and insurance external auditor and the auditing firm at the
brokers under IC. Once accredited/selected time of application and on continuing basis,
by any one (1) of them, the above-mentioned subject to BSP’s provisions on the delisting
special requirements shall no longer be and suspension of accreditation:
prescribed by the other regulators. 1. Individual external auditor
For corporations which are required to a. General requirements
submit financial statements to different (1) The individual applicant must be
regulators and are not covered by the mutual primarily accredited by the BOA. The
recognition policy of this MOA, the individual external auditor or partner
following guidance shall be observed: in-charge of the auditing firm must have at
a. The external auditors of UBs which least five (5) years of audit experience.
are listed in the Exchange, should be (2) Auditor’s independence.
selected/accredited by both the BSP and In addition to the basic screening
SEC, respectively; and procedures of BOA on evaluating auditor’s
b. For insurance companies and banks independence, the following are required
that are not listed in the Exchange, their for BSP purposes to be submitted in the form
external auditors must each be selected/ of notarized certification that:
accredited by BSP or IC, respectively. For (a) No external auditor may be engaged
purposes of submission to the SEC, the by any of the covered institutions under Item
financial statements shall be at least audited "B" hereof if he or any member of his
by an external auditor registered/accredited immediate family had or has committed to
with BOA. acquire any direct or indirect financial
This mutual recognition policy shall interest in the concerned covered institution,
however be subject to the BSP restriction or if his independence is considered
that for banks and its subsidiary and affiliate impaired under the circumstances specified
bank, QBs, trust entities, NSSLAs, their in the Code of Professional Ethics for CPAs.
subsidiaries and affiliates engaged in allied In case of a partnership, this limitation shall
activities and other FIs which under special apply to the partners, associates and the
laws are subject to BSP consolidated auditor-in-charge of the engagement and
supervision, the individual and consolidated members of their immediate family;
financial statements thereof shall be audited (b) The external auditor does not have/
by only one (1) external auditor/auditing shall not have outstanding loans or any
firm. credit accommodations or arranged for the
6. The selection of external auditors extension of credit or to renew an extension
and/or auditing firm shall be valid for a of credit (except credit card obligations
period of three (3) years. The SES shall make which are normally available to other credit
an annual assessment of the performance card holders and fully secured auto loans
of external auditors and/or auditing firm and and housing loans which are not past due)
will recommend deletion from the list even with the covered institutions under Item "B"
prior to the three (3)-year renewal period, if at the time of signing the engagement and
based on assessment, the external auditors’ during the engagement. In the case of
report did not comply with BSP partnership, this prohibition shall apply to
requirements. the partners and the auditor-in-charge of the
engagement; and
E. QUALIFICATION REQUIREMENT (c) It shall be unlawful for an external
The following qualification requirements auditor to provide any audit service to a
are required to be met by the individual covered institution if the covered

APP. S-8
09.12.31
institution’s CEO, CFO, Chief Accounting assurance procedures, such consultation

Officer (CAO), or comptroller was previously policies and stringent quality control, to
employed by the external auditor and ensure full compliance with the accounting
participated in any capacity in the audit of the and regulatory requirements.
covered institution during the one-year c. At the time of application, the
preceding the date of the initiation of the audit; applicant firm must have at least one (1)
(3) Individual applications as external signing practitioner or partner who is already
auditor of entities under Category A above selected/accredited, or who is already
must have established adequate quality qualified and is applying for selection by
assurance procedures, such consultation BSP.
policies and stringent quality control, to d. A registered accounting/auditing
ensure full compliance with the accounting firm may engage in any non-auditing service
and regulatory requirements. for an audit client only if such service is
b. Specific requirements approved in advance by the client’s audit
(1) At the time of application, committee. Exemptions from the prohibitions
regardless of the covered institution, the may be granted by the Monetary Board on a
external auditor shall have at least five (5) case-by-case basis to the extent that such
years experience in external audits; exemption is necessary or appropriate in the
(2) The audit experience above refers public interest. Such exemptions are subject
to experience required as an associate, to review by the BSP.
partner, lead partner, concurring partner or e. At the time of application, the
auditor-in-charge; and applicant firm must have the following track
(3) At the time of application, the record:
applicant must have the following track (1) For Category A, the applicant firm
record: must have had at least twenty (20) corporate
(a) For Category A, he/she must have clients with total assets of at least P50.0
at least five (5) corporate clients with total million each;
assets of at least P50.0 million each. (2) For Category B, the applicant firm
(b) For Category B, he/she must have must have had at least five (5) corporate
had at least three (3) corporate clients with clients with total assets of at least P20.0
total assets of at least P25.0 million each. million each;
(c) For Category C, he/she must have (3) For Category C, the applicant firm
had at least three (3) corporate clients with must have had at least five (5) corporate
total assets of at least P5.0 million each; clients with total assets of at least P5.0
2. Auditing firms million each.
a. The auditing firm must be primarily
accredited by the BOA and the name of the F. APPLICATION FOR AND/OR
firm’s applicant partner’s should appear in RENEWAL OF THE SELECTION OF
the attachment to the certificate of INDIVIDUAL EXTERNAL AUDITOR
accreditation issued by BOA. Additional 1. The initial application for BSP
partners of the firm shall be furnished by selection shall be signed by the external
BOA to the concerned regulatory agencies auditor and shall be submitted to the
(e.g. BSP, SEC and IC) as addendum to the appropriate department of the SES together
firm’s accreditation by BOA. with the following documents/information:
b. Applicant firms to act as the external a. Copy of effective and valid BOA
auditor of entities under Category A in Item Certificate of Accreditation with the attached
"B" must have established adequate quality list of qualified partner/s of the firm;

APP. S-8
09.12.31
b. A notarized undertaking of the (a) copy of updated BOA Certificate of

external auditor that he is in compliance Accreditation with the attached list of
with the qualification requirements under qualified partner/s of the firm;
Item "E" and that the external auditor shall (b) notarized certification of the external
keep an audit or review working papers for auditor that he still possess all qualification
at least seven (7) years in sufficient detail to required under Item "F.1.b" of this Appendix;
support the conclusion in the audit report (c) list of corporate clients audited
and making them available to the BSP’s during the three (3)-year period of being
authorized representative/s when required selected as external auditor by BSP. Such
to do so; list shall likewise indicate the findings noted
c. Copy of Audit Work Program which by the BSP and other regulatory agencies
shall include assessment of the audited on said AFS including the action thereon
institution’s compliance with BSP rules and by the external auditor; and
regulations, such as, but not limited to the (d) written proof that the auditor has
following: attended or participated in trainings for at
(1) capital adequacy ratio, as currently least thirty (30) hours in addition to the
prescribed by the BSP; BOA’s prescribed training hours. Such
(2) AMLA framework; training shall be in subjects like international
(3) risk management system, financial reporting standards, international
particularly liquidity and market risks; and standards of auditing, corporate
(4) loans and other risk assets review governance, taxation, code of ethics,
and classification, as currently prescribed regulatory requirements of SEC, IC and BSP
by the BSP rules and regulations. or other government agencies, and other
d. If the applicant will have clients topics relevant to his practice, conducted
falling under Category A, copy of the Quality by any professional organization or
Assurance Manual which, aside from the association duly recognized/accredited by
basic elements as required under the BOA the BSP, SEC or by the BOA/PRC through a
basic quality assurance policies and CPE Council which they may set up.
procedures, specialized quality assurance The application for initial or renewal
procedures should be provided consisting accreditation of an external auditor shall be
of, among other, review asset quality, accomplished by a fee of P2,000.00.
adequacy of risk-based capital, risk
management systems and corporate G. APPLICATION FOR AND/OR
governance framework of the covered RENEWAL OF THE SELECTION OF
entities. AUDITING FIRMS
e. Copy of the latest AFS of the 1. The initial application shall be
applicant’s two (2) largest clients in terms signed by the managing partner of the
of total assets. auditing firm and shall be submitted to
2. Subject to BSP’s provision on early the appropriate department of the SES
deletion from the list of selected external together with the following documents/
auditor, the selection may be renewed information:
within two (2) months before the expiration a. copy of effective and valid BOA
of the three (3)-year effectivity of the Certificate of Accreditation with attachment
selection upon submission of the written listing the names of qualified partners;
application for renewal to the appropriate b. notarized certification that the firm
department of the SES together with the is in compliance with the general
following documents/information: qualification requirements under Item "E.2"

APP. S-8
09.12.31
and that the firm shall keep an audit or b. amendments on Quality Assurance
review working papers for at least seven Manual, inclusive of written explanation on
(7) years insufficient detail to support the such revision, if any; and
conclusions in the audit report and making c. notarized certification that the firm
them available to the BSP’s authorized is in compliance with the general
representative/s when required to do so; qualification requirements under Item
c. copy of audit work program which "G.1.b" hereof;
shall include assessment of the audited The application for initial or renewal
institution’s compliance with BSP rules and accreditation of an auditing firm shall be
regulations, such as, but not limited to the accompanied by a fee of P5,000.00.
following;
(1) capital adequacy ratio, as currently H. REPORTORIAL REQUIREMENTS
prescribed by the BSP; 1. To enable the BSP to take timely and
(2) AMLA framework; appropriate remedial action, the external
(3) risk management system, auditor and/or auditing firm must report to
particularly liquidity and market risks; and the BSP within thirty (30) calendar days after
(4) loans and other risk assets review discovery, the following cases:
and classification, as currently prescribed a. Any material finding involving fraud
by the BSP rules and regulations. or dishonesty (including cases that were
d. If the applicant firm will have resolved during the period of audit);
clients falling under Category A, copy b. Any potential losses the aggregate of
Quality Assurance Manual where, aside which amounts to at least one percent (1%)
from the basic elements as required under of the capital;
the BOA basic quality assurance policies c. Any finding to the effect that the
and procedures, specialized quality consolidated assets of the company, on a
assurance procedures should be provided going concern basis, are no longer
relative to, among others review asset adequate to cover the total claims of
quality, adequacy of risk-based capital, risk creditors; and
management systems and corporate d. Material internal control weaknesses
governance framework of covered entities; which may lead to financial reporting
e. Copy of the latest AFS of the problems.
applicant’s two (2) largest clients in terms 2. The external auditor/auditing firm
of total assets; and shall report directly to the BSP within fifteen
f. Copy of firm’s AFS for the (15) calendar days from the occurrence of
immediately preceding two (2) years. the following:
2. Subject to BSP’s provision on early a. Termination or resignation as
deletion from the list of selected auditing external auditor and stating the reason
firm, the selection may be renewed within therefor;
two (2) months before the expiration of the b. Discovery of a material breach of
three (3)-year effectivity of the selection upon laws or BSP rules and regulations such as,
submission of the written application for but not limited to:
renewal to the appropriate department of (1) CAR; and
the SES together with the following (2) Loans and other risk assets review
documents/information: and classification.
a. a copy of updated BOA Certificate c. Findings on matters of corporate
of Registration with the attached list of governance that may require urgent action
qualified partner/s of the firm; by the BSP.

APP. S-8
09.12.31
3. In case there are no matters to report (1) application and renewal for
(e.g. fraud, dishonesty, breach of laws, etc.) accreditation;
the external auditor/auditing firm shall (2) report required under Item "H"; and
submit directly to BSP within fifteen (15) (3) Notarized certification of the
calendar days after the closing of the audit external auditor and/or auditing firm.
engagement a notarized certification that d. The BOA found that, after due
there is none to report. notice and hearing, the external auditor
The management of the covered committed an act discreditable to the
institutions, including its subsidiaries and profession as specified in the Code of
affiliates, shall be informed of the adverse Professional Ethics for CPAs. In this case,
findings and the report of the external the BOA shall inform the BSP of the results
auditor/auditing firm to the BSP shall include thereof;
pertinent explanation and/or corrective e. Declaration of conviction by a
action. competent court of a crime involving moral
The management of the covered turpitude, fraud (as defined in the Revised
institutions, including its subsidiaries and Penal Code), or declaration of liability for
affiliates, shall be given the opportunity to violation of the banking laws, rules and
be present in the discussions between the regulation, the Corporation Code of the
BSP and the external auditor/auditing firm Philippines, the Securities Regulation Code
regarding the audit findings, except in (SRC); and the rules and regulations of
circumstances where the external auditor concerned regulatory authorities;
believes that the entity’s management is f. Refusal for no valid reason, upon
involved in fraudulent conduct. lawful order of the BSP, to submit the
It is, however, understood that the requested documents in connection with an
accountability of an external auditor/ ongoing investigation. The external auditor
auditing firm is based on matters within the should however been made aware of such
normal coverage of an audit conducted in investigation;
accordance with generally accepted auditing g. Gross negligence in the conduct of
standards and identified non-audit services. audits which would result, among others,
in non-compliance with generally accepted
I. DELISTING AND SUSPENSION OF auditing standards in the Philippines or
SELECTED EXTERNAL AUDITOR/ issuance of an unqualified opinion which
AUDITING FIRM is not supported with full compliance by the
1. An external auditor’s duly selected auditee with generally accepted accounting
pursuant to this regulation shall be principles in the Philippines (GAAP). Such
suspended or delisted, in a manner negligence shall be determined by the BSP
provided under this regulation, under any after proper investigation during which the
of the following grounds: external auditor shall be given due notice
a. Failure to submit the report under and hearing;
Item "H" of this Appendix or the required h. Conduct of any of the non-audit
reports under Subsec. X190.1; services enumerated under Item "E.1" for
b. Continuous conduct of audit despite his statutory audit clients, if he has not
loss of independence as provided under Item undertaken the safeguards to reduce the
"E.1" or contrary to the requirements under threat to his independence; and
the Code of Professional Ethics; i. Failure to comply with the
c. Any willful misrepresentation in the Philippine Auditing Standards and
following information/documents; Philippine Auditing Practice Statements.

APP. S-8
09.12.31
2. An auditing firms; accreditation or delisting of the said firm shall depend on

shall be suspended or delisted, after due the gravity of the offense or the impact of
notice and hearing, for the following said scam or scandal on the investing public
grounds: or the securities market, as may be
a. Failure to submit the report under determined by the BSP;
Item "H" or the required reports under Sec. g. The firm has failed reasonably to
X190.1. supervise an associated person and
b. Continuous conduct of audit employed auditor, relating to the following:
despite loss of independence of the firm as (1) auditing or quality control standards,
provided under this regulation and under or otherwise, with a view to preventing
the Code of Professional Ethics; violations of this regulations;
c. Any willful misrepresentation in the (2) provisions under SRC relating to
following information/ documents; preparation and issuance of audit reports
(1) Application and renewal for and the obligations and liabilities of
accreditation; accountants with respect thereto;
(2) Report required under Item "H"; (3) the rules of the BSP under this
and Appendix; or
(3) Notarized certification of the (4) professional standards.
managing partner of the firm. h. Refusal for no valid reason, upon
d. Dissolution of the auditing firm/ order of the BSP, to submit requested
partnership, as evidenced by an Affidavit documents in connection with an ongoing
of Dissolution submitted to the BOA, or investigation. The firm should however be
upon findings by the BSP that the firm/ made aware of such investigation.
partnership is dissolved. The accreditation 3. Pursuant to paragraph 8 of the
of such firm/partnership shall however be aforesaid MOA, the SEC, BSP and IC shall
reinstated by the BSP upon showing that inform BOA of any violation by an
the said dissolution was solely for the accredited/selected external auditor which
purpose of admitting new partner/s have may affect his/her accreditation status as a
complied with the requirements of this public practitioner. The imposition of
regulation and thereafter shall be sanction by BOA on an erring practitioner
reorganized and re-registered; shall be without prejudice to the appropriate
e. There is a showing that the penalty that the SEC, IC or BSP may assess
accreditation of the following number or or impose on such external auditor pursuant
percentage of external auditors, whichever to their respective rules and regulations. In
is lesser, have been suspended or delisted case of revocation of accreditation of a public
for whatever reason, by the BSP: practitioner by BOA, the accreditation by
(1) at least ten (10) signing partners and SEC, BSP and IC shall likewise be
currently employed selected/accredited automatically revoked/derecognized.
external auditors, taken together; or The SEC, BSP and IC shall inform each
(2) such number of external auditors other of any violation committed by an
constituting fifty percent (50%) or more of external auditor who is accredited/selected
the total number of the firm’s signing by any one (1) or all of them. Each agency
partners and currently selected/accredited shall undertake to respond on any referral
auditors, taken together. or endorsement by another agency within
f. The firm or any one (1) of its auditors ten (10) working days from receipt thereof.
has been involved in a major accounting/ 4. Procedure and Effects of Delisting/
auditing scam or scandal. The suspension Suspension.

APP. S-8
09.12.31
a. An external auditor/auditing firm firm shall be deemed to have failed

shall only be delisted upon prior notice to reasonably to supervise any other person
him/it and after giving him/it the opportunity for purpose of Item "I.2.g" above, if:
to be heard and defend himself/itself by (1) There have been established in and
presenting witnesses/ evidence in his favor. for that firm procedures, and a system for
Delisted external auditor and/or auditing applying such procedures, that comply with
firm may re-apply for BSP selection after the applicable rules of BSP and that would
period prescribed by the Monetary Board. reasonably be expected to prevent and
b. BSP shall keep a record of its detect any such violation by such associated
proceeding/investigation. Said proceedings/ person; and
investigation shall not be public, unless (2) Such person or auditor has
otherwise ordered by the Monetary Board reasonably discharged the duties and
for good cause shown, with the consent of obligations incumbent upon that person by
the parties to such proceedings. reason of such procedures and system, and
c. A determination of the Monetary had no reasonable cause to believe that such
Board to impose a suspension or delisting procedures and system were not being
under this section shall be supported by a complied with.
clear statement setting forth the following: f. The BSP shall discipline any
(1) Each act or practice in which the selected external auditor that is suspended
selected/accredited external auditor or or delisted from being associated with any
auditing firm, or associated entry, if selected auditing firm, or for any selected
applicable, has engaged or omitted to auditing firm that knew, or in the exercise
engage, or that forms a basis for all or part or reasonable care should have known,
of such suspension/delisting; of the suspension or delisting of any
(2) The specific provision/s of this selected external auditor, to permit such
regulation, the related SEC rules or association, without the consent of the
professional standards which the Monetary Monetary Board.
Board determined as has been violated; and g. The BSP shall discipline any covered
(3) The imposed suspension or institution that knew or in the exercise of
delisting, including a justification for either reasonable care should have known, of the
sanction and the period and other suspension or delisting of its external auditor
requirements specially required within or auditing firm, without the consent of the
which the delisted auditing firm or external Monetary Board.
auditor may apply for re-accreditation. h. The BSP shall establish for
d. The suspension/delisting, including appropriate cases an expedited procedure
the sanctions/penalties provided in Sec. for consideration and determination of the
X189 shall only apply to: question of the duration of stay of any such
(1) Intentional or knowing conduct, disciplinary action pending review of any
including reckless conduct, that results in disciplinary action of the BSP under this
violation or applicable statutory, regulatory Section.
or professional standards; or
(2) Repeated instances of negligent J. SPECIFIC REVIEW
conduct, each resulting in a violation of the When warranted by supervisory
applicable statutory, regulatory or concern, the Monetary Board may, at the
professional standards. expense of the covered institution require
e. No associate person or employed the external auditor and/or auditing firm to
auditor of a selected/accredited auditing undertake a specific review of a particular

APP. S-8
09.12.31
aspect of the operations of these institutions. L. AUDIT ENGAGEMENT

The report shall be submitted to the BSP Covered institutions shall submit the
and the audited institution simultaneously, audit engagement contract between them,
within thirty (30) calendar days after the their subsidiaries and affiliates and the
conclusion of said review. external auditor/auditing firm to the
appropriate department of the SES within
K. AUDIT BY THE BOARD OF fifteen (15) calendar days from signing
DIRECTORS thereof. Said contract shall include the
Pursuant to Section 58 of RA. No. 8791, following provisions:
otherwise known as “The General Banking 1. That the covered institution shall be
Law of 2000” the Monetary Board may also responsible for keeping the auditor fully
direct the board of directors of a covered informed of existing and subsequent changes
institution or the individual members to prudential regulatory and statutory
thereof, to conduct, either personally or by requirements of the BSP and that both
a committee created by the board, an annual parties shall comply with said requirements;
balance sheet audit of the covered 2. That disclosure of information by the
institution to review the internal audit and external auditor/auditing firm to the BSP as
the internal control system of the required under Items “H” and “J” hereof, shall
concerned entity and to submit a report be allowed; and
of such audit to the Monetary Board 3. That both parties shall comply with
within thirty (30) calendar days after the all the requirements under this Appendix.
conclusion thereof. (As amended by Circular No. 660 dated 25 August 2009)

P REGULATIONS
(Regulations Governing Pawnshops)
TABLE OF CONTENTS
PART ONE - ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY
SECTION 4101P Basic Law Governing Pawnshops

4101P.1 Scope of authority of pawnshops
4101P.2 Form of organization
4101P.3 Organizational requirements
4101P.4 Requirement to register with the Bangko Sentral
4101P.5 Anti-money laundering seminar/training
4101P.6 Bangko Sentral processing and registration fees
4101P.7 Renewal of Bangko Sentral registration of
pawnshop head office and branches
4101P.8 Documentary requirements to renew the Bangko
Sentral registration
SECTION 4102P Definition of Terms
SECTIONS 4103P - 4105P (Reserved)
B. CAPITALIZATION
SECTION 4106P Capital of Pawnshops

41016P.1 Sanctions
SECTION 4107P Prudential Capital Ratio

4107P.1 Sanctions
C. - F. (RESERVED)
iii
G. PROPRIETOR, PARTNERS, DIRECTORS, OFFICERS AND EMPLOYEES
SECTION 4141P Bonding of Officers and Employees

4141P.1 Sanctions
SECTION 4142P Definitions, Qualifications and Responsibilities and Duties of

Proprietor/Partners/Directors/Officers
4142P.1 Definitions
4142P.2 General qualifications of a proprietor, partner,
incorporator, director, officer including branch
manager or officer-in-charge
4142P.3 Qualifications of a director
SECTION 4143P Disqualification of Directors and Officers

4143P.1 Persons disqualified from becoming directors
4143P.2 Persons disqualified from becoming officers
4143P.3 Disqualification procedures
4143P.4 Effect of possession of disqualifications
4143P.5 (Reserved)
4143P.6 Watchlisting
4143P.7 Applicability of Section 4143P to the proprietor
and managing partner of a pawnshop (in case of
a sole proprietorship/partnership
H. BRANCH OFFICES
SECTION 4151P Establishment of Branch Offices

4151P.1 Definition of branch office
4151P.2 Operations and functions
4151P.3 Basis for establishment
4151P.4 Documentary requirements
4151P.5 Processing and registration fees
4151P.6 Renewal of Bangko Sentral registration
4151P.7 Date of opening for business
4151P.8 Pawnshop branches without business permit and
authority to operate considered operating
illegally
iv
SECTION 4156P Business Days and Hours
J. RECORDS AND REPORTS
SECTION 4161P Records

4161P.1 Uniform system of accounts
4161P.2 Philippine financial reporting standards/
Philippine accounting standards
4161P.3 Accounting for pawnshops premises; other
fixed assets
4161P.4 Retention of records
SECTION 4162P Reports

4162P.1 Categories of and signatories to reports
4162P.2 Manner of filing
4162P.3 Sanctions
SECTION 4163P Report on Crimes/Losses
SECTION 4164P Audited Financial Statements/Annual Report of Pawnshops

4164P.1 Financial audit
4164P.2 Disclosure of external auditor's adverse findings
to the Bangko Sentral
4164P.3 Santions
4164P.4 Selection, appointment, reporting requirements
and delisting of external auditors and/or auditing
firm; sanction
SECTION 4165P General Information Sheet
K. INTERNAL CONTROL
SECTION 4171P Internal Control System

4171P.1 Proper accounting records
4171P.2 Number control
4171P.3 Safekeeping of pawns, records and insurance of
premises
4171P.4 Miscellaneous
v
SECTION 4172P Separation of Pawnshop Business from Other Businesses
L. MISCELLANEOUS PROVISIONS
SECTION 4181P Registered/Business Name

4181P.1 Change of registered/business name
4181P.2 Use of registered/business name in signage, pawn
tickets and other forms
4181P.3 Sanctions
SECTION 4182P Transfer/Relocation of Business

4182P.1 Documentary requirements for transfer within the
same city/municipality
4182P.2 Documentary requirements for transfer outside
the city/municipality
SECTION 4183P Closure of Pawnshops

4183P.1 Voluntary closure
4183P.2 Delisting of pawnshops/involuntary closure
4183P.3 Other grounds for delisting
SECTION 4184P Transfer of Ownership

4184P.1 Requirements for transfer of ownership
4184P.2 Processing and registration fees
SECTION 4185P Processing Fee for Replacement of Acknowledgement of

Registration of Head Office/Authority to Operate
SECTION 4190P Duties and Responsibilities of Pawnshops and their Directors/

Officers in Cases of Outsourcing of Pawnshop Functions
SECTION 4191P (Reserved)
SECTION 4192P Prompt Corrective Action Framework
SECTION 4199P General Provision on Sanctions
vi
PART TWO - BORROWING OPERATIONS
A. - J. (RESERVED)
K. OTHER BORROWINGS
SECTION 4285P Security and Exchange Commission Registration of Borrowing
SECTION 4286P Borrowings Constituting Quasi-Banking Functions
PART THREE - LOANS AND INVESTMENTS
A. LOANS IN GENERAL
SECTION 4301P Grant of Loans

4301P.1 General guidelines
4301P.2 Prohibitions
4301P.3 Know your pawner
4301P.4 Sanctions
SECTION 4302P Loan Limit

4302P.1 Sanctions
SECTION 4303P Interest and Surcharges

4303P.1 Rate of interest in the absence of stipulation
4303P.2 Other charges
4303P.3 Posting of interest rate and other charges
4303P.4 Sanctions
SECTION 4304P (Reserved)
SECTION 4305P Past Due Accounts; Renewal

4305P.1 Right of pawner to redeem pawn within ninety
(90) days from maturity
4305P.2 Sanctions
SECTION 4306P Interest Accrual on Past Due Loans
vii
B. LOAN COLLATERAL/SECURITY
SECTION 4321P Kinds of Security
SECTION 4322P Redemption of Pawns

4322P.1 Sanctions
SECTION 4323P Pawn Ticket

4323P.1 Additional regulations on pawn ticket
4323P.2 Sanctions
SECTION 4324P Reminder to Pawner; Notice to the Public

4324P.1 Poster
4324P.2 Sanctions
SECTION 4325P Public Auction of Pawns

4325P.1 Auction of pawned items covered by a single
pawn ticket
C. - J. (RESERVED)
K. MISCELLANEOUS
PART FOUR (RESERVED)
PART FIVE (RESERVED)
viii
PART SIX - MISCELLANEOUS
A. (RESERVED)
SECTION 4641P Electronic Services
SECTION 4642P Issuance and Operations of Electronic Money

4642P.1 Declaration of policy
4642P.2 Definitions
4642P.3 Prior Bangko Sentral approval
4642P.4 Common provisions
4642P.5 Quasi-bank license requirement
4642P.6 Sanctions
4642P.7 Transitory provisions
B. SUNDRY PROVISIONS
SECTION 4651P Supervisory Powers of the Bangko Sentral

4651P.1 Refusal to permit examination
4651P.2 Sanctions
SECTION 4657P Batas Pambansa Blg. 344 - An Act to Enhance the Mobility of
Disabled Persons by Requiring Certain Buildings, Institutions,
Establishments and Public Utilities to Install Facilities and Other
Devices
SECTION 4691P Anti-Money Laundering Regulations

4691P.1 Required seminar/training
4691P.2 Anti-money laundering program
4691P.3 - 4691P.8 (Reserved)
4691P.9 Sanctions and penalties
SECTION 4699P Administrative Sanctions
ix
List of Appendices
09.12.31
LIST OF APPENDICES
No. SUBJECT MATTER
P-1 Chart of Accounts and Description of Loan Register of Pawnshops
P-2 List of Reports Required from Pawnshops
Annex P-2-a - Reporting Guidelines on Crimes/Losses
P-3 Guidelines on Prescribed Reports Signatories and Signatory Authorization

Annex P-3-a - Format of Resolution for Signatories of Category A-1
Reports
Annex P-3-b - Format of Resolution for Signatories of Category A-2
Reports
Annex P-3-c - Format of Resolution for Signatories of Categies A-3
and B Reports
P-4 Standard Pawn Ticket
P-4-a Format of Statement of Understanding on Pawnshop Transaction
P-4-b Standard Additional Stipulations in Pawn Tickets
P-4-c Stipulations not Allowed in Standard Pawn Tickets
P-5 Anti-Money Laundering Regulations

Annex P-5-a - Certification of Compliance with Anti-Money
Annex P-5-b - Rules on Submission of Covered Transaction Reports
Institutions
P-6 Revised Implementing Rules and Regulations of R.A. No. 9160, as

P-7 "Know-Your-Pawner” Policy
P-8 Abstract of “Section 13 and 14 of P.D. No. 114”

(Pawnshop Regulation Act)
P-9 Guidelines to Govern the Selection, Appointment, Reporting

of Covered Entities
xi
§§ 4101P - 4101P.3
09.12.31
PART ONE
ORGANIZATION, MANAGEMENT AND ADMINISTRATION
A. SCOPE OF AUTHORITY percent (30%) of the capital stock of such

pawnshop.
Section 4101P Basic Law Governing In the case of a pawnshop organized
Pawnshops. P.D. No. 114, known as the as a corporation, at least seventy percent
Pawnshop Regulation Act, regulates the (70%) of the voting stock therein shall
establishment and operation of pawnshops. be owned by citizens of the Philippines,
(Circular No. 656 dated 02 June 2009) or if there be no capital stock, at least
seventy percent (70%) of the members
§ 4101P.1 Scope of authority of entitled to vote shall be citizens of the
pawnshops. A duly organized and licensed Philippines.
pawnshop has, in general, the power to Pawnshops registered as a corporation
engage in the business of lending money with foreign equity participation in excess
on the security of personal property within of thirty percent (30%) of the voting stock,
the framework and limitations of P.D. No. or members entitled to vote, of the
114 and the following regulations, subject pawnshop may retain the percentage of
to the regulatory and supervisory powers foreign equity as of 29 January 1973, and
of the BSP. said percentage shall not be increased, but
(Circular No. 656 dated 02 June 2009) may be reduced and once reduced, shall not
be increased thereafter beyond thirty
§ 4101P.2 Form of organization. A percent (30%) of the voting stock, or number
pawnshop may be established as a single of members entitled to vote, of such
proprietorship, a partnership or corporation. pawnshop.
Only Filipino citizens may establish The percentage of foreign-owned voting
and own a pawnshop organized as a single stock in a pawnshop corporation shall be
proprietorship. A pawnshop established determined by the citizenship of its
as a single proprietorship by a non-Filipino individual stockholders. If the voting stock
owner prior to 29 January 1973 may in a pawnshop corporation is held by
continue as such during the lifetime of the another corporation, the percentage of
registered owner. foreign ownership in that pawnshop, shall
If a pawnshop is organized as a be computed on the basis of the foreign
partnership, at least seventy percent citizenship of the individuals owning voting
(70%) of its capital shall be owned by stocks in, or members entitled to vote of,
Filipino citizens. Pawnshops established the stockholder corporation.
as partnerships prior to 29 January 1973, (Circular No. 656 dated 02 June 2009)
with non-Filipino partners whose
aggregate holdings amount to more than § 4101P.3 Organizational requirements
thirty percent (30%) of the capital may Any person or entity desiring to establish a
retain the percentage of their aggregate pawnshop shall register with the Department
holdings as of 29 January 1973, and said of Trade and Industry (DTI), in the case of a
percentage shall not be increased, but may single proprietorship; or with the Securities
be reduced, and once reduced shall not and Exchange Commission (SEC), in the case
be increased thereafter beyond thirty of a partnership/corporation.
Manual of Regulations for Non-Bank Financial Institutions P Regulations

Part I - Page 1
§§ 4101P.3 - 4101P.5
09.12.31
Pawnshops with foreign equity No application for registration shall be

participation shall also register with the accepted from a person or entity other than
Board of Investments. the proprietor, partner, or incorporator of a
After registering with the DTI or with pawnshop unless the person or entity
the SEC, the single proprietorship or the applying on behalf of the proprietor, partner
partnership/corporation, as the case may be, or incorporator submits a duly executed and
shall secure a business license from the city notarized special power of attorney
or municipality where the pawnshop is to authorizing the person or entity to act on
be established and operated, in accordance behalf of the proprietor, partner, or
with the requirements of the pertinent incorporator. In the case of a corporate
ordinance in that city or municipality. applicant, a certified true copy of the board
(Circular No. 656 dated 02 June 2009) resolution authorizing the person or entity
shall likewise be submitted.
§ 4101P.4 Requirement to register with A pawnshop shall commence actual
the Bangko Sentral. Pursuant to Section 6 of operations within six (6) months from the date
P.D. No. 114, which requires pawnbrokers of issuance of the AOR. Failure to commence
to register with the BSP before commencing actual operations within the aforementioned
actual business operations, every pawnshop six (6) months period shall render the BSP
shall submit to the BSP an Information Sheet AOR as automatically cancelled.
on the entity (using BSP-prescribed form) The pawnshop shall notify the BSP in
duly accomplished by the proprietor/ writing of the start of operations within five
managing partner/president under oath that (5) business days from the actual start of
shall be the basis for the issuance by the operations.
BSP of an Acknowledgement of Registration Any pawnshop that is found operating that
(AOR). The Information Sheet shall be does not have a current business permit issued
accompanied by the following documents: by the city or municipality where it is located
a. A Certificate of Registration (COR) and an AOR issued by the BSP is considered
of business name from the DTI, in case of a operating illegally. Such pawnshop shall be
sole proprietorship; reported to the Office of the Mayor of the
b. Articles of Partnership/Incorporation concerned city or municipality, for appropriate
and by-laws duly registered with the SEC, action, without prejudice to whatever legal
in the case of a partnership or a corporation action the BSP may pursue under Section 18
which Articles shall indicate that the primary of P.D. No. 114 and other applicable laws
purpose of the partnership/corporation is to against the pawnshop, its proprietor, partners,
engage in the business of a pawnshop or a incorporators, stockholders, directors,
pawnbroker; president and officers.
c. City/municipal license/business (Circular No. 656 dated 02 June 2009)
license/mayor’s permit for the current period;
d. Personal data sheet (using BSP- § 4101P.5 Anti-money laundering
prescribed form) with passport size picture seminar/training. As a prerequisite for the
duly accomplished by the proprietor or issuance by the BSP of the AOR, the
partners or incorporators, directors, officers officer(s) as well as the personnel directly
and individual stockholders owning 10% or involved in pawnshop operations shall
more of voting stock; and submit proof that he/they have attended a
e. Such other documents that may be seminar on the Anti-Money Laundering Act
required by the BSP that are enumerated as prescribed in Subsec. 4691P.1.
in a list attached to the Information Sheet. (Circular No. 656 dated 02 June 2009)
P Regulations Manual of Regulations for Non-Bank Financial Institutions

Part I - Page 2
§§ 4101P.6 - 4102P
09.12.31
§ 4101P.6 Bangko Sentral processing and Number of Offices Deadline for Renewal
registration fees. A non-refundable 76th to 100th offices 31 December 2010
processing fee in the amount of P1,000.00 101st onward 30 June 2011
shall be collected from a person or entity
applying to register a pawnshop upon Pawnshops with over 100 offices may
completion of the documentary requirements spread the renewal of their AOR and/or AO
in Subsec. 4101P.4. as may be arranged with the BSP.
In addition to the processing fee, Renewal(s) made after the above deadlines
P3,000.00 shall be collected every or after the dates arranged with the BSP shall
pawnshop unit as registration fee which shall be subject to a fine of P500.00 for each
be valid for a period of three (3) years. pawnshop office.
(Circular No. 656 dated 02 June 2009) Subsequent renewals shall be made after
three (3) years based on the anniversary
§ 4101P.7 Renewal of the Bangko Sentral month of the renewal in the preceding
registration of pawnshop head office and paragraph.
branches. The registration with BSP of a (Circular No. 656 dated 02 June 2009)
pawnshop head office and each of its
branches, if any, shall be valid for a period of § 4101P.8 Documentary requirements
three (3) years from the date of issuance of the to renew the Bangko Sentral registration
Acknowledgement of Registration (AOR) of a A pawnshop shall submit an application for
pawnshop head office and Authority to the renewal of its AOR and/or AO which
Operate (AO) of a pawnshop branch. application shall be accompanied by the
Every pawnshop shall renew its AOR following documents:
and/or AO after three (3) years on the a. City/municipal license/business
anniversary month when it was originally license/ mayor’s permit for the current period;
registered and a renewal fee of P3,000.00 b. Unexpired registration of business
shall be collected for each pawnshop office. name with DTI, in the case of a sole
A pawnshop that renews its AOR proprietorship;
and/or AO after the prescribed period of c. Updated Personal data sheet (using
renewal shall pay, in addition to the BSP prescribed form) with passport size picture
P3,000.00 renewal fee, a fine of P500.00 duly accomplished by the proprietor or
for each pawnshop office. partners or incorporators, directors, officers,
A pawnshop that fails to renew its AOR individual stockholders owning 10% or more
and/or AO within six (6) months after the of voting stock and branch managers or
anniversary month shall render the AOR officers-in-charge, as may be applicable; and
and/or AO automatically cancelled as d. Such other documents that may be
provided in Subsec. 4183P.3. required by the BSP that are enumerated in
Pawnshops established prior to the a list attached to the application for renewal
effectivity of these rules shall renew the BSP of AOR/AO.
AOR of its head office and/or AO of (Circular No. 656 dated 02 June 2009)
branches not later than date shown in the
following schedule: Sec. 4102P Definition of Terms
a. Pawnshop shall refer to a person
Number of Offices Deadline for Renewal or entity engaged in the business of lending
First 25 offices 31 March 2010 money on personal property that is physically
26th to 50th offices 30 June 2010 delivered to the pawnshop premises as loan
51st to 75th offices 30 September 2010 collateral. The term shall be synonymous,

Part I - Page 3
§§ 4102P - 4107P
09.12.31
and may be used interchangeably, with A pawnshop’s paid-in capital may be

pawnbroker or pawnbrokerage. in the form of:
b. Pawner shall refer to the borrower a. Cash;
from a pawnshop. b. Tangible properties, including real
c. Pawnee shall refer to the pawnshop estate and improvements thereon; and
or pawnbroker. c. A combination of cash and tangible
d. Pawn is the personal property properties.
delivered by the pawner to the pawnee as Tangible properties shall be limited to
security for a loan. those that are necessary for the conduct of
e. Pawn ticket is the pawnbroker’s the pawnshop business. They may be valued
receipt for a pawn and shall not be considered at fair value which is the amount for which
as an official receipt for amounts collected. an asset could be exchanged between
f. Property shall include only such knowledgeable, willing parties in an arm’s
personal property which can be physically length transaction. The fair value of land and
delivered to the control and possession of buildings is usually determined from market-
the pawnee. based evidence by appraisal that is normally
g. Voting stock is that portion of the undertaken by professionally qualified
authorized capital which is subscribed and appraisers.
entitled to vote. The value of the tangible properties
h. Vital records shall consist of the contributed as capital shall not exceed
Loans Extended/Paid Registers, General twenty-five percent (25%) of said paid-in
Ledger/Journal, that may in electronic form, capital and surplus/acumulated surplus: For
covering the current and at least the pawnshops existing as at 29 January 1973
preceding five (5) years of operation, unused whose value of properties exceeds the
accountable forms and permanent records, prescribed ratio, such percentage may be
e.g., articles of incorporation/co-partnership, retained or reduced but shall not be
by-laws, stock certificates, etc. increased thereafter. Should the ratio, on
i. Bulky pawns shall refer to the other hand, fall below the prescribed
household appliances, office machines and level, it may be increased but not beyond
the like, which occupy considerable amount twenty-five percent (25%).
of space, i.e., measuring at least 1.5 x 1.5 x (Circular No. 656 dated 02 June 2009)
0.5 feet.
j. Premises shall refer to the area § 4106P.1 Sanctions. The following
where the pawnshop conducts its business sanctions shall be imposed on pawnshops
and maintains office. It includes office or that fail to comply with the minimum
storage spaces maintained and/or used by paid-in capital:
the pawnshop which are adjacent to the a. Suspension of branching privilege;
pawnshop’s location. or
(Circular No. 656 dated 02 June 2009) b. Cancellation of BSP AOR as a
pawnshop.
Secs. 4103P - 4105P (Reserved) (Circular No. 656 dated 02 June 2009)
B. CAPITALIZATION Sec. 4107P Prudential Capital Ratio. The

minimum capital ratio of a pawnshop,
Sec. 4106P Capital of Pawnshops. Every expressed as a percentage of total capital
pawnshops shall have a minimum paid-in to pledge loans, shall not be less than fifty
capital of P100,000. percent (50%): Provided, That total pledge

Part I - Page 4
§§ 4107P - 4142P.1
09.12.31
loans shall not exceed P3.0 million. If and be required to post bonds with reputable
when the pledge loans exceed P3.0 million, insurance/surety companies accredited by
additional capital of 30% of pledge loans the Insurance Commissioner.
in excess of P3.0 million shall be required. (Circular No. 656 dated 02 June 2009)
For this purpose, the term total capital
shall be defined as total assets minus: § 4141P.1 Sanctions. A pawnshop that
(a) total liabilities; fails to post bonds for its accountable officers
(b) deferred tax assets; and employees shall be subject to the
(c) unbooked valuation reserves; and following sanctions:
(d) other capital adjustments as may be a. Warning for the first three (3)
required by the BSP. offense, whether incurred at the main office
Any appraisal surplus or appreciation or branch, if the pawnshop has any;
credit as a result of appreciation or an increase b. For succeeding offenses, fine of
in book value of the assets of the pawnshop P500.00 per day of non-compliance per
shall be excluded. officer/employee, from the time the
(Circular No. 656 dated 02 June 2009) pawnshop was informed of the violation
until such time that the pawnshop shall have
§ 4107P.1 Sanctions. Any pawnshop that secured a bond.
fails to comply with the prudential capital (Circular No. 656 dated 02 June 2009)
requirement shall submit within thirty (30)
days from date of notice from the BSP, a Sec. 4142P Definitions, Qualifications,
Letter of Undertaking to implement a capital Responsibilities and Duties of Proprietor/
build-up program for a period not to exceed Partners/Incorporators/Directors/Officers
one (1) year from date of undertaking. For purposes of this Section the following
The following sanctions shall be shall be the definitions and qualifications,
imposed on any pawnshop that fails to responsibilities and duties of proprietor/
submit a Letter of Undertaking or implement partners/incorporators/directors/officers.
the Letter of Undertaking: (Circular No. 656 dated 02 June 2009)
a. Suspension of branching privileges; or
b. Revocation of BSP registration as a § 4142P.1 Definitions
pawnshop. a. Proprietor is the person named in
(Circular No. 656 dated 02 June 2009) the Certificate of Registration issued by the
DTI and in the city/municipal license and
Secs. 4108P - 4110P (Reserved) mayor’s permit as the owner of the
business.
C. - F. (RESERVED) b. Partners are the persons named in
the articles of partnership.
Secs. 4111P - 4140P (Reserved) c. Incorporators are those mentioned
as such in the articles of incorporation as
G. PROPRIETOR/PARTNERS/ originally forming and composing the
DIRECTORS, OFFICERS AND corporation and who are signatories thereof.
EMPLOYEES d. Directors – Directors shall include:
(1) directors who are named as such in
Sec. 4141P Bonding of Officers and the articles of incorporation;
Employees. Accountable officers and (2) directors duly elected in subsequent
employees of pawnshops especially those meetings of the pawnshop’s stockholders;
who have access to pawned articles shall and

Part I - Page 5
§§ 4142P.1 - 4143P.1
09.12.31
(3) those elected to fill vacancies in the § 4142P.3 Qualifications of a director

board of directors. In addition to the requirements of Subsec.
The number of members of the board of 4142P.2 a, c and d above, a director must
directors, pursuant to Section 10 of Batas have attended a special seminar on
Pambansa No. 68, shall be at least five (5), corporate governance conducted by a
and a maximum of fifteen (15) directors. service provider accredited by the SEC or
e. Officers – are those persons whose BSP.
duties as such are defined in the by-laws (for (Circular No. 656 dated 02 June 2009)
corporations) or those who are generally
known to be the officers of the pawnshop Sec. 4143P Disqualification of Directors
either thru announcement, representation, and Officers. The following regulations
publication or any kind of communication shall govern the disqualification of
made by the pawnshop. pawnshop directors and officers.
(Circular No. 656 dated 02 June 2009) (Circular No. 656 dated 02 June 2009)
§ 4142P.2 General qualifications of a § 4143P.1 Persons disqualified from

proprietor, partner, incorporator, director, becoming directors. Without prejudice to
officer including branch manager or specific provisions of law prescribing
officer-in-charge. Any person can be a disqualifications for directors/trusteees, the
proprietor, partner, incorporator, director, following are disqualified from becoming
officer, branch manager or officer-in-charge directors of pawnshops:
of a pawnshop provided he/she: a. Permanently disqualified
a. Must have undergone a briefing on Directors/trustees/officers/employees
pawnshop regulations conducted by the BSP permanently disqualified by the Monetary
or any accredited service provider; Board from holding a director/trustee
b. Must have undergone a briefing on position:
the Anti-Money Laundering Law (AMLA) as (1) Persons who have been convicted
prescribed by Subsec. 4691P.1; by final judgment of the court for offenses
c. Must not be included in the BSP involving dishonesty or breach of trust such
Watchlist of directors and officers; and as estafa, embezzlement, extortion, forgery,
d. Must not possess any derogatory malversation, swindling and theft;
information from the National Bureau of (2) Persons who have been convicted
Investigation (NBI) and the Barangay by final judgment of the court for violation
where the person resides and where the of banking laws and/or relevant laws of other
pawnshop conducts business. The NBI FIs under the supervisory and regulatory
clearance and Barangay clearance shall be authority of the BSP;
submitted pursuant to Subsecs. 4101P.4 (3) Persons who have been judicially
and 4151P.4. declared insolvent, spendthrift or
Proprietors, partners, stockholders, incapacitated to contract; or
directors, officers including branch managers (4) Directors, trustees, officers of
or officers-in-charge of pawnshops closed institutions under the supervisory
established prior to 25 June 2009 shall and regulatory authority of the BSP who
submit the NBI and Barangay clearances were responsible for such institutions’
when the pawnshops apply for the renewal closure as determined by the Monetary Board.
of their BSP AOR and/or AO as prescribed b. Temporarily disqualified
in Subsec. 4101P.8. Directors/trustees/officers/employees
(Circular No. 656 dated 02 June 2009) disqualified by the Monetary Board from

Part I - Page 6
§ 4143P.1
09.12.31
holding a director/trustee position for a owning a controlling interest in the

specific/indefinite period of time. Included are: partnership; and
(1) Persons who refuse to fully disclose (v) A corporation, association or firm
the extent of their business interest to the wholly-owned or majority of the capital of
appropriate department of the SES when which is owned by any or a group of
required pursuant to a provision of law or persons mentioned in the foregoing Items
of a circular, memorandum or rule or “(i)”, “(ii)” and “(iv)”.
regulation of the BSP. This disqualification This disqualification shall be in effect
shall be in effect as long as the refusal as long as the delinquency persists.
persists; (4) Persons convicted for offenses
(2) Directors who have been absent or involving dishonesty, breach of trust or
who have not participated for whatever violation of banking laws and/or relevant
reasons in more than fifty percent (50%) of laws of other FIs under the supervision of
all meetings, both regular and special, of the BSP but whose conviction has not yet
the board of directors during their become final and executory;
incumbency, or any twelve (12)-month (5) Directors/trustees and officers of
period during said incumbency. The closed institutions under the supervisory
disqualification applies for purposes of the and regulatory powers of the BSP pending
succeeding election; their clearance by the Monetary Board;
(3) Persons who are delinquent in the (6) Directors/ trustees disqualified for
payment of their obligations as defined failure to observe/discharge their duties and
hereunder: responsibilities prescribed under existing
(a) Delinquency in the payment of regulations. This disqualification applies
obligations means that an obligation of a until the lapse of the specific period of
person with the institution where he/she is disqualification or upon approval by the
a director or officer, or at least two (2) Monetary Board or the appropriate
obligations with other FIs, under different department of the SES of such directors’/
credit lines or loan contracts, are past due trustees' election/reelection;
pursuant to Secs. X306, 4308Q, 4306S and (7) Persons dismissed from employment
4305P; for cause. This disqualification shall be in
(b) Obligations shall include all effect until they have cleared themselves of
borrowings from any FI obtained by: involvement in the alleged irregularity or
(i) A director/trustee or officer for his upon clearance, on their request, from the
own account or as representative or agent Monetary Board after showing good and
of others or where he/she acts as justifiable reasons, or after the lapse of five
guarantor, endorser or surety for loans (5) years from the time they were officially
from such FIs; advised by the appropriate department of
(ii) The spouse or child under the the SES of their disqualification;
parental authority of the director/trustee or (8) Those under preventive suspension;
officer; and
(iii) Any person whose borrowings or (9) Persons with derogatory records
loan proceeds were credited to the account with the NBI, court, police, Interpol and
of, or used for the benefit of a director/ monetary authority (central bank) of other
trustee or officer; countries (for foreign directors/trustees and
(iv) A partnership of which a director/ officers) involving violation of any law, rule
trustee or officer, or his/her spouse is the or regulation of the Government or any of
managing partner or a general partner its instrumentalities adversely affecting the

Part I - Page 7
§§ 4143P.1 - 4143P.3
09.12.31
integrity and/or ability to discharge the trustee/officer in any FI under the

duties of a director/trustee or officer. This supervision of the BSP. Grounds for
disqualification applies until they have disqualification made known to the
cleared themselves of involvement in the institution shall be reported to the
alleged irregularity. appropriate department of the SES of the BSP
(Circular No. 656 dated 02 June 2009) within 72 hours from knowledge thereof.
b. On the basis of knowledge and
§ 4143P.2 Persons disqualified from evidence on the existence of any of the
becoming officers grounds for disqualification mentioned in
a. The disqualifications for directors Subsecs. 4143P.1 and 4143P.2, the director
mentioned in Subsec. 4143P.1 shall likewise or officer concerned shall be notified in
apply to officers, except those stated in Items writing either by personal service or
“b(2)”. through registered mail with registry return
b. Except as may be authorized by the receipt card at his/her last known address
Monetary Board or the Governor, the by the appropriate department of the SES of
spouse or a relative within the second the existence of the ground for his/her
degree of consanguinity or affinity of any disqualification and shall be allowed to
person holding the position of chairman, submit within 15 calendar days from
president, executive vice president or any receipt of such notice an explanation on
position of equivalent rank, general why he/she should not be disqualified and
manager, treasurer, chief cashier or chief included in the watchlisted file, together
accountant is disqualified from holding or with the evidence in support of his/her
being elected or appointed to any of said position. The head of said department may
positions in the same pawnshop and the allow an extension on meritorious ground.
spouse or relative within the second degree c. Upon receipt of the reply/
of consanguinity or affinity of any person explanation of the director/trustee/officer
holding the position of manager, cashier, or concerned, the appropriate department of
accountant of a branch or office of a the SES shall proceed to evaluate the case.
pawnshop is disqualified from holding or The director/trustee/officer concerned shall
being appointed to any of said positions in be afforded to defend/clear himself/herself.
the same branch or office. d. If no reply has been received from
(Circular No. 656 dated 02 June 2009) the director/trustee/officer concerned upon
the expiration of the period prescribed
§ 4143P.3 Disqualification procedures under Item “b” above, said failure to reply
a. The board of directors/trustees and shall be deemed a waiver and the
management of every pawnshop shall be appropriate department of the SES shall
responsible for determining the existence of proceed to evaluate the case based on
the ground for disqualification of the available records/evidence.
pawnshop’s directors/trustees/officer or e. If the grounds for disqualification
employee and for reporting the same to the is delinquency in the payment of obligation,
BSP. While the concerned pawnshop may the concerned director/trustee or officer
conduct its own investigation and impose shall be given a period of thirty (30) calendar
appropriate sanction/s as are allowable, this days within which to settle said obligation
shall be without prejudice to the authority or, restore it to current status or, to explain
of the Monetary Board to disqualify a why he/she should not be disqualified and
pawnshop director/trustee/officer/employee included in the watchlisted file, before the
from being elected/appointed as director/ evaluation on his disqualification and

Part I - Page 8
§ 4143P.3
09.12.31
watchlisting is elevated to the Monetary not for the purpose of passing judgment on
Board. the findings and decision of the entity
f. For directors/trustees/officers of concerned. The appropriate department of
closed banks, the concerned department of the SES may decide to recommend to the
the SES shall make appropriate Monetary Board a penalty lower than
recommendation to the Monetary Board disqualification (e.g., reprimand, suspension,
clearing said directors/trustees/officers when etc.) if, in its judgment the act committed or
there is no pending case/complaint or omitted by the director/trustee/officer
evidence against them. When there is concerned does not warrant disqualification.
evidence that a director/trustee/officer has h. All other cases of disqualification,
committed irregularity, the appropriate whether permanent or temporary shall be
department of the SES shall make elevated to the Monetary Board for approval
recommendation to the Monetary Board and shall be subject to the procedures
that his/her case be referred to the Office of provided in Items “a”, “b”, “c” and “d” above.
Special Investigation (OSI) for further i. Upon approval by the Monetary
investigation and that he/she be included Board, the concerned directors/trustees/
in the master list of temporarily disqualified officers shall be informed by the appropriate
persons until the final resolution of his/her department of the SES in writing either by
case. Directors/trustee/officer with pending personal service or through registered mail
cases/complaints shall also be included in with registry return receipt card, at his/her
said master list of temporarily disqualified last known address of his/her disqualification
persons upon approval by the Monetary from being elected/appointed as director/
Board until the final resolution of their cases, trustee/officer in any FI under the supervision
If the director/trustee/officer is cleared from of BSP and/or of his/her inclusion in the
involvement in any irregularity, the master list of watchlisted persons so
appropriate department of the SES shall disqualified.
recommend to the Monetary Board his/her j. The board of directors/trustees of the
delisting. On the other hand, if the director/ concerned institution shall be immediately
trustee/officer concerned is found to be informed of cases of disqualification
responsible for the closure of the institution, approved by the Monetary Board and shall
the concerned department of the SES shall be directed to act thereon not later than the
recommend to the Monetary Board his/her following board meeting. Within seventy-
delisting from the disqualified persons and two (72) hours thereafter, the corporate
his/her inclusion in the master list of secretary shall report to the Governor of the
permanently disqualified persons. BSP through the appropriate department of
g. If the disqualification is based on the SES the action taken by the board on the
dismissal from employment for cause, the director/trustee/officer involved.
appropriate department of the SES shall, as k. Persons who are elected or
much as practicable, endeavor to establish appointed as director/trustee or officer in any
the specific acts or omissions constituting of the BSP-supervised institutions for the first
the offense of the ultimate facts which time but are subject to any of the grounds
resulted in the dismissal to be able to for disqualification provided for under
determine if the disqualification of the Subsecs. 4143P.1 and 4143P.2 shall be
director/trustee/officer concerned is afforded the procedural due process
warranted or not. The evaluation of the case prescribed above.
shall be made for the purpose of determining l. Whenever a director/trustee/officer
if disqualification would be appropriate and is cleared in the process mentioned under

Part I - Page 9
§§ 4143P.3 - 4143P.6
09.12.31
Item “c” above or, when the ground for recommendation by the appropriate
disqualification ceases to exist, he/she would department of the SES, the inclusion of
be eligible to become director/trustees or directors/trustees/officers/employees in
officer of any bank, QB, trust entity or any watchlist disqualification files “A” and “B”
institution under the supervision of the BSP on the basis of decisions, actions or reports
only upon prior approval by the Monetary of the courts, institutions under the
Board. It shall be the responsibility of the supervisory and regulatory powers of the
appropriate department of the SES to elevate BSP, NBI or other administrative agencies
to the Monetary Board the lifting of the shall first be approved by the Monetary
disqualification of the concerned director/ Board.
trustee/officer and his/her delisting from the c. Notification of directors/trustees/
masterlist or watchlisted persons. officers/employees. Upon approval by the
(Circular No. 656 dated 02 June 2009) Monetary Board, the concerned director/
trustee/officer/employee shall be informed
§ 4143P.4 Effect of possession of through registered mail, with registry return
disqualifications. Directors/trustees/officers receipt card, at his last known address of
elected or appointed possessing any of the his inclusion in the masterlist of watchlisted
disqualifications as enumerated herein, shall persons disqualified to be a director/trustee/
vacate their respective positions immediately. officer in any institution under the supervisory
(Circular No. 656 dated 02 June 2009) and regulatory powers of the BSP.
d. Confidentiality. Watchlisting shall
§ 4143P.5 (Reserved) be for internal use only and may not be
accessed or queried upon by outside parties
§ 4143P.6 Watchlisting. To provide the including such institutions under the
BSP with a central information file to be used supervisory and regulatory powers of the
as reference in passing upon and reviewing BSP, except with the authority of the person
the qualifications of persons elected or concerned and with the approval of the
appointed as directors/trustees or officer of Deputy Governor, SES, the Governor, or the
an institution under the supervisory and Monetary Board.
regulatory powers of the BSP, the SES shall The BSP will disclose information on
maintain a watchlist of disqualified its watchlist files only upon submission of
directors/trustees/officers under the a duly accomplished and notarized
following procedures: authorization from the concerned person
a. Watchlist categories. Watchlisting and approval of such request by the Deputy
shall be categorized as follows: Governor, SES or the Governor or the
(1) Disqualification File “A” Monetary Board. The prescribed authorization
(Permanent) - Directors/trustees/officers/ form to be submitted to the concerned
employees permanently disqualified by the department of the SES is in Appendix Q-45.
Monetary Board from holding a director/ Pawnshops can gain access to
trustee/officer position. information in the said watchlist for the sole
(2) Disqualification File “B” purpose of screening their applicants for
(Temporary) - Directors/trustees/officers/ hiring and/or confirming their elected
employees temporarily disqualified by the directors/trustees and appointed officers.
Monetary Board from holding a director/ Pawnshops must obtain the said
trustee/officer position. authorization on an individual basis.
b. Inclusion of directors/trustees/ e. Delisting. All delistings shall be
officers/employees in the watchlist. Upon approved by the Monetary Board upon

Part I - Page 10
§§ 4143P.6 - 4151P.2
09.12.31
recommendation of the appropriate proprietor or managing partner shall refer

department of the SES except in cases of to a person directly involved in the
persons known to be dead where delisting operation of a pawnshop business.
shall be automatic upon proof of death and In case the disqualification shall cause the
need not be elevated to the Monetary Board. dissolution of the proprietorship or partnership,
Delisting may be approved by the Monetary the AOR and AO, if any, shall be cancelled
Board in the following cases: and the pawnshop shall be removed from the
(1) Watchlist - Disqualification File “B” BSP List of Registered Pawnshops as
(Temporary) - prescribed in Subsec. 4183P.2.
(a) After the lapse of the specific period (Circular No. 656 dated 02 June 2009)
of disqualification;
(b) When the conviction by the court Secs. 4144P - 4150P (Reserved)
for crimes involving dishonesty, breach of
trust and/or violation of banking laws H. BRANCH OFFICES
becomes final and executory, in which case
the director/trustee/officer/employee is Sec. 4151P Establishment of Branch
relisted to Watchlist - Disqualification File Offices. In line with Section 6 of P.D. No.
“A” (Permanent); or 114 which requires pawnshops to register
(c) Upon favorable decision or with the BSP before commencing actual
clearance by the appropriate body, i.e., business operations, no pawnshop shall
court, NBI, institutions under the open, maintain or operate a branch office
supervisory and regulatory powers of the without first applying for and obtaining
BSP, or such other agency/body where the from the BSP, through the appropriate
concerned individual had derogatory department of the SES, an Authority to
record. Operate (AO) such branch which shall be
Directors/trustees/officers/employees processed in accordance with the
delisted from the Watchlist - following guidelines.
Disqualification File “B” other than those (Circular No. 656 dated 02 June 2009)
upgraded to Watchlist - Disqualification File
“A” shall be eligible for re-employment with § 4151P.1 Definition of branch office
any institution under the supervisory and As used in these rules, the term “branch
regulatory powers of the BSP. office” refers to any place of business outside
(Circular No. 656 dated 02 June 2009) the head or main office of a pawnshop where
pawnshop operations and transactions are
§ 4143P.7 Applicability of section conducted under the control and supervision
4143P to the proprietor and managing of the head or main office.
partner of a pawnshop (in the case of a (Circular No. 656 dated 02 June 2009)
sole proprietorship/partnership). The
foregoing disqualification and watchlisting § 4151P.2 Operations and functions
provisions of this Section shall apply, where The operations and transactions of a branch
practicable, to the managing proprietor or office shall likewise be subject to the
managing partner of a pawnshop that is a provisions of P.D. No. 114 governing
sole proprietorship or partnership, in which operations and transactions of a head or
case, the BSP shall initiate the main office, as well as by other pertinent
disqualification proceedings against the laws, BSP rules and regulations.
managing proprietor/managing partner. For The primary purpose of branching is
purposes of this subsection, a managing to provide additional source of credit to

Part I - Page 11
§§ 4151P.2 - 4151P.7
09.12.31
small borrowers not served by the banks d. City/municipal license/business

and other FIs. license/mayor’s permit from the city or
(Circular No. 656 dated 02 June 2009) municipality where the pawnshop branch
is to be established;
§ 4151P.3 Basis for establishment e. Personal data sheet (using BSP-
Branch offices shall be allowed on the basis prescribed form) with passport size picture
of the head office’s ability to conduct duly accomplished by the proposed branch
operations in accordance with P.D. No. 114 manager or officer-in-charge; and
and BSP rules and regulations. The BSP f. Such other documents that may be
department concerned shall not process an required by the BSP for the evaluation of
application for branching of a pawnshop if the branch application as enumerated in a
any of the following conditions: list attached to the application form.
a. has an approved but unopened (Circular No. 656 dated 02 June 2009)
branch;
b. has an unpaid penalty assessed by § 4151P.5 Processing and registration
the BSP; fees. A non-refundable processing fee of
c. has not complied with the required P1,000.00 shall be collected from a person
prudential capital ratio as prescribed in Sec. or entity applying to establish a pawnshop
4107P; branch upon completion of the
d. has not complied with the required documentary requirements in Subsec.
renewal of BSP AOR and/or AO as 4151P.4.
prescribed in Subsec. 4101P.7; and In addition to the processing fee,
e. has not submitted any of the P3,000.00 shall be collected from such
periodic reports listed in Appendix P-2. person or entity as registration fee which is
(Circular No. 656 dated 02 June 2009) valid for a period of three (3) years.
(Circular No. 656 dated 02 June 2009)
§ 4151P.4 Documentary requirements
A pawnshop that intends to open a branch § 4151P.6 Renewal of Bangko Sentral
office shall submit to the BSP an application registration. Every branch of a pawnshop
(using a BSP-prescribed form) duly shall be subject to the provisions of Subsec.
accomplished and signed by the proprietor/ 4101P.7 on renewal of BSP registration.
managing partner/president under oath that (Circular No. 656 dated 02 June 2009)
shall be the basis for the issuance by the
BSP an Authority to Operate (AO). The § 4151P.7 Date of opening for
following documents shall be submitted business. The pawnshop branch shall
together with every application for a branch commence actual operations within six (6)
office: months from the date of issuance of the AO.
a. Duly notarized certification from the Failure to commence actual operations
head office as to its compliance with the within the aforementioned six (6) months
minimum amount of capital under Secs. period shall render the BSP AO as
4106P and 4107P; automatically cancelled.
b. Certified true copy of the board The pawnshop head office shall notify
resolution authorizing the establishment of the BSP in writing of the start of operations
the branch (in case of corporation); of the branch within five (5) business days
c. Information on branch location, from the actual start of the operations of the
facilities (such as vault) and insurance branch.
coverage thereon; (Circular No. 656 dated 02 June 2009)

Part I - Page 12
§§ 4151P.8 - 4161P
09.12.31
§ 4151P.8 Pawnshop branches without c. Cancellation of the AOR or AO, for

business permit and authority to operate a subsequent offense. Once the AOR of the
considered operating illegally. Any main office is cancelled, the AO of the
pawnshop branch that is found operating branch(es) is/are likewise cancelled.
that does not have a current business permit Pawnshops shall only transact business
issued by the city or municipality where it in the pawnshops’ registered place of
is located and an AO issued by the BSP is business or premises of the head office and
considered operating illegally. Such branches, if any. Transacting business
pawnshop shall be reported to the Office outside the pawnshops’ registered place of
of the Mayor of the concerned city or business or premises shall be a ground for
municipality, for appropriate action, cancellation of pawnshop’s AOR or AO, as
without prejudice to whatever legal action the case may be.
the BSP may pursue under Section 18 of (Circular No. 656 dated 02 June 2009)
P.D. No. 114 and other applicable laws
against the pawnshop, its proprietor, Secs. 4157P - 4160P (Reserved)
partners, stockholders, directors and
president or officer of equivalent rank. J. RECORDS AND REPORTS
Sec. 4161P Records. The accounting period
Secs. 4152P - 4155P (Reserved) of pawnshops shall be on the calendar year
basis.
I. BUSINESS DAYS AND HOURS The accounting records of pawnshops
shall consist of records of original entry and
Sec. 4156P Business Days and Hours books of final entry.
Pawnshops, including their branches, shall The records of original entry shall consist
transact business at a minimum of five (5) of pawn tickets, official receipts, vouchers
days a week, for a minimum of six (6) hours and other supporting documents. The books
a day, both to be selected by them. They of final entry shall consist of the general
may, at their discretion, remain open ledger, subsidiary ledgers and registers of
beyond the aforesaid requirement as they loans extended and loans paid.
deem it necessary. Pawnshops may use any form of loans
The business hours and business days extended and loans paid registers as long
shall be printed on the face of the pawn as they contain spaces and columns for the
ticket and shall be posted together with the following information enumerated in
original BSP AOR/AO conspicuously at all Section 11 of P.D. No. 114, as well as the
times within the premises of the pawnshop, data required by the BSP:
preferably at the window or door that is (a) name of the pawner;
clearly visible to the pawning public. (b) amount of principal loan;
Failure to display the original copy of (c) pawn ticket number; and
the AOR/AO and the business days and (d) signature of the pawner.
hours shall subject the pawnshop to the A pawnshop that uses a computerized
following administrative sanctions: system may record its loan transactions in
a. Warning for the first three (3) individual loan extended vouchers which
offences of the pawnshop main office shall contain the same information
and/or its branches, if there is any; necessary to comply with Section 11 of
b. Penalty of P300.00 each for the P.D. No. 114 in lieu of the loan extended
succeeding three (3) offenses; and and loans paid registers. Such pawnshops

Part I - Page 13
§§ 4161P - 4161P.4
09.12.31
shall periodically compile or bind the loan a. In preparing consolidated financial

extended vouchers and shall be made statements, only investments in financial
available for BSP examination upon request. allied subsidiaries except insurance
The Description of Loan Registers of subsidiaries shall be consolidated on a
Pawnshops provided in Appendix P-1 shall line-by-line basis; while insurance and
be followed. non-financial allied subsidiaries shall be
(Circular No. 656 dated 02 June 2009) accounted for using the equity method.
Financial/non-financial allied/non-allied
§ 4161P.1 Uniform system of associates shall be accounted for using
accounts. Pawnshops shall strictly adopt/ equity method in accordance with the
implement the Uniform System of Accounts provisions of PAS 28 “Investments in
prescribed for pawnshops in the recording Associates”.
of daily transactions including reportorial b. For purposes of preparing separate
requirements. financial statements, financial/non-financial
The Uniform Chart of Accounts for allied/non-allied subsidiaries/associates,
Pawnshops is provided in Appendix P-1. including insurance subsidiaries/associates,
(Circular No. 656 dated 02 June 2009) shall also be accounted for using the equity
method; and
§ 4161P.2 Philippine financial reporting c. FIs shall be required to meet the BSP
standards/Philippine accounting standards recommended valuation reserves.
Statement of policy. It is the policy of the Notwithstanding the exceptions in
BSP to promote fairness, transparency and Items “a”, “b” and “c”, the audited annual
accuracy in financial reporting. It is in this financial statements required to be
light that the BSP aims to adopt all Philippine submitted to the BSP in accordance with
Financial Reporting Standards (PFRS) and Appendix P-2 shall in all respect be PFRS/
Philippine Accounting Standards (PAS) PAS compliant: Provided, That FIs shall
issued by the Accounting Standards Council submit to the BSP adjusting entries
(ASC) to the greatest extent possible. reconciling the balances in the financial
Pawnshops shall adopt the PFRS and statements for prudential reporting with
PAS which are in accordance with generally that in the audited annual financial
acceptable accounting principles in statements.
recording transactions and in the preparation (Circular No. 656 dated 02 June 2009)
of financial statements and reports to BSP.
However, in cases where there are § 4161P.3 Accounting for pawnshops
differences between BSP regulations and premises; other fixed assets. Pawnshop
PFRS/PAS as when more than one (1) option premises, furniture, fixture and equipment
are allowed or certain minimum limits are shall be accounted for using the cost model
prescribed by the PFRS/PAS, the option or under PAS 16 “Property, Plant and
limit prescribed by BSP regulations shall be Equipment”.
adopted by all banks/FIs. (Circular No. 656 dated 02 June 2009)
For purposes hereof, the PFRS/PAS shall
refer to issuances of the ASC and approved § 4161P.4 Retention of records
by the PRC. Pawnshop records, ledgers, books and
Accounting treatment for prudential documents (including those in electronic
reporting. For prudential reporting, FIs shall media):
adopt in all respect the PFRS and PAS except (a) shall not be destroyed or disposed
as follows: of for at least five (5) years;

Part I - Page 14
§§ 4161P.4 - 4162P.3
09.12.31
(b) shall have backup hard and/or soft in accordance with the requirements in this
copy to allow reconstruction of records in Subsection shall be considered as not having
case of loss or destruction due to fire and submitted.
other fortuitous events; and (Circular No. 656 dated 02 June 2009)
(c) shall be made available for BSP
examination upon request. § 4162P.2 Manner of filing. The
A pawnshop that does not have records, submission of the reports shall be effected
ledgers, registers, books or documents or by filing them personally with the
refuses to permit access to its records, appropriate department of the SES or with
ledgers, registers, books or documents to the BSP Regional Offices/Units, or by
an authorized BSP officer examiner may be sending them by registered mail or special
considered as refusal to permit an delivery through private couriers, unless
examination, the penalty for which shall be otherwise specified in the circular or
the revocation/cancellation of the memorandum of the BSP.
pawnshop’s BSP registration under Subsec. (Circular No. 656 dated 02 June 2009)
4651P.2.
(Circular No. 656 dated 02 June 2009) § 4162P.3 Sanctions
a. Definition of terms. For purposes of
Sec. 4162P Reports. Pawnshops shall these rules, the following definitions shall
submit to the appropriate department of the apply:
SES the reports listed in Appendix P-2 in (1) Report shall refer to any report or
the forms as may be prescribed by the DG, statement required of a pawnshop to be
SES. submitted to the BSP periodically or within
Any change in, or amendment to, the a specified period.
articles of incorporation/co-partnership, (2) Faulty report shall refer to an
by-laws or material documents required to inaccurate/improperly accomplished report.
be submitted to the BSP shall be reported (3) Willful delay or default in the
by submitting copies of the amended articles submission of reports shall refer to the failure
of incorporation, by-laws or material of a pawnshop to submit a report on time.
document to the appropriate department of Failure to submit a report on time due to
the SES within fifteen (15) days following fortuitous events, such as fire and other natural
such change. calamities and public disorders, including
(Circular No. 656 dated 02 June 2009) strike or lockout affecting a pawnshop as
defined in the Labor Code or a national
§ 4162P.1 Categories of and signatories emergency affecting operations of pawnshops,
to reports. Reports required to be submitted shall not be considered as willful delay.
to the BSP are classified into Categories (4) False statement shall refer to any
A-1, A-2, A-3 and B reports as indicated in untruthful data or information or falsehoods
the list of reports required to be submitted made in a report to the BSP or its authorized
to the BSP in Appendix P-2. agents, with intent to deceive or mislead.
Appendix P-3 prescribes the signatories Any false statement which tends to favor
for each report category and the the pawnshop submitting the report shall
requirements on signatory authorization. be prima facie evidence of intent to deceive
Reports submitted in computer media shall or mislead.
be subject to the same requirements. (5) Repeated violation shall mean the
A report submitted to the BSP under the commission of the same offense for at least
signature of an officer who is not authorized two (2) times.

Part I - Page 15
§ 4162P.3
09.12.31
(6) Persistent violation shall mean the c. Fines for willful delay in submission
commission of the same offense for at least of reports. Pawnshops incurring willful
three (3) times. delay in the submission of required reports
(7) Offense shall refer to submission shall pay a fine in accordance with the
of faulty report, willful delay in submission following schedule:
of reports, or making of false statements in
reports. I. For Categories A-1, A-2 and A-3
(8) Continuing offenses/violations are reports -
acts, omissions or transactions entered into, Per calendar day of ninety pesos
in violations of laws, BSP rules and (P90) default until the report is filed
regulations, MB directives, and orders of the
Governor which persist from the time the II. For Category B reports -
particular acts were committed or omitted Per calendar day of thirty pesos
or the transactions were entered into until (P30) default until the report is filed
the same were corrected/rectified by
subsequent acts or transactions. They shall Delay or default shall start to run on
be penalized on a per calendar day basis the day following the last day required for
from the time the acts were committed/ the submission of reports. However, should
omitted or the transactions were effected the last day of filing fall on a non-working
up to the time they were corrected/ day in the locality where the reporting
rectified. pawnshop is situated, delay or default shall
(9) Transactional offenses/violations start to run on the day following the next
are acts, omissions or transactions entered working day. The due date/deadline for
into in violation of laws, BSP rules and submission of reports to BSP as prescribed
regulations, Monetary Board directives, under Sec. 4162P governing the frequency
and orders of the Governor which cannot and deadlines indicated in Appendix P-2
be corrected/rectified by subsequent acts shall be automatically moved to the next
or transactions. They shall be meted with banking day whenever a half-day
one-time monetary penalty on a per suspension of business operations in
transaction basis. government offices is declared due to an
(10) Continuing penalty refers to the emergency such as typhoon, floods, etc.
monetary penalty imposed on continuing For the purpose of establishing delay
offenses/violations on a per calendar day or default, the date of acknowledgment
basis reckoned from the time the offense/ by the appropriate department of the SES
violation occurred or was committed until or the BSP Regional Offices/Units
the same was corrected/rectified. appearing on the copies of such reports
(11) Transactional penalty refers to a filed or submitted or the date of mailing
one-time penalty imposed on transactional postmarked on the envelope or the date
offense/violation. of registry or special delivery receipt, as
b. Fine for submission of faulty report. the case may be, shall be considered as
Any pawnshop which submits a faulty report the date of filing.
shall pay to the BSP a fine of thirty pesos ( Delayed schedules or attachments and
P30) per calendar day which shall accrue amendments shall be considered late
beginning on the sixth business day from reporting subject to the above penalties.
the day the written notice of faulty report is d. Fine for making false statements.
received by the pawnshop concerned until Any pawnshop which makes a false
a correct report is submitted. statement in any of its reports to the BSP or

Part I - Page 16
§§ 4162P.3 - 4163P
09.12.31
its authorized agents shall pay to the BSP a f. Appeal to the Monetary Board. A one-
fine in accordance with the following time appeal or request for reconsideration on
schedule: the monetary penalty approved by the
(1) For the first and second offense, a Governor/Monetary Board to be imposed on
fine payable on the business day following the pawnshop, its directors/trustees and/or
the receipt of BSP advice - officers, in the case of a corporation; its
P300.00 and sixty pesos (P60.00) for partners, in the case of a partnership; its
every calendar day of delay in payment until proprietor/owner, in the case of a sole
the fine is fully paid. proprietorship, shall be allowed.
(2) For repeat violations - The appeal shall be filed with the
P 600.00 and P120.00 for every calendar appropriate department of the SES within
day of delay in payment until the fine is fully fifteen (15) calendar days from receipt of the
paid. Statement of Account/billing letter. The
(3) For persistent violations - appropriate department of the SES shall
Suspension, after due hearing, of the evaluate the appeal or request for
pawnshop's directors/trustees/officers/ reconsideration of the entity/individual and
proprietor/managing partner. make recommendations thereon within
Any false statement made in a previous thirty (30) calendar days from receipt thereof.
report which was not immediately known The appeal or request for reconsideration
but was discovered only in later reports shall of the monetary penalty approved by the
constitute only one (1) violation. The Governor/Monetary Board shall be elevated
penalty shall operate on the sixth working to the Monetary Board for resolution/
day counted from receipt of notice of decision. The running of the monetary
submission of a false statement from the BSP penalty period in case of continuing penalty
or its authorized agents until a correct and/or the period for computing additional
statement is submitted. charge shall be interrupted from the time the
e. Manner of collection and payment appeal or request for reconsideration was
of fines. A pawnshop shall be billed by the received by the appropriate department of
appropriate department of the SES. The the SES up to the time that the notice of the
pawnshop shall thereupon remit the amount Monetary Board decision was received by
of the fine to the BSP through the the entity/individual concerned.
appropriate department of the SES. The imposition of the foregoing
Late payment of monetary penalty shall penalties shall be without prejudice to
be subject to an additional charge of six imposition of the other sanctions pursuant
percent (6%) per annum to be reckoned to Sections 17 and 18 of P.D. No. 114.
from the business day immediately (As amended by Circular Nos. 662 dated 09 September 2009
following the day said penalty becomes due and 656 dated 02 June 2009)
and payable up to the day of actual payment.
The penalty shall become due and payable Sec. 4163P Report on Crimes/Losses
fifteen (15) calendar days from receipt of Pawnshops shall submit a report on
the Statement of Account from BSP. crimes and losses in accordance with
Failure of a pawnshop to effect the Appendix P-2 together with the following:
settlement of the full amount of the fine a. Notarized list of lost pawned
within a period of fifteen (15) days from articles, indicating the pawn ticket number,
receipt of the bill shall subject it to other name of the pawner, date loan granted,
administrative sanctions and/or to the penal brief description of pawn, and amount of
provisions of P.D. No. 114. loan;

Part I - Page 17
§§ 4163P - 4164P.4
09.12.31
b. Police report on the investigation of directors present and absent shall be made
the fire/robbery incident; available to the BSP upon request.
c. Proof of notification in writing to all (Circular No. 656 dated 02 June 2009)
concerned pawners about the incident; and
d. Plan of settlement of pawners’ claim § 4164P.2 Disclosure of external
for lost pawned items, if any. auditor’s adverse findings to the Bangko
(Circular No. 656 dated 02 June 2009) Sentral
a. Findings to be disclosed. Pawnshops
Sec. 4164P Audited Financial Statements/ shall require their external auditors to report
Annual Report of Pawnshops. The to the BSP any matter adversely affecting the
following rules shall govern the submission condition or soundness of the pawnshop,
of audited financial statements (annual such as, but not limited to:
reports) by pawnshops. (1) Any serious irregularity, including
(Circular No. 656 dated 02 June 2009) those involving fraud or dishonesty, that
may jeopardize the interest of the public;
§ 4164P.1 Financial audit. Every (2) Losses incurred which substantially
pawnshop shall cause an annual financial reduce the capital funds of the pawnshop;
audit and a report of such audit shall be (3) Capital deficiency as prescribed in
made and submitted to the appropriate Secs. 4106P and 4107P; and
department of the SES not later than 30 June (4) Inability of the auditor to confirm
following the reference calendar year. the physical presence of pawned items.
The financial audit of a pawnshop with The disclosure of information by the
total consolidated assets of at least P50.0 external auditor to the BSP shall not be a
million shall be conducted by an external ground for civil, criminal or disciplinary
auditor who is in the list of accredited proceedings against the former.
external auditors of the SEC or the Office of Pawnshop management shall be present
the Insurance Commissioner (OIC) or in the during discussions or at least be informed
list of BSP-selected external auditors. of the adverse findings in order to preserve
The proprietor, partners or the board of the concerns of the supervisory authority
directors/trustee, in a regular or special and external auditors regarding the
meeting, (in the case of a corporation), shall confidentiality of information.
consider and act on the financial audit report. (Circular No. 656 dated 02 June 2009)
A copy of the action/s taken on the report by
the proprietor/partner, while in the case of a § 4164P.3 Sanction. An auditing firm
corporation, its board resolution which shall or external auditor who fails to report to
show, among other things, the names of the the BSP any matter adversely affecting the
directors/trustees who are present and absent, condition or soundness of the pawnshop
shall be included in the financial audit report shall be referred to the SEC, OIC or to the
to be submitted to the BSP every 30 June. appropriate department of the SES, as the
The proprietor, partner or board of case may be, for appropriate action.
directors/trustees shall also consider and act (Circular No. 656 dated 02 June 2009)
on the Letter of Comments (LOC) submitted
by the external auditor. A copy of the LOC § 4164P.4 Selection, appointment,
together with the action/s taken on the findings reporting requirements and delisting of
and recommendations by the proprietor/ external auditors and/or auditing firm;
partners, while in case of corporation, its board sanction. Pursuant to Section 58, R.A. No.
resolution which shall show the names of the 8791, and the existing provisions of the

Part I - Page 18
§§ 4164P.4 - 4171P.3
09.12.31
executed MOA dated 12 August 2009, BSP to the PRC for appropriate disciplinary
binding the BSP, SEC, PRC – BoA and the action.
IC for a simplified and synchronized (Circular No. 656 dated 02 June 2009, as amended by Circular
accreditation requirements for external No. 660 dated 25 September 2009)
auditor and/or auditing firm, following are
the revised rules and regulations that shall Sec. 4165P General Information Sheet
govern the selection and delisting by the BSP Pawnshops organized as a corporation shall
of covered institutions which under special submit to the SDC a copy of the general
laws are subject to BSP supervision. information sheet duly stamped received by
Statement of policy. It is the policy of the SEC five (5) days from submission to SEC.
the BSP to ensure effective audit and (Circular No. 656 dated 02 June 2009)
supervision of banks, QBs, trust entities
and/or NSSLAs including their subsidiaries Secs. 4166P - 4170P (Reserved)
and affiliates engaged in allied activities and
other FIs which under special laws are K. INTERNAL CONTROL
subject to BSP supervision, and to ensure
the reliance by BSP and the public on the Sec. 4171P Internal Control System. The
opinion of external auditors and auditing following provisions are the minimum
firms by prescribing the rules and internal control standards for pawnshops to
regulations that shall govern the selection, help promote effective control system.or
appointment, reporting requirements and safe but within the pawnshop premises.
delisting for external auditors and auditing (Circular No. 656 dated 02 June 2009)
binding provisions of and implementing § 4171P.1 Proper accounting records
regulations pursuant to the aforesaid a. All pawnshops shall maintain proper
MOA. and adequate accounting records which
a. Rules and regulations. The revised include reconciliation of due to/from head
rules and regulations that shall govern the office/branches, if the pawnshop has several
selection and delisting by the BSP of covered offices.
institutions which under special laws are b. Records should be kept up-to-date
subject to BSP supervision are shown in and shall contain sufficient detail so that an
Appendix S-8. audit trail is established.
Sanctions. The applicable sanctions/ (Circular No. 656 dated 02 June 2009)
penalties prescribed under Sections 36 and
37 of R.A. 7653 to the extent applicable § 4171P.2 Number control
shall be imposed on the covered institutions, The following are the forms, instruments
its audit committee and the directors and accounts that shall be number-
approving the hiring of external auditors/ controlled:
auditing firm who/which are not in the BSP (1) Pawn tickets;
list of selected auditors for covered (2) Official receipts; and
institutions or for hiring, and/or retaining (3) Expense vouchers.
the services of the external auditor/auditing (Circular No. 656 dated 02 June 2009)
firm in violation of any of the provisions of
this Section and for non-compliance with § 4171P.3 Safekeeping of pawns,
the Monetary Board directive under Item “K” records and insurance of premises. Except
in Appendix P-9. Erring external auditors/ for bulky pawns, all pawns shall be placed
auditing firm may also be reported by the inside a tamper-proof sealed envelope or

Part I - Page 19
§§ 4171P.3 - 4181P
09.12.31
plastic bag and must be kept inside the safe the business of a pawnshop, shall keep such
or concrete vault. Bulky pawns may be business distinct and separate from the
placed outside the safe or vault but within pawnshop operation.
the pawnshop premises. Allowable corollary business activities
Vital records for the current year must of pawnshops shall include acting as
be kept inside the safe or vault when not in foreign exchange dealer/money changer
use. Other pawnshop records/documents and/or as remittance agent, acting as bills
may be placed in filing cabinets/shelves payment agent for utility companies and
outside the vault or safe but within the other entities and such other activities as
pawnshop premises. may be allowed by the BSP.
For this purpose, a pawnshop’s vault, A pawnshop must secure the necessary
i.e., its walls, ceiling and floor shall be made business permit from the city or municipality
of steel-reinforced concrete or such other for the corollary business. A pawnshop that
equally safe materials/specifications. Vault will engage in the business of a foreign
doors shall be made of steel or other drill exchange dealer/money changer or act as a
and torch-resistant materials. Safes should be remittance agent shall register with the BSP
sufficiently heavy or be securely anchored to before engaging in such business pursuant
the floor of the premises. The door shall be to Sec. 4511N.
equipped with a combination lock and the The pawnshop should be able to show
body shall consist of steel with an ultimate in its financial statements the appropriate
tensile strength of 50,000 pounds per square accounts as well as the income or loss
inch or its equivalent in the metric system. pertaining to the corollary business.
Vital records kept in electronic media (Circular No. 656 dated 02 June 2009)
including back-up copies thereof shall be
kept in safes or vaults designed to protect Secs. 4173P - 4180P (Reserved)
them from damage due to fire or other
fortuitous events. L. MISCELLANEOUS PROVISIONS
The pawnshop premises, furniture,
fixtures and equipment and all pawns of the Sec. 4181P Registered/Business Name. The
pawnshops, except those which are kept inside registered name of a pawnshop shall refer
a fireproof vault, must be insured against fire. to the name appearing in the Certificate
(Circular No. 656 dated 02 June 2009) of Registration (COR) of business name
from the DTI, in the case of a sole
§ 4171P.4 Miscellaneous. Every proprietorship, or in the Articles of
pawnshop shall adopt minimum internal Partnership/Incorporation and By-Laws
control measures to safeguard the assets of duly registered with the SEC, in the case
the pawnshop. Such measures may include of a partnership or corporation. In case,
but is not limited to, dual control, check and the registered name shall include the word
balance and internal audit. No employee “pawnshop” to reflect the nature of
shall be permitted to process a transaction business it is engaged in.
affecting his own account. Conversely, no person or entity shall
(Circular No. 656 dated 02 June 2009) advertise, use signage or hold itself out as
being engaged in the business of a
Sec. 4172P Separation of Pawnshop pawnshop or use in its business name the
Business from Other Businesses. A words “pawnshop”, “pawnbrokerage”, or
pawnshop that is at the same time engaged words of similar import, or transact in any
in another business not directly related to manner the business of a pawnshop without

Part I - Page 20
§§ 4181P - 4181P.3
09.12.31
having first complied with the provisions name as mentioned in Sec. 4181P above or
of P.D. No. 114 and these regulations. that uses or will use a name already
A pawnshop that shall use/uses a name registered and being used by another
that is different from its registered name pawnshop shall indicate parenthetically
with DTI or SEC shall cause to have such under the such name, the registered name
name to also appear parenthetically under of the pawnshop with the DTI or SEC, as
its registered name in the certificate of the case may be, with the words “owned
registration with DTI or articles of and operated by” before the registered name
partnership/incorporation and by-laws with in the pawnshop’s signage, pawn tickets,
SEC, as well as in the business permit issued official receipts, stationery, etc.
by the city or municipality. c. A pawnshop that is a subsidiary or
(Circular No. 656 dated 02 June 2009) affiliate of another pawnshop shall likewise
indicate such relationship in the signage, pawn
§ 4181P.1 Change of registered/ tickets, official receipts, stationery, etc.
business name. A pawnshop shall not A subsidiary is a corporation more than
change its registered/business name without fifty percent (50%) of the voting stock of
submitting the following documents to the which is owned by another corporation;
appropriate department of the SES: while an affiliate is a corporation less than
a. Certificate of Registration from DTI fifty (50%) of the voting stock of which is
or SEC, as the case may be, indicating the owned by another corporation.
new business/registered name; d. The exact address of the pawnshop
b. Mayor’s/municipal license/permit; shall be indicated consistently in all
and pawnshop documents (e.g., pawn tickets,
c. Original BSP Acknowledgement of official receipts, stationery, etc.) and in the
Registration of Head Office (AOR) and/or business permit issued by the city or
Authority to Operate (AO) issued under the municipality.
old name. e. All pawnshops using a signage prior
A new BSP AOR and/or AO shall be to the effectivity of this regulation, which
issued indicating the new registered/ signage does not conform to the provisions of
business name of the pawnshop. this Subsection shall be given ninety (90) days
(Circular No. 656 dated 02 June 2009) from effectivity date to replace said signage.
§ 4181P.2 Use of registered business
name in signage, pawn tickets and other § 4181P.3 Sanctions. A pawnshop that
forms. The following regulations shall be fails to comply with the foregoing provisions
observed with respect to the use of the shall be subject to the following
business/registered name in the signage, pawn administrative sanctions as may be
ticket and other forms of a pawnshop: determined by the Monetary Board:
a. As a general rule, the registered a. Reprimand or warning on the
name appearing in the Certificate of proprietor, managing partner, directors/
Registration of DTI or SEC, as the case may trustees or officers, as the case may be, for
be, shall be used consistently in the not more than two (2) offenses;
pawnshop’s signage and in all documents b. Suspension of operations of the
including pawn tickets, official receipts, pawnshop for a certain period;
stationery, etc. of the pawnshop. c. Suspension of managing proprietor,
b. A pawnshop that uses or will use a managing partner, directors/trustees or
name that is different from its registered officers for a certain period;

Part I - Page 21
§§ 4181P.3 - 4182P.2
09.12.31
d. Fine of P500.00 at a single instance; at the city hall or municipal building of the
and city or municipality where the pawnshop
e. Such other sanction/s as the has its place of business.
Monetary Board may deem warranted. (Circular No. 656 dated 02 June 2009)
§ 4182P.1 Documentary requirements
Sec. 4182P Transfer/Relocation of Business for transfer within the same city/
The following shall govern the transfer/ municipality. The following documents shall
relocation of pawnshops. be filed with the appropriate department of
No pawnshop shall transfer or relocate the SES in connection with transfer of
its place of business within three (3) months location within the same city or
following the maturity of any loan or pledge, municipality:
or before any pawn shall have been sold or a. A certification signed by the
disposed of as provided under existing proprietor/managing partner/president
regulations. A notice of transfer shall be informing the appropriate department of the
submitted to the appropriate department of SES of the intended transfer and that the
the SES within ten (10) days before the requirements prescribed under Sec. 4182P
effectivity of such transfer. have been complied with;
A pawnshop may transfer its place of b. Copy of notice of transfer duly
business from one location to another within acknowledged by the DTI and by the
the territorial limits of the city or licensing authority of the locality where the
municipality upon compliance with the pawnshop is operating;
following requirements: c. Sample copy of the pawn ticket
a. Notice of transfer shall be published bearing the new address;
in English and in Filipino or in the local d. Sketch of pawnshop’s new
dialect in two (2) daily newspapers of location;
general circulation in the city or e. Original BSP AOR and/or AO issued
municipality where the pawnshop is closing to the pawnshop, or an affidavit in case of
business, and posted in English and Filipino loss;
or in the local dialect for one (1) month after f. Board resolution authorizing the
date of publication in a conspicuous place transfer of the pawnshop (in case of
in the premises to be vacated and to be corporations)
transferred to; (Circular No. 656 dated 02 June 2009)
b. The notice shall be published for
at least three (3) consecutive days, the last § 4182P.2 Documentary requirements
day of which shall be five (5) days before for transfer outside the city/municipality
the actual transfer; and A pawnshop that intends to transfer/relocate
c. Notice shall contain the following its business outside the city or municipality
information: where it is located shall comply with the
(1) Date of transfer; following:
(2) Address of the premises to be (1) requirements on closure of business
vacated; and under Sec. 4183P; and
(3) Address of the premises to which (2) requirements for the establishment
pawnshop intends to transfer. and registration of a new pawnshop or
In remote areas where newspapers are branch under Subsecs. 4101P.4 and
not available, the publication requirement 4151P.4, respectively, where applicable.
shall be complied with by posting notices (Circular No. 656 dated 02 June 2009)

Part I - Page 22
§§ 4183P - 4183P.3
09.12.31
Sec. 4183P Closure of Pawnshops. The consecutive years, starting from the 2009
following rules shall govern the closure of financial reports, shall be considered to have
pawnshops: ceased operations and shall be delisted from
(Circular No. 656 dated 02 June 2009) the BSP List of Registered Pawnshops
starting 2012.
§ 4183P.1 Voluntary closure. Voluntary It may be reinstated in the BSP Registry,
closure of a pawnshop may be effected only if within thirty (30) business days from the
after three (3) months following the maturity date of BSP notification, it:
of any loan or pledge, or before any pawn (a) submits the 3-year required reports;
shall have been sold or disposed of and after and
it has complied with the following (b) pays a fine of P100,000 for delayed
requirements: reporting.
(1) Submission of the following If no action/advice is received from the
documentary requirement within thirty pawnshop after the lapse of the 30-day
calendar (30) days after the provision of deadline, the BSP Registration shall be
Subsec. 4183P.1: automatically cancelled and the city or
a. Notarized statement stating that: municipality shall be informed of the
(i) The pawnshop’s books of accounts, delisted pawnshops operating within their
reports, records and documents shall be area of jurisdiction, for appropriate action.
preserved for at least five (5) years from date The appropriate department of the SES
of last entry; shall not register any new pawnshop whose
(ii) All unused accountable forms have owner(s), partner(s) or stockholder(s) owned
been destroyed to prevent their a pawnshop that has been delisted from the
unauthorized use; Registry for non-submission of the financial
(iii) Proprietor/partners/president of the reports, unless the fine of P100,000 shall
pawnshop shall be held liable for present have been paid.
or future claims arising from its For this purpose, the term partner(s) and
pawnbroking transactions; and stockholder(s) shall refer to those partner(s)
(iv) All outstanding pawns have been or stockholder(s) who have controlling
redeemed/sold at public auction, or otherwise ownership/interest and management of the
disposed of, in accordance with law. pawnshop. If said owner(s), partner(s) or
b. Copy of the pawnshop’s application stockholder(s) shall use another person to
for retirement of business approved by the establish a new pawnshop, such pawnshop
licensing authority of the city or municipality shall also be delisted from the Registry.
where the pawnshop operated. (Circular No. 656 dated 02 June 2009)
c. Original BSP AOR and/or AO issued
to the pawnshop. § 4183P.3 Other grounds for delisting
(2) Remittance of penalties or BSP Aside from failure to submit financial reports,
assessments on the pawnshop, if any, such pawnshops may also be delisted from the
as for non-submission/delayed submission BSP List of Registered Pawnshops in the
of required reports. following cases:
(Circular No. 656 dated 02 June 2009) a. Failure to comply with the
minimum capital as prescribed in Secs.
§ 4183P.2 Delisting of pawnshops/ 4106P and 4107P;
involuntary closure b. Failure to post in conspicuous
A pawnshop that fails to submit the place the BSP AOR and/or AO as
required financial reports for three (3) prescribed in Sec. 4156;

Part I - Page 23
§§ 4183P.3 - 4184P.2
09.12.31
c. Failure to start operations within a. The pawnshop’s books of

six (6) months from date of issuance of accounts, records and documents shall be
the BSP AOR and/or AO as prescribed in preserved for five (5) years from date of
Subsecs. 4101P.4 and 4151P.7; last entries before the transfer of
d. Failure to renew the BSP AOR and/ ownership;
or AO as prescribed in Subsec. 4101P.7; b. All unused accountable forms such
e. Disqualification of managing as official receipts and pawn tickets have
proprietor/managing partner as provided in been destroyed to prevent their
Subsec. 4143P.7; unauthorized use.
f. Refusal to permit BSP examination c. The owner/managing partner/
as prescribed in Subsec. 4651P.2; president shall be held accountable for
g. Cancellation of registration by the present and future claims arising from
SEC, in case of corporations and transactions of the pawnshop under the
partnerships; former owner (new owner may assume
h. Cancellation of DTI registration of this liability, in which case, he/she shall
business/trade name for failure to renew submit a notarized statement to that
registration after the expiry of the five-year effect).
period, in case of sole proprietorship; d. All outstanding pawns have been
i. Cancellation of business license/ redeemed or sold at public auction, or
permit by the city or municipality; and otherwise disposed of in accordance with
j. Conducting pawnbrokering law; or the owners of outstanding pawns
activities outside the pawnshop premises. have been notified by registered mail on
Pawnshops that cease to operate but fail the transfer of ownership of the
to comply with the closure requirements pawnshop.
under Subsec. 4183P.1 shall still be subject (2) Copy of pawnshop’s notice of
to the reportorial requirements and the retirement of business acknowledged by the
imposition of penalty for delayed/non- licensing authority where the pawnshop
submission of reports. operated.
The city or municipality shall be (3) Original BSP AOR and/or AO issued
informed of the delisted pawnshops to the pawnshop, or an affidavit in case of
operating within their area of jurisdiction, loss.
for appropriate action. (4) Payment of Bangko Sentral
(Circular No. 656 dated 02 June 2009) assessment on the pawnshop, if any, such
as for non-submission or delayed
Sec. 4184P Transfer of Ownership. No submission of required reports.
pawnshop proprietor/partners/stockholders If the vendee shall continue the
shall transfer ownership over the pawnshop operation of the pawnshop, he shall
business without securing prior BSP approval. comply with the provisions of Subsecs.
(Circular No. 656 dated 02 June 2009) 4101P.3 and 4142P.2. The vendee shall
also submit a copy of the duly executed
§ 4184P.1 Requirements for transfer contract affecting the transfer of
of ownership. The owner(s) shall file the ownership.
following documents ten (10) days before (Circular No. 656 dated 02 June 2009)
transferring the ownership of the pawnshop:
(1) Notarized statement by owner/ § 4184P.2 Processing and registration
managing partner/president or its equivalent fees. A pawnshop that is the subject of
rank stating that: change of ownership shall be subject to the

Part I - Page 24
§§ 4184P.2 - 4199P
09.12.31
BSP processing and registration fees under Q-37 shall be adopted in so far as they are
Subsec. 4101P.6. applicable to pawnshops.
Sec. 4185P Processing Fee for Replacement Sec. 4191P (Reserved)

of Acknowledgement of Registration of Head
Office/Authority to Operate. A non- Sec. 4192P Prompt Corrective Action
refundable processing fee of P300.00 shall be Framework. The framework for the
collected from each pawnshop that will enforcement of prompt corrective action
request for a replacement AOR or AO due to: (PCA) on banks which is in Appendix
(a) loss of AOR/AO; Q-40, shall govern the PCA taken on
(b) change of business/registered name pawnshops to the extent applicable, or by
under Subsec. 4181P.1; and analogy.
(c) transfer of location or address under (Circular No. 664 dated 15 September 2009)
Subsec. 4182P.
(Circular No. 656 dated 02 June 2009) Secs. 4193P - 4198P (Reserved)
Secs. 4186P - 4189P (Reserved) Sec. 4199P General Provision on Sanctions

The imposition of administrative sanctions
Sec. 4190P Duties and Responsibilities of pursuant to Section 17 of P.D. No. 114
Pawnshops and their Directors/Officers in for violation of the provisions of this Part
Cases of Outsourcing of Pawnshop shall be without prejudice to any action
Functions. The rules on outsourcing of that may be taken under Section 18 of
banking functions as shown in Appendix P.D. No. 114.

Part I - Page 25
§§ 4201P - 4299P
09.12.31
PART TWO
BORROWING OPERATIONS
A. - J. (RESERVED) Sec. 4286P Borrowings Constituting Quasi-

Banking Functions. Borrowing from twenty
Sections 4201P - 4284P (Reserved) (20) or more lenders for the purpose of
relending or purchase of receivables or other
K. OTHER BORROWINGS obligations constitutes quasi-banking.
A pawnshop cannot engage in quasi-
Sec. 4285P Securities and Exchange banking unless it meets the pre-qualification
Commission Registration of Borrowing requirements under the MORNBFI-QBs and
Borrowing by any pawnshop through the obtains authority or a separate license to
issuance of any instrument shall be subject engage in quasi-banking from the BSP.
to the registration provisions of Section 8 (Circular No. 656 dated 02 June 2009)
of the Securities Regulation Code (SRC)
and the applicable implementing rules Secs. 4287P - 4298P (Reserved)
and regulations of the Securities and
Exchange Commission (SEC). While Sec. 4299P General Provision on Sanctions. Any
borrowing from nineteen (19) individuals violation of the provisions of this Part may be a
or less is exempt from the registration ground for the revocation of the AOR that shall
requirement under Section 10 of the SRC, require the winding down of the pawnshop
Rule 10-1 of the SEC implementing rules business and shall be subject to the applicable
and regulations still requires SEC to be sanctions under Sections 36 and 37 of R.A. No.
notified of the issuance of the debt 7653 (New Central Bank Act) and/or R.A. No.
instrument. 8799 (Securities Regulation Code).

Part II - Page 1
§§ 4301P - 4301P.3
09.12.31
PART THREE
LOANS AND INVESTMENTS
A. LOANS IN GENERAL present the original and submit a clear copy

of at least one (1) valid photo bearing
Section 4301P Grant of Loans. The identification document (ID) issued by an
following regulations shall be observed in official authority.
the grant of loans by pawnshops. The valid ID should indicate the address
(Circular No. 656 dated 02 June 2009) where the pawner resides, otherwise,
pawner shall be required to present,
§4301P.1 General guidelines. A together with the valid ID, a barangay
pawnshop shall extend a loan only if such certification or a copy of a billing statement
is secured by personal property that could that indicates the address where the pawner
be physically delivered to the control and resides.
possession of the pawnshop. For this purpose, the term “official
Before accepting articles as pawn, the authority” shall refer to any of the
pawnshop must ascertain whether the following:
pawner is the true owner of the article (i) Government of the Republic of the
offered as pawn. In the conduct of business, Philippines;
a pawnshop shall be guided by the standard (ii) Its political subdivisions and
of diligence that is expected of “a good instrumentalities;
father of a family”, ensuring always that there (iii) Government-owned and/or
is no ground to suspect that the article/s offered controlled corporations (GOCCs); and
as pawn was an object of robbery or theft. (iv) Private entities or institutions
(Circular No. 656 dated 02 June 2009) registered with or supervised or regulated
either by the BSP or the SEC or the Insurance
§4301P.2 Prohibitions. Pawnshop Commission (IC).
owners/managers/officers/directors Valid IDs include the following:
employees shall not: (a) Passport;
a. Use pawned articles for themselves (b) Driver’s License;
or allowing employees to use said articles (c) Professional Regulation
for any purpose without the express consent Commission (PRC) ID;
or authority of the pawner unless continued (d) National Bureau of Investigation
use is necessary to preserve the pawn; (NBI) Clearance;
b. Grant loans to minors or (e) Police Clearance;
incompetent persons; or (f) Postal ID;
c. Re-pledge/re-pawn the pawned (g) Voter’s ID;
article in his possession to another (h) Barangay Certification;
pawnshop or lending entity. (i) Government Service Insurance
(Circular No. 656 dated 02 June 2009) System (GSIS) e- Card;
(j) Social Security System (SSS) Card;
§4301P.3 Know your pawner (k) Senior Citizen Card;
Pawnshops who transact with any pawner (l) Overseas Workers Welfare
for the first time shall require the pawner to Administration (OWWA) ID;

Part III - Page 1
§§ 4301P.3 - 4301P.4
09.12.31
(m) OFW ID; The poster (shown as Appendix 7) shall not

(n) Seaman’s Book; be smaller than 8.5 x 11 inches.
(o) Alien Certification of Registration/ (Circular No. 656 dated 02 June 2009, as amended by Circular
Immigrant Certificate of Registration; No. 657 dated 16 June 2009)
(p) Government Office and GOCC ID,
e.g., Armed Forces of the Philippines (AFP § 4301P.4 Sanctions. Any pawnshop
ID), Home Development Mutual Fund that violates any of the foregoing provisions
(HDMF ID); as determined by BSP in the spot checking
(q) Certification from the National of pawnshops or whenever a complaint
Council for the Welfare of Disabled Persons brought to the attention of BSP is found to
(NCWDP); be true, shall be imposed the following
(r) Department of Social Welfare and sanctions:
Development (DSWD) Certification; a. Fine of P500.00 for each of the first
(s) Integrated Bar of the Philippines ID; three (3) offenses;
(t) Company IDs issued by private b. Fine of P1,000.00 for the next three
entities or institutions registered with or (3) offenses;
supervised or regulated either by the BSP, c. For subsequent violation,
SEC or IC; and cancellation of BSP Acknowledgement of
(u) Passports issued by foreign Registration (AOR) or Authority to Operate
governments. (AO) issued to the pawnshop head office
The foregoing shall be in addition to the or branch, as the case may be, and issuance
customer identification requirements under of a letter to the concerned city or
Rule 9.1.c of the Revised Implementing municipality advising them of the
Rules and Regulations (RIRRs) of R.A. No. cancellation of the BSP AOR/AO and
9160, as amended (Anti-Money Laundering recommending the revocation of their
Act), which requires pawnshop to obtain business/mayor’s permit(s). It is understood
the following minimum information/ that if the AOR of the HO is cancelled, the
documents from pawners: AO of the branch/es is/are likewise
(1) Name; cancelled; and
(2) Present address; d. Such other sanctions as the
(3) Permanent address; Monetary Board may deem warranted.
(4) Date and place of birth; A pawnshop that fails to post the
(5) Nationality; requirements of 4301P.3 as determined in
(6) Nature of work and name of the spot checking done by BSP shall be
employer or nature of self-employment/ imposed the following sanctions:
business; a. Warning for the first three (3)
(7) Contact numbers; and offences;
(8) Specimen signature. b. Penalty of P300.00 each for the
A copy of the ID, barangay certificate succeeding three (3) offenses;
and/or billing statement shall be kept by c. Penalty of P750.00 each for the next
pawnshops for convenience of the pawner three (3) offenses; and
who continues to transact with the d. Cancellation of the AOR or AO, for
pawnshop but said documents should be a subsequent offense. Once the AOR of the
updated at least every three (3) years. main office is cancelled, the Authority to
Pawnshops shall post excerpts of the Operate (AO) of the branch/es is/are
above requirements conspicuously in its likewise cancelled.
principal place of business and branches. (Circular No. 656 dated 02 June 2009)

Part III - Page 2
§§ 4302P - 4303P.4
09.12.31
Sec. 4302P Loan Limit. Pawnshops may Court of Appeals, GR No. 131622 dated
grant such amount of loans as may be agreed 27 November 1998) the interest rate shall
upon between the parties. The amount of not be iniquitous, unconscionable, or
loan shall in no case be less than thirty contrary to morals, if not against the law as
percent (30%) of the appraised value of the may be determined by the Court.
security offered, unless the pawner manifests No pawnshop shall collect interest on
in writing that he is applying for a lesser loans in advance for a period of more than
amount. Pawnshops shall not under- one (1) year.
appraise the security offered for the loan to (Circular No. 656 dated 02 June 2009)
circumvent the restriction prescribed by this
Section. § 4303P.1 Rate of interest in the
(Circular No. 656 dated 02 June 2009) absence of stipulation. The rate of interest
for a loan or forbearance of money in the
§ 4302P.1 Sanctions. Any pawnshop absence of an expressed contract as to such
that violates the foregoing provisions as rate of interest, shall be twelve percent
determined by BSP in the spot checking of (12%) per annum.
pawnshops or whenever a complaint (Circular No. 656 dated 02 June 2009)
brought to the attention of BSP is found to
be true, shall be imposed the following § 4303P.2 Other charges. In addition
sanctions: to interest, pawnshops may impose a
a. Fine of P500.00 for each of the first maximum service charge of five pesos
three (3) offenses; (P5.00), but in no case to exceed one percent
b. Fine of P1,000.00 each for the next (1%) of the principal loan. No other charges,
three (3) offenses; such as but not limited to insurance
c. For subsequent violation, premium for the safekeeping and
cancellation of BSP Acknowledgement of conservation of the pawned item, shall be
Registration (AOR) or Authority to Operate collected.
(AO) issued to the pawnshop head office (Circular No. 656 dated 02 June 2009)
or branch, as the case may be, and issuance
of a letter to the concerned city or § 4303P.3 Posting of interest rate and
municipality advising them of the other charges. Pawnshops shall post
cancellation of the BSP AOR/AO and conspicuously in its principal place of
recommending the revocation of their business and branches the interest rate in
business/mayor’s permit(s). It is understood percent, specifying therein if such interest
that if the AOR of the HO is cancelled, the rate is yearly, monthly or daily, as well as
AO of the branch/es is/are likewise the other charges, if any, to be charged by
cancelled; and the pawnshop. The poster shall not be
d. Such other sanctions as the smaller than 8.5 x 11 inches.
Monetary Board may deem warranted. (Circular No. 656 dated 02 June 2009)
§ 4303P.4 Sanctions. Any pawnshop
Sec. 4303P Interest and Surcharges. The that violates the foregoing provisions as
rate of interest including surcharges on any determined by BSP in the spot checking
loan or forbearance of money extended by of pawnshops or whenever a complaint
a pawnshop shall not be subject to any brought to the attention of BSP is found to
ceiling. However, pursuant to a decision of be true, shall be imposed the following
the Supreme Court (case of Medel, et al vs sanctions:

Part III - Page 3
§§ 4303P.4 - 4305P.2
09.12.31
a. Fine of P500.00 for each of the first indicating the new term of the loan agreed
three (3) offenses; upon by the pawnshop and the pawner.
b. Fine of P1,000.00 for the next three (Circular No. 656 dated 02 June 2009)
(3) offenses;
c. For subsequent violation, § 4305P.1 Right of pawner to redeem
cancellation of BSP Acknowledgement of pawn within ninety (90) days from maturity
Registration (AOR) or Authority to Operate A pawner who fails to pay or renew his
(AO) issued to the pawnshop head office or loan with a pawnshop on the date it falls
branch, as the case may be, and issuance of due shall have ninety (90) days from the date
a letter to the concerned city or municipality of maturity of the loan within which to
advising them of the cancellation of the BSP redeem the pawn by paying the principal
AOR/AO and recommending the revocation amount of the loan plus the amount of
of their business/mayor’s permit(s). It is interest that shall have accrued thereon. The
understood that if the AOR of the HO is amount of interest due and payable after the
cancelled, the AO of the branch/es is/are maturity date of the loan shall be computed
likewise cancelled; and upon redemption based on the sum of the
d. Such other sanctions as the principal loan and interest earned as of the
Monetary Board may deem warranted. date of maturity. The procedures to be
A pawnshop that fails to post the interest followed in case the pawner fails to redeem
rate and other charges pursuant to his pawn are prescribed in Sec. 4324P.
Subsection 4303P.3 as determined in the If the maturity date of the loan or expiry
spot checking done by BSP shall be imposed date of redemption period falls on the
the following sanctions: pawnshop’s non-business day, a regular
a. Warning for the first three (3) holiday or a special non-working holiday
offenses; in the locality, then the maturity date of the
b. Penalty of P300.00 each for the loan or expiry date of redemption period
succeeding three (3) offenses; shall be on the next business day.
c. Penalty of P750.00 for the next three If the pawnshop is closed on the
(3) offenses; and maturity date of the loan or expiry of the
d. Cancellation of the AOR or AO, for redemption period, with or without prior
a subsequent offense. Once the AOR of the notice to the pawner, then the maturity date
main office is cancelled, the Authority to of the loan or expiry of redemption period
Operate (AO) of the branch(es) is/are shall be on the next business day and the
likewise cancelled. pawnshop shall not charge additional
(Circular No. 656 dated 02 June 2009) interest or surcharge to the pawner.
If the pawnshop is closed due to a
Sec. 4304P (Reserved) robbery, then the maturity date of the pledge
or expiry of redemption period shall be on
Sec. 4305P Past Due Accounts; Renewal the next business day when the pawnshop
A loan may be renewed for such amount opens for business and the pawnshop shall
and period as may be agreed upon between not charge additional interest or surcharge
the pawnshop and the pawner, subject to to the pawners.
the same conditions provided in this Part (Circular No. 656 dated 02 June 2009)
for new loans.
No loan shall be renewed or its maturity § 4305P.2 Sanctions. Any pawnshop
date extended unless a new pawn ticket as that violates the foregoing provisions as
defined in Sec. 4102P shall be issued determined by BSP in the spot checking of

Part III - Page 4
§§ 4305P.2 - 4322P.1
09.12.31
pawnshops or whenever a complaint Except for bulky pawns, pawns shall be

brought to the attention of BSP is found to placed in a tamper-proof sealed plastic
be true, shall be imposed the following envelop or bag which must be kept inside
sanctions: the safe or concrete vault. Bulky pawns may
a. Fine of P500.00 for each of the first be placed outside the safe or vault but
three (3) offenses; within the pawnshop premises.
b. Fine of P1,000.00 each for the next Pawnshop owners shall be liable for
three (3) offenses; any pawned item lost or destroyed arising
c. For subsequent violation, out of their negligence, fault, delay in
cancellation of BSP Acknowledgement of delivery or willful violation of the loan
Registration (AOR) or Authority to Operate agreement.
(AO) issued to the pawnshop head office (Circular No. 656 dated 02 June 2009)
or branch, as the case may be, and issuance
of a letter to the concerned city or Sec. 4322P Redemption of Pawns. A
municipality advising them of the pawnshop shall not release any pawn
cancellation of the BSP AOR/AO and without first requiring the pawner to
recommending the revocation of their present and surrender the corresponding
business/mayor’s permit(s). It is understood pawn ticket. If the pawn ticket was lost
that if the AOR of the HO is cancelled, the and could not be presented or
AO of the branch/es is/are likewise surrendered, the pawnshop shall require
cancelled; and the owner-pawner to execute and submit
d. Such other sanctions as the an affidavit of loss and shall ascertain the
Monetary Board may deem warranted. identity of the pawner, to ensure that the
(Circular No. 656 dated 02 June 2009) pawned item is released only to the
owner-pawner.
Sec. 4306P Interest Accrual on Past Due The pawnshop shall return the pawn in
Loans. Interest income on past due loans the same condition when they were first
arising from discount amortization (and not pawned by pawner, upon full settlement of
from the contractual interest of the account) the loan.
shall be accrued as provided in PAS 39. (Circular No. 656 dated 02 June 2009)
§ 4322P.1 Sanctions. Whenever a
Secs. 4307P - 4320P (Reserved) pawnshop allows redemption of pawned
items without the surrender of the
B. LOAN COLLATERAL/SECURITY corresponding original pawn ticket/affidavit
of loss, the pawnshop shall be imposed the
Sec. 4321P Kinds of Security. Only following sanctions:
personal property that is capable of being a. Fine of P500.00 for each of the
physically delivered to the control and first three (3) offenses;
possession of the pawnshop shall be b. Fine of P1,000.00 for each of the
accepted as security for loans. Certain next three (3) offenses;
specified chattels, such as guns, knives, or c. For subsequent violation,
similar weapons, whose reception in pawn cancellation of BSP Acknowledgement of
is expressly prohibited by other laws, Registration (AOR) or Authority to Operate
decrees, or regulations, shall not be (AO) issued to the pawnshop head office or
accepted by pawnshops as security for branch, as the case may be, and issuance of
loans. a letter to the concerned city or municipality

Part III - Page 5
§§ 4322P.1 - 4323P.2
09.12.31
advising them of the cancellation of the BSP No other document or instrument shall
AOR/AO and recommending the revocation be used/issued by a pawnshop for any loan
of their business/mayor’s permit(s). It is granted by it to a pawner/borrower.
understood that if the AOR of the HO is (Circular No. 656 dated 02 June 2009)
cancelled, the AO of the branch/es is/are
likewise cancelled; and § 4323P.1 Additional regulations on
d. Such other sanctions as the pawn ticket. The contents on the face of
Monetary Board may deem warranted. the standard pawn ticket, prescribed for
(Circular No. 656 dated 02 June 2009) pawnshops pursuant to the requirements of
P.D. No. 114, and the terms and conditions
Sec. 4323P Pawn Ticket. Pawnshops shall thereof, are in Appendices P-4 and P-4a.
at the time of the loan, deliver to each Unnecessary data shall be avoided.
pawner a pawn ticket which shall contain Additional terms and conditions which
the following: pawnshops may wish to incorporate shall
a. The business/registered name, be subject to prior approval by the
address, tax identification number, business appropriate department of the SES.
days and hours, of the pawnshop. The Pawn ticket shall not be smaller than
business name indicated in the pawn ticket 8 x 11”.
shall be in accordance with the provision Pawn tickets shall at least be in
of Subsec. 4181P.2; duplicate. The first copy shall contain the
b. Name of pawner; word “Original” which shall be given to the
c. Pawner’s residential address; pawner when the loan is granted and
d. Pawner’s telephone/mobile phone surrendered upon redemption of pawn,
number and/or e-mail address, if applicable; while the second copy shall be marked
e. Preferred mode of notification “Duplicate” which shall remain on file with
(telephone, mobile phone, e-mail or mail); the pawnshop.
f. Description of the pawner (sex, date Pawn tickets shall be serially numbered.
of birth, nationality, height, weight); Pawnshops may choose the color or
g. Date the loan was granted; quality of the paper used as pawn ticket.
h. Amount of the principal loan and net Standard Additional Stipulations and
proceeds; Stipulations not allowed in pawn tickets are
i. Interest rate in percent, indicating if in Appendices P-4-b and P-4-c.
daily, monthly or annually; (Circular No. 656 dated 02 June 2009)
j. Interest in absolute amount;
k. Service charge in amount; § 4323P.2 Sanctions. Any pawnshop
l. Penalty interest in percent, if any; which violates or fails to comply with the
m. Appraised value of pawn; requirements of Subsec. 4323P.1 shall be
n. Period of maturity; imposed the following sanctions:
o. Description of the pawn; a. Fine of P500.00 for each of the first
p. Expiry date of the redemption three (3) offenses;
period; b. Fine of P1,000.00 for each of the
q. Signature of the pawnshop’s next three (3) offenses;
authorized representative; c. For subsequent violation,
r. ID presented; and cancellation of BSP Acknowledgement of
s. Such other terms and conditions as Registration (AOR) or Authority to Operate
may be agreed upon between the pawnshop (AO) issued to the pawnshop head office
and the pawner. or branch, as the case may be, and issuance

Part III - Page 6
§§ 4323P.2 - 4324P.2
09.12.31
of a letter to the concerned city or circulated in the city or municipality where

municipality advising them of the the pawnshop has its place of business, six
cancellation of the BSP AOR/AO and (6) days prior to the date set for the public
recommending the revocation of their auction.
business/mayor’s permit(s). It is understood The notice shall be in English, and in
that if the AOR of the HO is cancelled, the either Filipino or the local dialect and shall
AO of the branch/es is/are likewise contain the following:
cancelled; and a. Name and address of the owner of
d. Such other sanctions as the the pawnshop; and
Monetary Board may deem warranted. b. Date, hour and place of the auction
The owner, partner, manager, or officer- sale.
in-charge of the pawnshop responsible for In remote areas where newspapers are
the violation or non-compliance shall be neither published nor circulated, the
jointly liable with the pawnshop. publication requirement shall be complied
(Circular No. 656 dated 02 June 2009) with by posting notices at the city hall or
municipal building of the city or municipality
Sec. 4324P Reminder to Pawner; Notice and in two (2) other conspicuous public
to the Public. At least thirty (30) days before places where the pawnshop has its place of
the expiration of the ninety (90)-day grace business.
period allowed in Section 4305P, the (Circular No. 656 dated 02 June 2009)
pawnshop shall duly notify the pawner in
writing that the pawn shall be sold or § 4324P.1 Poster. Pawnshops shall post
otherwise disposed of in the event that the conspicuously in the principal place of
pawner fails to redeem the pawn within the business and branches an abstract of the
ninety (90)-day grace period, specifying in provision of Section 4324P (Appendix P-7)
the same notification the date, hour and which shall be not be smaller than 8.5 x 11
place where the sale shall take place. inches.
The notice shall be sent through the (Circular No. 656 dated 02 June 2009)
preferred mode of notification indicated by
the pawner in the pawn ticket at the time § 4324P.2 Sanctions. Any pawnshop
the loan was granted which may be which violates or fails to comply with the
through text/SMS message, electronic requirements of Subsec. 4324P.1 shall be
mail, or by mail to the residential address. imposed the following sanctions:
If sent through text/SMS, the pawnshop a. Fine of P500.00 for each of the first
shall obtain a report from the appropriate three (3) offenses;
Telecommunications Company (TELCO) b. Fine of P1,000.00 for each of the
indicating that a text/SMS message was sent next three (3) offenses;
to the mobile phone number given by the c. For subsequent violation,
pawner. The report of the TELCO shall be cancellation of BSP Acknowledgement of
made available to BSP upon request. Registration (AOR) or Authority to Operate
If upon the expiration of the ninety (90) (AO) issued to the pawnshop head office or
-day grace period, the pawner fails to branch, as the case may be, and issuance of
redeem his pawn, the pawnshop may sell a letter to the concerned city or municipality
or dispose of the pawn only after it has advising them of the cancellation of the BSP
published a notice of public auction of AOR/AO and recommending the revocation
unredeemed articles held as security for of their business/mayor’s permit(s). It is
loans in at least two (2) newspapers understood that if the AOR of the HO is

Part III - Page 7
§§ 4324P.2 - 4399P
09.12.31
cancelled, the AO of the branch/es is/are notary public of the city or province where
likewise cancelled; and the pawnshop has its place of business.
d. Such other sanctions as the The Auction Sheet/Book containing
Monetary Board may deem warranted. entries of auctioned pawned articles duly
The owner, partner, manager, or signed by the auctioneer or notary public
officer-in-charge of the pawnshop under oath shall be maintained by the
responsible for the violation or non- pawnshop.
compliance shall be jointly liable with the (Circular No. 656 dated 02 June 2009)
pawnshop.
A pawnshop that fails to post the § 4325P.1 Auction of pawned items
abstract of Sec. 4324P as may be determined covered by a single pawn ticket. If one
in the spot checking done by BSP shall be pawn ticket covers two or more pledged
imposed the following sanctions: articles, and only one of the articles was
a. Warning for the first three (3) sold during the auction, the pawnshop shall
offenses; allocate the loan value for each article
b. Penalty of P300.00 each for the based on their appraised value.
succeeding three (3) offenses; (Circular No. 656 dated 02 June 2009)
c. Penalty of P750 each for the next
three (3) offenses; and Sec. 4326P - 4335P (Reserved)
d. Cancellation of the AOR or AO, for
a subsequent offense. Once the AOR of the C. - J. (RESERVED)
main office is cancelled, the Authority to
Operate (AO) of the branch(es) is/are Secs. 4336P - 4395P (Reserved)
likewise cancelled.
(Circular No. 656 dated 02 June 2009) K. MISCELLANEOUS
Sec. 4325P Public Auction of Pawns. No Secs. 4396P - 4398P (Reserved)

pawnshop shall sell or otherwise dispose
of any article or thing received as security Sec. 4399P General Provisions on
for a loan except by public auction at any of Sanctions. Any violation of the provisions
the following places: of this part shall be subject to Section 18 of
a. Pawnshop’s place of business; or P.D. No. 114.
b. Any public place within the The imposition of administrative
territorial limits of the municipality or city sanctions pursuant to Section 17 of P.D. No.
where the pawnshop conducts its business. 114 for violation of the provisions of this
The auction shall be conducted under Part shall be without prejudice to the
the control and direction of a duly licensed imposition of other administrative sanctions
auctioneer. In cities and municipalities and to the filing of a criminal case as
where there is no duly licensed auctioneer, provided for in other provisions of law.
the public auction may be conducted by a (Circular No. 656 dated 02 June 2009)

Part III - Page 8
§§ 4401P - 4499P
09.12.31
PART FOUR
Sections 4401P - 4499P (Reserved)

Part IV - Page 1
§§ 4501P - 4599P
09.12.31
PART FIVE
Sections 4501P - 4599P (Reserved)

Part V - Page 1
§§ 4601P - 4642P.4
09.12.31
PART SIX
MISCELLANEOUS
A. (RESERVED) e. issued in accordance with this

Section.
Sections 4601P - 4640P (Reserved) Electronic money issuer shall be
classified as follows:
Sec. 4641P Electronic Services. The a. Banks (hereinafter called EMI-Bank);
guidelines concerning electronic activities b. NBFI supervised by the BSP
as may be applicable, are found in Sec. (hereinafter called EMI-NBFI); and
4701Q and its Subsections. c. Non-bank institutions registered
(Circular No. 649 dated 09 March 2009) with the BSP as a monetary transfer agent
under Sec. 4511N of the MORNBFI
Sec. 4642P Issuance and Operations of (hereinafter called EMI-Others).
Electronic Money. The following guidelines For purposes of this Section:
shall govern the issuance of electronic a. Electronic instruments or devices shall
money (e-money) and the operations of mean cash cards e-wallets accessible via
electronic money issuers (EMIs). mobile phones or other access device, stored
(Circular No. 649 dated 09 March 2009) value cards, and other similar products.
b. E-money issued by QBs shall not be
§ 4642P.1 Declaration of policy. It is considered as deposits.
the policy of the BSP to foster the (Circular No. 649 dated 09 March 2009)
development of efficient and convenient
retail payment and fund transfer § 4642P.3 Prior Bangko Sentral
mechanisms in the Philippines. The approval. Pawnshops planning to be an EMI-
availability and acceptance of e-money as a NBFI shall comply with the requirements
retail payment medium will be promoted of Sec. 4632P and Sec. 4190Q, when
by providing the necessary safeguards and applicable.
controls to mitigate the risks associated in (Circular No. 649 dated 09 March 2009)
an e-money business.
(Circular No. 649 dated 09 March 2009) § 4642P.4 Common provisions. The
following provisions are applicable to all EMIs:
§ 4642P.2 Definitions a. E-money instrument issued shall be
E-money shall mean monetary value as subject to aggregate monthly load limit of
represented by a claim on its issuer, that is: P100,000 unless a higher amount has been
a. electronically stored in an approved by BSP. In case an EMI issues
instrument or device; several e-money instruments to a person
b. issued against receipt of funds of an (e-money holder), the total amount loaded
amount not lesser in value than the in all the e-money instruments shall be
monetary value issued; consolidated in determining compliance
c. accepted as a means of payment by with the aggregate monthly load limit;
persons or entities other than the issuer; b. EMIs shall put in place a system
d. withdrawable in cash or cash to maintain accurate and complete record
equivalent; and of e-money instruments issued, the identity

Part VI - Page 1
§§ 4642P.4 - 4642P.5
09.12.31
of e-money holders, and the individual and (2) Properly-designed computer

e-money instruments issued to common measures intended to safeguard the
e-money holders. The susceptibility of a integrity, authenticity and confidentiality of
system to intentional or unintentional data and operating processes;
misreporting of transactions and balances (4) Adequate business continuity and
and other similar incentives convertible to cash, i. EMIs shall provide the SDC
nor be purchased at a discount. E-money is quarterly statements containing, among
not considered a deposit hence it is not insured others, information on investments, volume
with the PDIC. of transactions, total outstanding e-money
d. EMIs shall not ensure that e-money balances, and liquid assets in such forms
instruments clearly identify the issuer who is as may be prescribed later on.
ultimately responsible to the e-money holders. j. EMIs shall notify BSP in writing of
This shall be communicated to the client who any change or enhancement in the e-
shall acknowledge the same in writing. money facility thirty (30) days prior to
e. It is the responsibility of EMIs to implementation. If said change or
ensure that their distributors/e-money agents enhancement requires prior BSP approval,
comply with all applicable requirements of the same shall be evaluated accordingly.
the Anti-Money Laundering laws, rules and Any change or enhancement that shall
regulations. expand the scope or change the nature of
f. EMIs shall provide an acceptable the e-money instrument shall be subject
redress mechanism to address the to prior approval of the Deputy Governor,
complaints of its customers. SES. These changes or enhancements may
g. EMIs shall disclose in writing and include the following:
its customers shall signify agreement to the (1) Additional capabilities of the
information embodied in Item “c” above e-money instrument/s, like access to new
upon their participation in the e-money channels (e.g. inclusion of internet channel
system. In addition, it shall provide clear in addition to merchant Point of Sale
guidance in English and Filipino on terminals);
consumers’ right of redemption, including (2) Change in technology service
conditions and fees for redemption, if any. providers and other major partners in the
Information on available redress procedures e-money business (excluding partner
for complaints together with the address and merchants), if any; and
contact information of the issuer shall also (3) Other changes or enhancements.
be provided. (Circular No. 649 dated 09 March 2009)
h. Prior to the issuance of e-money.
EMIs should ensure that the following § 4642P.5 Quasi-bank license
minimum systems and controls are in place: requirement. EMI-NBFIs and EMI-Others
(1) Sound and prudent management, that engage in lending activities must secure
administrative and accounting procedures a quasi-banking license from the BSP.
and adequate internal control mechanisms; (Circular No. 649 dated 09 March 2009)

Part VI - Page 2
§§ 4642P.6 - 4651P
09.12.31
§ 4642P.6 Sanctions. Monetary will undertake, with the corresponding

penalties and other sanctions for the timelines, to conform to the provisions that
following violations committed by EMI- they have not complied with subject to BSP
NBFIs shall be imposed: approval.
Nature of Violation/ Sanction/Penalties
Exception Secs. 4643P - 4650P (Reserved)
1. Issuing e-money Applicable penalties
without prior BSP under Sections 36 & B. SUNDRY PROVISIONS
approval 37 of R.A. No. 7653;
Watchlisting of
owners/partners/
Sec. 4651P Supervisory Powers of the
principal officers Bangko Sentral. The head of the appropriate
2. Violation of any Applicable penalties department of the SES and his duly
of the provisions of prescribed under designated representatives are authorized to
R.A. No. 9160 (Anti- the Act conduct an examination, inspection, or
Money Laundering investigation of books, records, business
Law of 2001 as affairs, administration, and financial
amended by R.A.No. condition of any pawnshop, whenever said
9194) and its official deems it necessary for the effective
implementing rules
implementation of P.D. No. 114, and other
and regulations
3. Violation/s of Penalties and sanctions
pertinent rules and regulations. Said official
this Section under the and his duly designated representatives may
abovementioned laws administer oaths to any director, officer, or
and other applicable employee of the pawnshop.
laws, rules and If, upon such examination, inspection,
regulations or investigation, the official or his deputies
shall establish that the pawnshop is violating
In addition, the susceptibility of a or is not complying with the requirements
system to intentional or unintentional of P.D. No. 114 and of the provisions of
misreporting of transactions and balances other pertinent rules and regulations, said
shall be sufficient ground for appropriate official shall immediately inform the
BSP action or imposition of sanctions, Monetary Board of his findings and
whenever applicable. recommendations, and the Monetary Board
(Circular No. 649 dated 09 March 2009) shall take appropriate action to stop such
violation or non-compliance, and punish the
§ 4642P.7 Transitory provisions. An pawnshop and/or the persons responsible.
EMI-NBFI granted an authority to issue Any business establishment which
e-money prior to 26 March 2009 may represents itself as a pawnshop and/or
continue to exercise such authority: regularly grants loans against pawns/
Provided, That it shall submit to the BSP, collaterals physically delivered to the
within one (1) month from the 26 March establishment or is suspected to be a
2009 a certification signed by the President pawnshop may be subject to the visitatorial
or Officer with equivalent rank and function authority of the BSP to determine whether
that it is in compliance with all the the establishment is engaged in the business
applicable requirements of this Section. of a pawnshop or in pawnbrokering.
Otherwise, they are required to submit Any establishment that is found to be
within the same period the measures they operating as a pawnshop illegally shall be

Part VI - Page 3
§§ 4651P - 4691P
09.12.31
reported to the office of the city or municipal examination shall be subject to whatever
mayor where the establishment is located, legal action that the BSP may take against
for appropriate action, without prejudice to the owners, operators and officers of the
whatever legal action that the BSP may take establishment.
against the owners and operators of the (Circular No. 656 dated 02 June 2009)
establishment.
(Circular No. 656 dated 02 June 2009) Secs. 4652P - 4656P (Reserved)
§ 4651P.1 Refusal to permit examination Sec. 4657P Batas Pambansa Blg. 344 - An
Refusal to permit examination shall mean Act to Enhance the Mobility of Disabled
any act or omission which impedes, delays Persons by Requiring Certain Buildings,
or obstructs the duly authorized BSP officer/ Institutions, Establishments and Public
examiner/employee from conducting an Utilities to Install Facilities and Other
examination, including the act of refusing Devices. In order to promote the realization
to accept or honor a letter of authority to of the rights of disabled persons to participate
examine presented by any officer/examiner/ fully in the social life and the development
employee of the BSP and the act of refusing of the societies in which they live and the
to present pawnshop’s vital records referred enjoyment of the opportunities available to
to in Sec. 4102P upon request by any officer/ other citizens, no license or permit for the
examiner/employee of the BSP. construction, repair or renovation of public
(Circular No. 656 dated 02 June 2009) and private buildings for public use,
educational institutions, airports, sports and
§ 4651P.2 Sanctions. Whenever a recreation centers and complexes, shopping
pawnshop refuses to permit a BSP centers or establishments, public parking
examination, the BSP officer/examiner/ places, workplaces, public utilities, shall be
employee shall report the matter to the head granted or issued unless the owner or
of the appropriate supervising and examining operator thereof shall install and incorporate
department of the BSP, who shall then make in such building, establishment or public
a written demand upon the pawnshop utility, such architectural facilities or
concerned for such examination. structural features as shall reasonably
If the pawnshop continues to refuse said enhance the mobility of disabled persons
examination without any satisfactory such as sidewalks, ramps, railings and the
explanation, the said department head shall like. If feasible, all such existing buildings,
recommend to the Monetary Board the institutions, establishments, or public
revocation of the registration of the utilities may be renovated or altered to
pawnshop’s AOR or AO, as the case may enable the disabled persons to have access
be. The Office of the Mayor of the concerned to them.
city or municipality shall be informed of the (Circular No. 656 dated 02 June 2009)
revocation to take appropriate action on the
pawnshop without prejudice to whatever Secs. 4658P - 4690P (Reserved)
legal action that the BSP may take against
the owners, operators and officers of the Sec. 4691P Anti-Money Laundering
pawnshop. Regulations. Banks, offshore banking
An establishment which represents itself units(OBUs), QBs, trust entities, non-stock
as a pawnshop or is suspected to be engaged savings and loan associations (NSSLAs),
in the business of a pawnshop or in pawnshops, and all other institutions,
pawnbrokering that refuses to permit BSP including their subsidiaries and affiliates

Part VI - Page 4
§§ 4691P - 4699P
09.12.31
supervised and/or regulated by the BSP, Appendix 5 and to submit a plan of action
otherwise known as “covered institutions” to comply with anti-money laundering
shall comply with the provisions of requirements within thirty (30) business
R.A. No. 9160, as amended, otherwise days from opening of a pawnshop.
known as the “Anti-Money Laundering Act (Circular No. 656 dated 02 June 2009)
of 2001” and its Implementing Rules and
Regulations (IRRs) in Appendix P-6. §§ 4691P.3 - 4691P.8 (Reserved)
(Circular No. 656 dated 02 June 2009, as amended by
Circular No. 661 dated 01 September 2009) § 4691P.9 Sanctions and penalties
a. Whenever a covered institution
§ 4691P.1 Required seminar/training violates the provisions of Section 9 of
Pawnshop personnel directly involved in R.A. No. 9160 of this Section, the officer(s)
pawnshop operations shall attend a seminar or other persons responsible for such
on the requirements of the anti-money violation shall be punished by a fine of not
laundering law, particularly on customer less than P50,000 nor more than P200,000
identification, record keeping and reporting or by imprisonment of not less than two (2)
of covered and suspicious transactions, to years nor more than ten (10) years, or both,
be conducted by the Anti-Money at the discretion of the court pursuant to
Laundering Council (AMLC) or by any of Section 36 of R.A. No. 7653, otherwise
its recognized accredited service providers. known as “The New Central Bank Act”.
The provisions of this subsection shall also b. Without prejudice to the criminal
apply to officer(s) of the branch(es). sanctions prescribed above against the
The officer(s) in-charge and the culpable persons, the Monetary Board may,
personnel who have attended the required at its discretion, impose upon any covered
seminar may echo the said training to all institution, its directors and/or officers for
employees within thirty (30) calendar days any violation of Section 9 of R.A. No. 9160,
from such attendance or as new employees the administrative sanctions provided under
are hired. Section 37 of R.A. No. 7653.
In case of pawnshops belonging to the (Circular No. 656 dated 02 June 2009)
same group of related companies, the
training/seminars may be cascaded to other Secs. 4692P - 4698P (Reserved)
pawnshops within the group, subject to the
following conditions: Sec. 4699P Administrative Sanctions. The
(1) training officers shall have attended Monetary Board shall impose upon
the AMLA lectures conducted by the AMLC; pawnshops, their owners, partners,
(2) lecture materials to be used by directors and officers for any violation of the
training officers should be approved by the provisions of the rules on pawnshops,
AML Examination Group of the BSP; and P.D. No. 114, pertinent laws or any order
(3) training officers shall submit to the or instruction of the Monetary Board or its
BSP, the list, under oath, of pawnshop authorized official; or any commission of
personnel who have attended the lectures. irregularities in the conduct of its business,
(Circular No. 656 dated 02 June 2009) the following administrative sanctions:
a. For a violation consummated at a
§ 4691P.2 Anti-Money Laundering single instance and not punishable on a
Program. Every pawnshop is required to per-day basis, a fine of not more than P500;
formulate an anti-money laundering or for a violation which is continuing and
prevention program as prescribed in punishable on a per-day basis, a fine of not

Part VI - Page 5
§ 4699P
09.12.31
more than P600 for every day of violation original pawn ticket/substitute pawn ticket/
or non-compliance; and/or affidavit of loss.
b. Suspension or, after due hearing, 3. Falsifying pawn tickets.
removal of partners/directors/trustees or 4. Actual collection of interest in
officers: Provided, That, in case the removal advance and or service charges without
of managing proprietor/managing partners reflecting the same on the pawn ticket.
shall cause the dissolution of the 5. Tampering or substitution of
proprietorship or partnership, the pawnshop pawn.
shall be delisted from the BSP List of Registered 6. Failure to issue official receipts for
Pawnshops as prescribed in Subsec. 4183P.2. amounts collected.
For purposes of this Section, the phrase 7. Any other act or omission analogous
any commission of irregularities in the to the above-enumerated acts and
conduct of its business shall include any act omissions.
or omission described hereunder. The imposition of administrative
1. Failure to produce pawn upon sanctions pursuant to Section 17 of
redemption or in any other case where the P.D. No. 114 for violation of the provisions
pawnshop has the obligation to produce the of this Part shall be without prejudice to
pawn. any action that may be taken under Section
2. Allowing the redemption of pawn 18 of P.D. No. 114.
without the surrender of the corresponding (Circular No. 656 dated 02 June 2009)

Part VI - Page 6
APP. P-1
09.12.31
CHART OF ACCOUNTS AND DESCRIPTION

OF LOAN REGISTER OF PAWNSHOPS
(Appendix to Sec. 4161P)
A. General Ledger. The General Ledger is (4) Income - This account represents the
the controlling record of all subsidiary "general ledger control" account for all
ledger accounts. The general ledger income of the pawnshop. An "Income
accounts shall be grouped as follows: Subsidiary Ledger" shall be maintained and
the total of this ledger shall equal the
(1) Assets - Asset accounts shall consist of balance of "Income Control" account of the
the following: general ledger at all times.
(a) Cash on hand and in banks; The "Income Subsidiary Ledger" shall
(b) Pledge loans; contain the following accounts:
(c) Land; (a) Interests - pledge loans;
(d) Building; (b) Service charges;
(e) Furniture and fixtures; (c) Gain or loss at auction sale;
(f) Office equipment; (d) Interests on securities; and
(g) Leasehold improvements; (e) Other income
(h) Investment in securities; and
(i) Other assets. (5) Expenses - The expenses account shall
Other assets shall include all assets not include the following:
included in any of the above classification, (a) Salaries and allowances;
such as prepaid expenses, advances, (b) Interest on borrowed money;
accounts receivables. (c) Rental;
(d) Depreciation;
(2) Liabilities - Liabilities represent (e) Light and water;
obligations of the pawnshop, such as: (f) Taxes and licenses;
(a) Loans payable; (g) SSS contribution;
(b) Accounts payable; and (h) Costs of telephone, postage and/or
(c) Other liabilities. telegram;
Other liabilities are liabilities not (i) Stationery and/or supplies; and
included in the above classification, such (j) Miscellaneous expenses.
as SSS premiums and medicare, tax
withheld, accruals. B. Registers. The following registers shall
be maintained to trace loan transactions.
(3) Capital - Capital at the end of the year
is the excess of assets over liabilities, or the (1) Loans Extended Register - Every
sum of paid-in capital, surplus or retained pawnbroker shall keep a "Loans Extended
earnings accounts and net income for the Register" in which shall be entered in ink, at
year. The accounts under this group shall the time of each loan or pledge transaction,
consist of the following: an accurate account and description in English,
(a) Capital/capital stock; with corresponding translation in the local
(b) Drawings; dialect, the following minimum data:
(c) Retained earnings; and (a) Date of transaction;
(d) Net income for the year. (b) Number of pawn ticket;

Appendix P-1 - Page 1
APP. P-1
09.12.31
(c) Amount of money loaned or payments of loans. It shall contain the

principal; following minimum data:
(d) Rate of interest to be paid, in percent; (a) Date of payment;
(e) Service charge collected; (b) Number of pawn ticket;
(f) Description of pawn; (c) Name of pawner;
(g) Appraised value of pawn; (d) Principal amount;
(h) Name of pawner; (e) Amount of interest paid; and
(i) Address of pawner; (f) Signature or thumbmark of the
(j) Description of the pawner, pawner and the name of the pawner written
including: by and signature of the witness to the
(i) Nationality; thumbmarking.
(ii) Sex; and A pawnshop that uses a computerized
(iii) General appearance; and system may record its loan transactions in
(k) Signature or thumbmark of the individual loan extended vouchers which shall
pawner and the name of the pawner written contain the same information enumerated
by and signature of the witness to the above in lieu of the loan extended and loans
thumbmarking. paid registers. Such pawnshops shall
periodically compile or bind the loan extended
(2) Loans Paid Register - A "Loans Paid vouchers and shall be made available for BSP
Register" shall be maintained in which shall examination upon request.
be entered in ink, the principal and interest (As amended by Circular No. 656 dated 02 June 2009)

LIST OF REPORTS REQUIRED FROM PAWNSHOPS
Deadline of Other
Category Form No. MOR Ref. Report Title Frequency Submission Instructions/Requirements
B BSP 7-26-01.1C 4165P General Information Sheet (for corporation) Annually 5 days from submission To be submitted to SEC
to SEC within 30 calendar days from
the date of annual
stockholders' meeting.
A-2 BSP 7-26-02C 4161P Statement of Condition (SOC) -do- January 31 To be submitted to
(As amended Supervisory Data Center
by CL-079 (SDC). For pawnshops with
dated branches, the SOC shall be
12.17.09) submitted on a consolidated
basis (i.e., head office plus
branches) together with a list
of all its branches in the report.
Branches are not required to
submit individual reports.
A-3 BSP 7-26-03C 4161P Statement of Income and Expenses -do- -do- do-
(As amended
by CL-079
dated
12.17.09)
B Unnumbered 4164P Audited Financial Statement (AFS) for the previous year -do- June 30 of the following To be submitted to appropriate
(no prescribed ended prepared by an external auditor together with reference calendar year supervising and examining
form) actions taken on the financial audit report department. For pawnshops
with assets of P50 million and

above, the AFS shall be
prepared by independent
external auditors that are in the
P Regulations
list of accredited external

auditors of the SEC, Office of the
09.12.31
APP. P-2
Insurance Commissioner or in
the list of BSP-selected external
auditors.
09.12.31
APP. P-2
P Regulations
Deadline of Other
Category Form No. MOR Ref. Report Title Frequency Submission Instructions/Requirements
B Unnumbered 4163P Report on Crimes/Losses As crime or See Appendix P-2a for

incident guidelines on reporting
occurs crimes and losses
A-2 Unnumbered 4691P Report on Suspicious Transactions As transaction 10th business day from To be submitted to the Anti-
occurs date of transaction/ Money Laundering Council
knowledge
A-2 Unnumbered 4691P Report on Covered Transactions -do- -do- -do-
A-2 Unnumbered 4691P Certification of compliance with existing anti-money Annually 20th business day after To be submitted to the
laundering regulations end of reference year appropriate department of the
SES
A-3 Unnumbered 4162P Report on Borrowings of BSP Personnel Quarterly 15 banking days after Original-SDC
(CL-059 end of reference quarter
dated
11.28.07
and
CL-050
dated
10.04.07)
B Forms I and II M-031 Report on Electronic Money Transactions -do- -do- e-mail -
Schedule 1 dated Quarterly Statement of E-Money Balances and sdcothers-emoney@bsp.gov.ph
09.11.09 Activity - Volume and Amount of E-Money Transactions hard copy - SDC
and Cir. Quarterly Statement of Liquidity Cover
No. 649 Schedules
dated 1 - E- Money Balances
03.09.09
APP. P-2
09.12.31
Annex P-2-a
REPORTING GUIDELINES ON CRIMES/LOSSES

(Annex to App. P-2)
1. Pawnshops shall report on the than arising from a crime: Provided, That if
following matters through the appropriate no pawned article is involved, the amount
department of the SES: involved per incident is P20,000 or more.
a. Crimes whether consummated, 2. The following guidelines shall be
frustrated or attempted against pawned observed in the preparation and submission
articles/property/facilities (such as robbery, of the report.
theft, swindling or estafa, forgery and other a. The report shall be prepared in two
deceits) and other crimes involving loss/ (2) copies and shall be submitted within ten
destruction of pawn/property of the (10) business days from knowledge of the
pawnshop: Provided, That if no pawned crime or incident, the original to the
article is involved, the amount involved in appropriate department of the SES and the
each crime is P20,000 or more. duplicate to the BSP Security Coordinator,
Crimes involving the pawnshop thru the Director, Security Investigation and
personnel, regardless of whether or not Transport Department.
such crimes involve the loss/destruction of b. Where a thorough investigation and
pawned articles/property of the pawnshop, evaluation of facts is necessary to complete
even if the amount involved is less than the report, an initial report submitted within
those above specified, shall likewise be the ten (10) business day deadline may be
reported to the BSP. accepted: Provided, That a complete report is
b. Incidents involving material loss, submitted not later than fifteen (15) business
destruction or damage to the institution's days from termination of investigation.
pawned articles/property/facilities, other (As amended by Circular No. 656 dated 02 June 2009)

APP. P-3
09.12.31

(Appendix to Subsec. 4162P.1 )
Category A-1 reports shall be signed by shall be duly designated in a resolution

the chief executive officer, or in his absence, approved by the board of directors in the
by the executive vice-president, and by the format as prescribed in Annex P-3-c.
comptroller, or in his absence, by the chief
accountant, or by officers holding equivalent Copies of the board resolutions on the
positions. The designated signatories in this report signatory designations shall be
category, including their specimen submitted to the appropriate department of
signatures, shall be contained in a resolution the SES within three (3) days from the date
approved by the board of directors in the of resolution.
format prescribed in Annex P-3-a.
In the case of pawnshops organized
Category A-2 reports of head offices as single proprietorship or partnership,
shall be signed by the president, executive the reports shall be signed by the
vice-presidents, vice-presidents or officers proprietor or managing partner, as the case
holding equivalent positions. Such reports may be, in place of chief executive officer
of other offices/units (such as branches) shall or president. Other signatories shall be
be signed by their respective managers/officers authorized by the proprietor/managing
in-charge. Likewise, the signing authority in partner in a letter of authority to be
this category shall be contained in a resolution submitted to the appropriate department
approved by the board of directors in the of the SES indicating the names, positions
format prescribed in Annex P-3-b. and specimen signatures of the designated
signatories as well as the reports they are
Categories A-3 and B reports shall be to sign.
signed by officers or their alternates, who (As amended by Circular No. 656 dated 02 June 2009)

APP. P-3
09.12.31
Annex P-3-a
Whereas, it is required under Subsec. 4162P.1 of the revised Manual of Regulations for
Non-Bank Financial Institutions - Pawnshops, that Category A-1 reports be signed by the
chief executive officer, or in his absence, by the executive vice-president, and by the comptroller,
or in his absence, by the chief accountant, or by officers holding equivalent positions.
Whereas, we, the members of the Board of Directors of (Name of Pawnshop) ,
are conscious that, in designating the officials who would sign said Category A-1 reports, we
are actually empowering and authorizing said officers to represent and act for or in behalf of the
Board of Directors in particular and (Name of Pawnshop) in general;
Whereas, this Board has full faith and confidence in the institution's Chief Executive
Officer, Executive Vice-President, Comptroller and Chief Accountant, as the case may be,
Now, therefore, we, the members of the Board of Directors, resolve, as it is hereby resolved that:
1. Mr.____________, President _________________
Specimen Signature
or
Executive
2. Mr.____________, Vice-President _________________
Specimen Signature
and
3. Mr.____________, Comptroller _________________
Specimen Signature
or
Chief
4. Mr.____________, Accountant _________________
Specimen Signature
are hereby authorized to sign Category A-1 reports of (Name of Pawnshop) ;
Done in the City of Philippines, this ____day of ____, 20____.

___________________ ___________________
DIRECTOR DIRECTOR
___________________ ___________________
DIRECTOR DIRECTOR
___________________ ___________________
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY
(As amended by Circular No. 656 dated 02 June 2009)

APP. P-3
09.12.31
Annex P-3-b
Whereas, it is required under Subsec. 4162P.1 of the revised Manual of Regulations for
Non-Bank Financial Institutions - Pawnshops, that Category A-2 reports be signed by the
president, executive vice-presidents, vice-presidents or officer holding equivalent position,
and that such reports of other offices be signed by the respective manager/officers-in-charge;
Whereas, it is also required that aforesaid officers of the institution be authorized under a
resolution duly approved by the institution's Board of Directors;
Whereas, we, the members of the Board of Directors of (Name of Pawnshop) , are
Board of Directors in particular and (Name of Pawnshop) in general;
Whereas, this Board has full faith and confidence in the Institution's President (and/or the
Executive Vice-President, etc., as the case may be) and, therefore, assumes responsibility for
all the acts which may be performed by aforesaid officers under their delegated authority;
resolved that:
Name of Officer Specimen Signature Position Title Report No.
are hereby authorized to sign the Category A-2 reports of (Name of Pawnshop) .
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
________________________
CORPORATE SECRETARY

APP. P-3
09.12.31
Annex P-3-c
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORIES

A-3 AND B REPORTS
Whereas, it is required under Subsec. 4162P.1 of the revised BSP Manual of Regulations
for Non-Bank Financial Institutions (Pawnshops), that Categories A-3 and B reports be signed
by officers or their alternates;
Whereas, we the members of the Board of Directors of (Name of Pawnshop) , are
conscious that, in designating the officials who would sign said Categories A-3 and B reports,
we are actually empowering and authorizing said officers to represent and act for or in
behalf of the Board of Directors in particular and (Name of Pawnshop) in general;
Whereas, this Board has full faith and confidence in the Institution's Chief Executive
Officer, Executive Vice-President, Comptroller, and Chief Accountant , as the case may
be, and , therefore, assumes responsibility for all the acts which may be performed by
aforesaid officers under their delegated authority;
resolved that:
Name of Authorized Signatory/Alternate Specimen Signature Position Title Report No.
1. Authorized
(Alternate)
2. Authorized
(Alternate)
are hereby authorized to sign the Category A-3 and B reports of (Name of Pawnshop) .
Done in the City of ___________________, Philippines, this ____day of ____, 20____.
___________________________
___________________ ___________________
DIRECTOR DIRECTOR
___________________ ___________________
DIRECTOR DIRECTOR
___________________ ___________________
DIRECTOR DIRECTOR
ATTESTED BY:
________________________
CORPORATE SECRETARY

APP. P-4
09.12.31
STANDARD PAWN TICKET

(Appendix to Subsec. 4323P.1)
BUSINESS/REGISTERED NAME
Address
Taxpayer Identification Number
Business Days and Hours
Serial No.:001 Original

Principal Amount of Loan
Interes in absolute amount 1 Date Loan Granted
Service Charge in amount Maturity Date
Net Proceeds Expiry Date of Redemption
1
Formula (Principal x Rate x Time) Interest Rate in percent: _______
Please check:
Per annum Per Month Per Day
Penalty interest in percent, if any
Description of the Pawn Appraised Value
Information on the Pawner

Name Sex
Complete Residential Address Date of Birth
Telephone/mobile phone No. Nationality
E-mail address, if any: Height
Preferred Mode of notification: Please check Weight
Mail to above address Text/SMS E-Mail ID Presented
TERMS AND CONDITIONS OF STANDARD PAWN TICKET

1. The pawner hereby accepts the pawnshop’s appraisal as proper.
2. The pawnshop hereby agrees not to collect advance interest for a period of more than
one (1) year.
3. The service charge is equivalent to one percent (1%) of the principal loan, but shall
not exceed five pesos (P5.00). No other charges shall be collected.
4. This loan is renewable for such amount and period as may be agreed upon between
the pawnshop and the pawner subject to the same requirements for a new loan.
5. Upon maturity of this loan, as indicated above, the pawner still has ninety (90) days
from maturity date within which to redeem the pawn by paying the principal loan
plus the interest that shall have accrued thereon.
6. The amount of interest due and payable after the maturity date of the loan up to the
redemption period shall be computed upon redemption at the rate of interest provided

APP. 4
09.12.31
above based on the sum of the principal loan and interest earned as of the date of
maturity. Any additional penalty and/or interest shall also be computed in the same
manner.
7. The pawnshop shall notify the pawner of any change in its business address/location.
8. The pawner shall advise the pawnshop of any change of address/contact number/
e-mail address.
9. The pawnshop shall send a reminder to the pawner in the preferred mode of notification
given above, or at the new address/mobile phone number or e-mail address, if such
was provided by the pawner before the expiration of the ninety (90) day grace period.
The pawnshop shall have the right to sell or dispose of the pawn if the pawner fails to
redeem it within the ninety (90) day grace period.
10. This ticket shall be surrendered at maturity date upon payment of the loan. In case of
loss or destruction of this ticket, the pawner hereby undertakes to personally present
an affidavit to the pawnshop before the redemption period expires. The pawnshop
has two (2) days to decide whether to accept (1) the affidavit in place of the original
pawn ticket; or (2) to issue a substitute pawn ticket, thereby cancelling the original.
11. The pawner shall not assign, sell or in any other way alienate the pawn securing this
loan without prior written consent of the pawnshop. If the pawnshop agrees, the
terms and conditions of this contract remain enforceable.
12. In case of pre-payment of this loan by pawner, the interest collected in advance shall
accrue in full to the pawnshop.
13. The pawner shall not be entitled to the excess of the public auction sale price over
the amount of principal, interest and service fee; neither shall the pawnshop be
entitled to recover the deficiency from the pawner.
(Signature or Thumbmark) (Signature)

Pawner Pawnshop's Authorized Representative
(As amended by Circular 656 dated 02 June 2009)

APP. P-4-a
09.12.31
FORMAT OF STATEMENT OF UNDERSTANDING ON

PAWNSHOP TRANSACTION
_________________________________
(Business Name of Pawnshop)
STATEMENT OF UNDERSTANDING
I ACKNOWLEDGE THAT I UNDERSTAND AND FULLY AGREE TO THE TERMS AND

CONDITIONS OF THIS CONTRACT OF PLEDGE/PAWNSHOP TRANSACTION, AND
TO THE FOLLOWING:
1. Agreement as to Interest Rates. The parties are generally free to agree in writing
on the interest rates to be imposed in loans secured by pledge/pawned properties. In
case of dispute, the regular courts of law have the vested power to determine the
reasonableness and legality of interest rates.
2. Degree of Diligence Required of a Pawnshop. In accordance with Republic Act No.
386, as amended, the Civil Code of the Philippines, pawnshops shall take care of the
thing pawned by exercising reasonable care and caution that an ordinary prudent
person would as to his own property.
a. Accountability in case of Fire. The office building/premises and all pawns in the
pawnshop, except those which are kept inside a fireproof vault, are insured against
fire in accordance with the pertinent regulations of the Bangko Sentral ng Pilipinas
(BSP). The amount of indemnity shall be dependent on the insurance policy agreement
between the pawnshop and the insurance company.
b. Accountability in case of robbery and other fortuitous events. Any claim for
restitution by pawners in case of loss, destruction or defect of the pawn due to robbery
and other fortuitous event, with or without the fault or negligence of the pawnshop,
its officers and directors, are cognizable by the regular courts.
I DECLARE UNDER THE PENALTY OF THE ANTI-FENCING LAW THAT I AM THE

OWNER OF THE PROPERTY SUBJECT OF THIS AGREEMENT.
(Signature of Pawner over Printed Name)

Date:

Appendix P-4-a - Page 1
APP. P-4-b
09.12.31
STANDARD ADDITIONAL STIPULATIONS IN PAWN TICKETS

On Face of Pawn Ticket
1. Member: Chamber of Pawnbrokers of the Philippines
On Reverse Side of Pawn Ticket

1. I hereby authorize M , whose signature appears below, to
redeem (or renew ) my pawn covered by this pawn ticket.
1
Signature of Representative Signature of Pawner

(Signed in the presence of pawner)
Received by:
Pawner/Authorized Representative
(Signed in the presence of pawnshop owner/employee)
2. Pinahihintulutan ko si G______________, na may lagda sa ibaba, para tubusin

(o mapanibago*) ang aking sangla na binanggit sa papel na ito.
Lagda ng Kinatawan Lagda ng Nagsangla

(Nilagdaan sa harap ng nagsangla)
Tinatanggap ko ang bagay/mga bagay na binanggit sa papel na ito:
Lagda ng Tumanggap
3. Received the article(s) in the same condition when pawned and redeemed.
Pawner
4. Acknowledgment: I hereby declare that the above-mentioned article(s) are my

personal property and are free from liens and encumbrances.
Pawner
1
As pawnshop may opt to allow/include in the pawn ticket.

Appendix P-4-b - Page 1
APP. P-4-b
09.12.31
5. Venue of all judicial and administrative cases or proceedings and other legal
incidents arising out of or in connection with this contract shall solely and
exclusively be brought before appropriate courts, departments, offices or agencies
of the government situated in (locality of pawnshop head office).
6. The authorized representative must present valid identification papers.
7. Upon expiration of the redemption period, the pawnshop has the right to open
the sealed pawn for purposes of public auction.
8. For purposes of computing the amount of interest for pledge loans paid after
maturity date, a fraction of (less than) a month shall be considered as one whole
month.
9. Any one of the following:
a. In case this loan is not paid on maturity date, the pawner hereby agrees to
pay in addition to accrued interest, two percent (2%) per month of the principal,
as liquidated damages. For purposes of computing the amount of liquidated
damages, a fraction of a month shall be considered as one (1) full month.
b. The pawnshop may at its sole option, allow redemption of pawn after
expiration of the 90-day grace period. Provided the pawner shall pay the
principal plus interest due at the rate prescribed herein and liquidated
damages of two percent (2%) per month on the principal, counted after grace
period. For purposes of computing the amount of liquidated damages, a
fraction of a month shall be considered as one (1) full month.
c. In case this loan is not paid on maturity date, the pawner hereby agrees to
pay in addition to accrued interest, two percent (2%) per month of the principal,
as liquidated damages. For purposes of computing the amount of liquidated
damages, a fraction of a month shall be considered as one (1) full month. The
pawnshop may, at its sole option, allow redemption of pawn after expiration
of the 90-day grace period upon payment by the pawner of the loan principal
plus interest due and liquidated damages at the rates and manner of
computation herein prescribed.
10. The pawner shall hereby notify the pawnshop of his/her intention to redeem the
pawn twenty-four (24) hours prior to actual redemption.

Appendix P-4-b - Page 2
APP. P-4-c
09.12.31
STIPULATIONS NOT ALLOWED IN STANDARD PAWN TICKETS

1. Advertisements such as “highest appraisal in town, dependable, honest”, or other

similar terms.
2. Facsimile signature of authorized pawnshop representative.
3. “Terms and conditions accepted and payment received.”
4. “By ordinary or registered mail” in standard Term and Condition No. 9.
5. “Letter of authorization”, as title of third-party redemption/authorization feature.
6. Additional features such as “demand for receipt”, “authorized by the Bangko Sentral
ng Pilipinas” and heading of ticket as “pawnshop receipt”.

Appendix P-4-c - Page 1
APP. P-5
09.12.31

institutions, and their subsidiaries and identification of the person purporting to act
affiliates supervised or regulated by the BSP on behalf of the client.
(covered institutions) shall strictly comply b. In case of doubt as to whether their
with the provisions of Section 9 of R.A. No. purported clients or customers are acting for
9160 and the following rules and themselves or for another, reasonable
regulations on anti-money laundering. measures should be taken to obtain the true
identity of the persons on whose behalf an
1. Customer identification. Covered account is opened or a transaction conducted.
institutions shall establish and record c. The provisions of existing laws to
the true identity of its clients based on the contrary notwithstanding, anonymous
official documents. They shall maintain accounts, accounts under fictitious names,
a system of verifying the true identity and all other similar accounts shall be
of their clients and, in case of corporate absolutely prohibited. In case where
clients, require a system of verifying numbered accounts is allowed (i.e., peso
their legal existence and organizational and foreign currency non-checking
structure, as well as the authority and numbered accounts), covered institutions
identification of all persons purporting should ensure that the client is identified in
to act on their behalf. an official or other identifying documents.
When establishing business relations The BSP may conduct annual testing
or conducting transactions (particularly solely limited to the determination of the
opening of deposit accounts, accepting existence and the identity of the owners of
deposit substitutes, entering into trust and such accounts.
other fiduciary transactions, renting of Covered institutions shall phase out
safety deposit boxes, performing within a period of one (1) year from 2 April
remittances and other large cash 2001 or upon their maturity, whichever is
transactions) covered institutions should earlier, anonymous accounts or accounts
take reasonable measures to establish and under fictitious names as well as numbered
record the true identity of their clients. accounts being kept or managed by them,
Said client identification may be based which are not expressly allowed under
on official or other reliable documents existing law.
and records. d. The identity of existing clients or
a. In cases of corporate and other legal beneficial owners of deposits and other
entities, the following measures should be funds held or being managed by the covered
taken, when necessary: institutions should be renewed/updated at
(1) Verification of the legal existence least every other year.
and structure of the client from the e. All records of all transactions of
appropriate agency or from the client itself covered institutions shall be maintained and
or both, proof of incorporation, including safely stored for five (5) years from the dates
information concerning the customer’s of transactions. With respect to closed
name, legal form, address, directors, accounts, the records on customer
principal officers and provisions regulating identification, account files and business
the power behind the entity. correspondence, shall be preserved and

APP. P-5
09.12.31
safely stored for at least five (5) years from R.A. No. 9160 and/or its IRRs, the
the dates when they were closed. transactions involving such funds or
Such records must be sufficient to permit attempts to transact the same, should be
reconstruction of individual transactions so reported to the Anti-Money Laundering
as to provide, if necessary, evidence for Council (AMLC) in accordance with Rules
prosecution of criminal behaviour. 5.2 and 5.3 of the AMLA IRRs.
f. Special attention should be given to a. Report on suspicious transactions.1
all complex, unusual large transactions, and Banks shall report covered transactions and
all unusual patterns of transactions, which suspicious transactions, as defined in Rules
have no apparent or visible lawful purpose. 5.2 and 5.3 of the AMLA IRRs, to the AMLC
The background and purpose of such using the forms prescribed by the AMLC.
transactions should, as far as possible, be Reportable transactions shall include the
examined, the findings established in following:
writing, and be available to help supervisors, (1) Outward remittances without
auditors and law enforcement agencies. visible lawful purpose;
g. Covered institutions should not, or (2) Inward remittances without visible
should at least avoid, transacting business lawful purpose or without underlying trade
with criminals. Reasonable measures transactions;
should be adopted to prevent the use of their (3) Unusual purchases of foreign
facilities for laundering of proceeds of exchange without visible lawful purpose;
crimes and other illegal activities. (4) Unusual sales of foreign exchange
whose sources are not satisfactorily
2. Programs against money established;
laundering. Programs against money (5) Complex, unusual large
laundering should be developed. These transactions, and all unusual patterns of
programs, should include, as a minimum: transactions, which have no apparent or
a. The development of internal visible lawful purpose;
policies, procedures and controls, including (6) Funds being managed or held as
the designation of compliance officers at deposit substitutes if there is reasonable
management level, and adequate screening ground to believe that the same are
procedures to ensure high standards when proceeds of criminal and other illegal
hiring employees; activities; and
b. An ongoing employee training (7) Suspicious Transaction Indicators or
program; and “Red Flags” as a guide in the submission to
c. An audit function to test the system. the AMLC of reports of suspicious
transactions relating to potential or actual
3. Submission of plans of action financing of terrorism.
Covered institutions shall submit a plan of (a) Wire transfers between accounts,
action on how to comply with the without visible economic or business
requirements of Appendix P-5 Nos. 1, 2 and purpose, especially if the wire transfers are
4 within thirty (30) business days from July effected through countries which are
31, 2000 or from opening of the institution. identified or connected with terrorist
activities.
4. Required reporting of certain (b) Sources and/or beneficiaries of wire
transactions. If there is reasonable ground transfers are citizens of countries which are
to believe that the funds are proceeds identified or connected with terrorist
of an unlawful activity as defined under activities.
1
Amended by AMLC Resolution No. 292 dated 20 November 2003 (Annex P-5-b).
APP. P-5
09.12.31
(c) Repetitive deposits or withdrawals (8) All other suspicious transactions/

that cannot be explained or do not make activities which can be reported without
sense. violating any law.
(d) Value of the transaction is over and The report on suspicious transactions
above what the client is capable of earning. shall provide the following minimum
(e) Client is conducting a transaction information:
that is out of the ordinary for his known (a) Name or names of the parties
business interest. involved.
(f) Deposits being made by individuals (b) A brief description of the transaction
who have no known connection or relation or transactions.
with the account holder. (c) Date or date the transaction(s)
(g) An individual receiving remittances, occurred.
but has no family members working in the (d) Amount(s) involved in every
country from which the remittance is made. transaction.
(i) Client is under investigation by law b. Exemption from Bank Secrecy Law.
enforcement agencies for possible When reporting covered transactions to the
involvement in terrorist activities. AMLC, covered institutions and their
(j) Transactions of individuals, officers, employees, representatives, agents,
companies or non-governmental advisors, consultants or associates shall not
organizations (NGOs) that are affiliated or be deemed to have violated R.A. No. 1405,
related to people suspected of being as amended; R.A. No. 6426, as amended;
connected to a terrorist group or a group R.A. No. 8791 and other similar laws, but
that advocates violent overthrow of a are prohibited from communicating, directly
government. or indirectly, in any manner or by any
(k) Transactions of individuals, means, to any person the fact that a covered
companies or NGOs that are suspected as transaction report was made, the contents
being used to pay or receive funds from thereof, or any other information in relation
revolutionary taxes. thereto. In case of violation thereof, the
(l) The NGO does not appear to have concerned officer, employee, representative,
expenses normally related to relief or agent, advisor, consultant or associate of the
humanitarian effort. covered institution, shall be criminally
(m) The absence of contributions from liable. However, no administrative,
donors located within the country of origin criminal or civil proceedings, shall lie
of the NGO. against any person for having made a
(n) A mismatch between the pattern covered transaction report in the regular
and size of financial transactions on the one performance of his duties and in good faith,
hand and the stated purpose and activity of whether or not such reporting results in any
the NGO on the other. criminal prosecution under R.A. 9160 or any
(o) Incongruities between apparent other Philippine law.
sources and amount of funds raised or c. Prohibition from disclosure of the
moved by the NGO. covered transaction report. When reporting
(p) Any other transaction that is similar, covered transactions to the AMLC, covered
identical or analogous to any of the institutions and their officers, employees,
foregoing. representatives, agents, advisors, consultants

. -5
05.12.31
APP. P-5
09.12.31
or associates are prohibited from 5. Certification of compliance with

communicating, directly or indirectly, in any anti-money laundering regulations.
manner or by any means, to any person, Covered institution shall submit annually
entity, the media, the fact that a covered to the BSP thru the appropriate department
transaction report was made, the contents of the SES a certification (Annex P-5-a)
thereof, or any other information in relation signed by the president or officer of
thereto. Neither may such reporting be equivalent rank and by their compliance
published or aired in any manner or form officer to the effect that they have monitored
by the mass media, electronic mail, or other compliance with existing anti-money
similar devices. In case of violation thereof, laundering regulations.
the concerned officer, employee, The certification shall be submitted in
representative, agent, advisor, consultant or accordance with Appendix P-2 and shall be
associate of the covered institution, or media considered a Category A-2 report.
shall be held criminally liable. (As amended by Circular No. 656 dated 02 June 2009)

APP. P-5
09.12.31
Annex P-5-a
CERTIFICATION OF COMPLIANCE
WITH ANTI-MONEY LAUNDERING REGULATIONS
CERTIFICATION
hereby certify:
1. That we have monitored (Name of Pawnshop’)s compliance with R.A. No. 9160
(Anti-Money Laundering Act of 2001), as well as with BSP Circular Nos. 251, 253,
259 and 302;
2. That the Pawnshop is complying with the required customer identification,

documentation of all new clients, and continued monitoring of customer’s activities;
3. That the Pawnshop is also complying with the requirement to record all transactions
and to maintain such records including the record of customer identification for at
least five (5) years;
4. That the Pawnshop does not maintain anonymous or fictitious accounts; and
5. That we conduct regular anti-money laundering training sessions for all Pawnshop
officers and selected staff members holding sensitive positions.
(Name of President or officer of equivalent rank) (Name of Compliance Officer)
SUBSCRIBED AND SWORN to before me, _____ this ____ day of ___________, affiant/s
exhibiting to me their Community Tax Certificate No.(s) as follows:

Page No. _________;
Book No. _________;
Series of 20___

APP. P-5
09.12.31
Annex P-5-b
Anti-Money Laundering Council Resolution No. 292

SUSPICIOUS TRANSACTION REPORTS BY COVERED INSTITUTIONS
1. All covered institutions are required their respective transaction amounts, said
to file Suspicious Transaction Reports (STRs) covered institutions shall be required to file
on transactions involving all kinds of CTRs on its clients whose transactions
monetary instruments or property. exceed P500,000 and are included in the
bulk transactions.
2. Banks shall file Covered Transaction
Reports (CTRs) on transactions involving all 5. With respect to insurance
kinds of monetary instruments or property, companies, when the total amount of the
i.e., in cash or non-cash, whether in premiums for the entire year, regardless
domestic or foreign currency. of the mode of payment (monthly,
quarterly, semi-annually or annually),
3. Covered institutions, other than exceeds P500,000, such amount shall be
banks, shall file CTRs on transactions in reported as a covered transaction, even if
cash or foreign currency or other monetary the amounts of the amortizations are less
instruments (other than checks) or than the threshold amount. The CTR shall
properties. Due to the nature of the be filed upon payment of the first premium
transactions in the stock exchange, only the amount, regardless of the mode of
brokers-dealers shall be required to file payment. Under this rule, the insurance
CTRs and STRs. The PSE, PCD, SCCP and company shall file the CTR only once
transfer agents are exempt from filing CTRs. every year until the policy matures or
They, are however, required to file STRs rescinded, whichever comes first.
when the transactions that pass through
them are deemed to be suspicious. 6. The submission of CTRs is deferred
until the AMLC directs otherwise.
4. Where the covered institution Submission of STRs, however, are not
engages in bulk transactions with a bank, deferred and covered institutions are
i.e., deposits of premium payments in bulk mandated to submit such STRs when the
or settlements of trade, and the bulk circumstances so require.
transactions do not distinguish clients and (As amended by Circular No. 656 dated 02 June 2009)

APP. P-6
09.12.31

RULE 1 subsidiaries and affiliates supervised and/

TITLE or regulated by the BSP.
(a) A subsidiary means an entity more
Rule 1.a. Title. These Rules shall be known than fifty percent (50%) of the outstanding
and cited as the “Revised Rules and voting stock of which is owned by a bank,
Regulations Implementing R.A. No. 9160”, QB, trust entity or any other institution
[the Anti-Money Laundering Act of 2001 supervised or regulated by the BSP.
(AMLA)], as amended by R.A. No. 9194. (b) An affiliate means an entity at least
twenty percent (20%) but not exceeding fifty
Rule 1.b. Purpose. These Rules are percent (50%) of the voting stock of which
promulgated to prescribe the procedures is owned by a bank, QB, trust entity, or any
and guidelines for the implementation of other institution supervised and/or regulated
the AMLA, as amended by R.A. No. 9194. by the BSP.
RULE 2 Rule 3.a.2. Insurance companies,

DECLARATION OF POLICY insurance agents, insurance brokers,
professional reinsurers, reinsurance brokers,
Rule 2. Declaration of Policy. It is hereby holding companies, holding company
declared the policy of the State to protect systems and all other persons and entities
the integrity and confidentiality of bank supervised and/or regulated by the
accounts and to ensure that the Philippines Insurance Commission (IC).
shall not be used as a money-laundering (a) An insurance company includes
site for the proceeds of any unlawful those entities authorized to transact
activity. Consistent with its foreign policy, insurance business in the Philippines,
the Philippines shall extend cooperation whether life or non-life, and whether
in transnational investigations and domestic, domestically incorporated or
prosecutions of persons involved in money branch of a foreign entity. A contract of
laundering activities wherever committed. insurance is an agreement whereby one
undertakes for a consideration to indemnify
RULE 3 another against loss, damage or liability
DEFINITIONS arising from an unknown or contingent
event. Transacting insurance business
Rule 3. Definitions. For purposes of this Act, includes making or proposing to make, as
the following terms are hereby defined as insurer, any insurance contract, or as surety,
follows: any contract of suretyship as a vocation and
not as merely incidental to any other
Rule 3.a. Covered Institution refers to: legitimate business or activity of the surety,
doing any kind of business specifically
Rule 3.a.1. Banks, offshore banking recognized as constituting the doing of an
units, QBs, trust entities, non-stock savings insurance business within the meaning of
and loan associations, pawnshops, and all P.D. No. 612, as amended, including a
other institutions, including their reinsurance business and doing or proposing

APP. P-6
09.12.31
to do any business in substance equivalent other entities managing securities or

to any of the foregoing in a manner designed rendering similar services, (ii) mutual funds
to evade the provisions of P.D. No. 612, as or open-end investment companies, close-
amended. end investment companies, common trust
(b) An insurance agent includes any funds, pre-need companies or issuers and
person who solicits or obtains insurance on other similar entities; (iii) foreign exchange
behalf of any insurance company or corporations, money changers, money
transmits for a person other than himself an payment, remittance, and transfer companies
application for a policy or contract of and other similar entities, and (iv) other
insurance to or from such company or offers entities administering or otherwise dealing
or assumes to act in the negotiation of such in currency, commodities or financial
insurance. derivatives based thereon, valuable objects,
(c) An insurance broker includes any cash substitutes and other similar monetary
person who acts or aids in any manner in instruments or property supervised and/or
soliciting, negotiating or procuring the regulated by the SEC.
making of any insurance contract or in (a) A securities broker includes a
placing risk or taking out insurance, on person engaged in the business of buying
behalf of an insured other than himself. and selling securities for the account of
(d) A professional reinsurer includes others.
any person, partnership, association or (b) A securities dealer includes any
corporation that transacts solely and person who buys and sells securities for his/
exclusively reinsurance business in the her account in the ordinary course of business.
Philippines, whether domestic, domestically (c) A securities salesman includes a
incorporated or a branch of a foreign entity. natural person, employed as such or as an
A contract of reinsurance is one by which agent, by a dealer, issuer or broker to buy
an insurer procures a third person to insure and sell securities.
him against loss or liability by reason of such (d) An associated person of a broker or
original insurance. dealer includes an employee thereof who
(e) A reinsurance broker includes any directly exercises control or supervisory
person who, not being a duly authorized authority, but does not include a salesman,
agent, employee or officer of an insurer in or an agent or a person whose functions
which any reinsurance is effected, acts or are solely clerical or ministerial.
aids in any manner in negotiating contracts (e) An investment house includes an
of reinsurance or placing risks of effecting enterprise which engages or purports to
reinsurance, for any insurance company engage, whether regularly or on an isolated
authorized to do business in the Philippines. basis, in the underwriting of securities of
(f) A holding company includes any another person or enterprise, including
person who directly or indirectly controls securities of the Government and its
any authorized insurer. A holding company instrumentalities.
system includes a holding company together (f) A mutual fund or an open-end
with its controlled insurers and controlled investment company includes an investment
persons. company which is offering for sale or has
outstanding, any redeemable security of
Rule 3.a.3. (i) Securities dealers, brokers, which it is the issuer.
salesmen, associated persons of brokers or (g) A closed-end investment company
dealers, investment houses, investment includes an investment company other than
agents and consultants, trading advisors, and open-end investment company.

APP. P-6
09.12.31
(h) A common trust fund includes a (a) any bank or trust company;
fund maintained by an entity authorized to (b) any journalist, reporter, columnist,
perform trust functions under a written and editor, lawyer, accountant, teacher;
formally established plan, exclusively for the (c) the publisher of any bonafide
collective investment and reinvestment of newspaper, news, business or financial
certain money representing participation in publication of general and regular
the plan received by it in its capacity as circulation, including their employees;
trustee, for the purpose of administration, (d) any contract market;
holding or management of such funds and/ (e) such other person not within the
or properties for the use, benefit or intent of this definition: Provided. That the
advantage of the trustor or of others known furnishing of such service by the foregoing
as beneficiaries. persons is solely incidental to the conduct
(i) A pre-need company or issuer of their business or profession.
includes any corporation supervised and/or (3) any person who undertakes the
regulated by the SEC and is authorized or management of portfolio securities of
licensed to sell or offer for sale pre-need investment companies, including the
plans. Pre-need plans are contracts which arrangement of purchases, sales or exchanges
provide for the performance of future of securities.
service(s) or payment of future monetary (l) A moneychanger includes any
consideration at the time of actual need, person in the business of buying or selling
payable either in cash or installment by the foreign currency notes.
planholder at prices stated in the contract (m) A money payment, remittance and
with or without interest or insurance transfer company includes any person
coverage and includes life, pension, offering to pay, remit or transfer or transmit
education, internment and other plans, money on behalf of any person to another
which the Commission may, from time to person.
time, approve. (n) “Customer” refers to any person or
(j) A foreign exchange corporation entity that keeps an account, or otherwise
includes any enterprise which engages or transacts business, with a covered
purports to engage, whether regularly or on institution and any person or entity on
an isolated basis, in the sale and purchase whose behalf an account is maintained or
of foreign currency notes and such other a transaction is conducted, as well as the
foreign-currency denominated non-bank beneficiary of said transactions. A customer
deposit transactions as may be authorized also includes the beneficiary of a trust, an
under its articles of incorporation. investment fund, a pension fund or a
(k) Investment Advisor/Agent/Consultant company or person whose assets are
shall refer to any person: managed by an asset manager, or a grantor
(1) who for an advisory fee is engaged of a trust. It includes any insurance policy
in the business of advising others, either holder, whether actual or prospective.
directly or through circulars, reports, (o) “Property” includes any thing or
publications or writings, as to the value of item of value, real or personal, tangible or
any security and as to the advisability of intangible, or any interest therein or any
trading in any security; or benefit, privilege, claim or right with respect
(2) who for compensation and as part thereto.
of a regular business, issues or promulgates,
analyzes reports concerning the capital Rule 3.b. Covered Transaction is a
market, except: transaction in cash or other equivalent

APP. P-6
09.12.31
monetary instrument involving a total (5) Other similar instruments where

amount in excess of PhP500,000.00 within title thereto passes to another by
one (1) banking day. endorsement, assignment or delivery.
Rule 3.b.1. Suspicious transactions are Rule 3.d. Offender refers to any person who
transactions, regardless of amount, where commits a money laundering offense.
any of the following circumstances exist:
(1) There is no underlying legal or trade Rule 3.e. Person refers to any natural or
obligation, purpose or economic juridical person.
justification;
(2) The client is not properly identified; Rule 3.f. Proceeds refers to an amount
(3) The amount involved is not derived or realized from an unlawful
commensurate with the business or activity. It includes:
financial capacity of the client; (1) All material results, profits, effects
(4) Taking into account all known and any amount realized from any unlawful
circumstances, it may be perceived that the activity;
client’s transaction is structured in order to (2) All monetary, financial or economic
avoid being the subject of reporting means, devices, documents, papers or
requirements under the act; things used in or having any relation to any
(5) Any circumstance relating to the unlawful activity; and
transaction which is observed to deviate (3) All moneys, expenditures, payments,
from the profile of the client and/or the disbursements, costs, outlays, charges,
client’s past transactions with the covered accounts, refunds and other similar items for
institution; the financing, operations, and maintenance
(6) The transaction is in any way related of any unlawful activity.
to an unlawful activity or any money
laundering activity or offense under this act Rule 3.g. Supervising Authority refers to the
that is about to be, is being or has been BSP, the SEC and the IC. Where the BSP, SEC
committed; or or IC supervision applies only to the
(7) Any transaction that is similar, registration of the covered institution, the BSP,
analogous or identical to any of the the SEC or the IC, within the limits of the
foregoing. AMLA, shall have the authority to require
and ask assistance from the government
Rule 3.c. Monetary Instrument refers to: agency having regulatory power and/or
(1) Coins or currency of legal tender of licensing authority over said covered
the Philippines, or of any other country; institution for the implementation and
(2) Drafts, checks and notes; enforcement of the AMLA and these Rules.
(3) Securities or negotiable instruments,
bonds, commercial papers, deposit Rule 3.h. Transaction refers to any act
certificates, trust certificates, custodial receipts establishing any right or obligation or giving
or deposit substitute instruments, trading rise to any contractual or legal relationship
orders, transaction tickets and confirmations between the parties thereto. It also includes
of sale or investments and money market any movement of funds by any means with
instruments; a covered institution.
(4) Contracts or policies of insurance,
life or non-life, and contracts of suretyship; Rule 3.i. Unlawful activity refers to any act
and or omission or series or combination

APP. P-6
09.12.31
thereof involving or having relation, to the has secured or obtained, or will secure or
following: obtain, any government permit or license,
in consideration for the help given or to be
(A) Kidnapping for ransom under given, without prejudice to Section 13 of
Article 267 of Act No. 3815, otherwise known R.A. No. 3019;
as the Revised Penal Code, as amended; (16) Causing any undue injury to any
(1) Kidnapping for ransom. party, including the government, or giving
any private party any unwarranted benefits,
(B) Sections 4, 5, 6, 8, 9, 10, 12, 13, advantage or preference in the discharge of
14, 15 and 16 of R.A. No. 9165, otherwise his official, administrative or judicial
known as the Comprehensive Dangerous functions through manifest partiality, evident
Drugs Act of 2002; bad faith or gross inexcusable negligence;
(2) Importation of prohibited drugs; (17) Entering, on behalf of the
(3) Sale of prohibited drugs; government, into any contract or transaction
(4) Administration of prohibited manifestly and grossly disadvantageous to
drugs; the same, whether or not the public officer
(5) Delivery of prohibited drugs; profited or will profit thereby;
(6) Distribution of prohibited drugs; (18) Directly or indirectly having
(7) Transportation of prohibited financial or pecuniary interest in any
drugs; business contract or transaction in
(8) Maintenance of a Den, Dive or connection with which he intervenes or
Resort for prohibited users; takes part in his official capacity, or in which
(9) Manufacture of prohibited drugs; he is prohibited by the Constitution or by
(10) Possession of prohibited drugs; any law from having any interest;
(11) Use of prohibited drugs; (19) Directly or indirectly becoming
(12) Cultivation of plants which are interested, for personal gain, or having
sources of prohibited drugs; and material interest in any transaction or act
(13) Culture of plants which are requiring the approval of a board, panel or
sources of prohibited drugs. group of which he is a member, and which
exercise of discretion in such approval, even
(C) Section 3 paragraphs b, c, e, g, h if he votes against the same or he does not
and i of R.A. No. 3019, as amended, participate in the action of the board,
otherwise known as the Anti-Graft and committee, panel or group.
Corrupt Practices Act;
(14) Directly or indirectly requesting or (D) Plunder under R.A. No. 7080, as
receiving any gift, present, share, percentage amended;
or benefit for himself or for any other person (20) Plunder through misappropriation,
in connection with any contract or conversion, misuse or malversation of
transaction between the Government and public funds or raids upon the public
any party, wherein the public officer in his treasury;
official capacity has to intervene under the (21) Plunder by receiving, directly or
law; indirectly, any commission, gift, share,
(15) Directly or indirectly requesting or percentage, kickbacks or any other form of
receiving any gift, present or other pecuniary pecuniary benefit from any person and/or
or material benefit, for himself or for entity in connection with any government
another, from any person for whom the contract or project or by reason of the office
public officer, in any manner or capacity, or position of the public officer concerned;

APP. P-6
09.12.31
(22) Plunder by the illegal or fraudulent (32) Piracy in inland Philippine waters;
conveyance or disposition of assets (33) Aiding and abetting pirates and
belonging to the National Government or brigands.
any of its subdivisions, agencies,
instrumentalities or government-owned or - (H) Qualified theft under Article 310
controlled corporations or their subsidiaries; of the Revised Penal Code, as amended;
(23) Plunder by obtaining, receiving or (34) Qualified theft.
accepting, directly or indirectly, any shares
of stock, equity or any other form of interest (I) Swindling under Article 315 of the
or participation including the promise of Revised Penal Code, as amended;
future employment in any business (35) Estafa with unfaithfulness or abuse
enterprise or undertaking; of confidence by altering the substance,
(24) Plunder by establishing quality or quantity of anything of value
agricultural, industrial or commercial which the offender shall deliver by virtue
monopolies or other combinations and/or of an obligation to do so, even though such
implementation of decrees and orders obligation be based on an immoral or illegal
intended to benefit particular persons or consideration;
special interests; (36) Estafa with unfaithfulness or abuse
(25) Plunder by taking undue advantage of confidence by misappropriating or
of official position, authority, relationship, converting, to the prejudice of another,
connection or influence to unjustly enrich money, goods or any other personal
himself or themselves at the expense and to property received by the offender in trust or
the damage and prejudice of the Filipino on commission, or for administration, or
people and the Republic of the Philippines. under any other obligation involving the duty
to make delivery or to return the same, even
(E) Robbery and extortion under though such obligation be totally or partially
Articles 294, 295, 296, 299, 300, 301 and guaranteed by a bond; or by denying having
302 of the Revised Penal Code, as amended; received such money, goods, or other
(26) Robbery with violence or property;
intimidation of persons; (37) Estafa with unfaithfulness or abuse
(27) Robbery with physical injuries, of confidence by taking undue advantage
committed in an uninhabited place and by of the signature of the offended party in
a band, or with use of firearms on a street, blank, and by writing any document above
road or alley; such signature in blank, to the prejudice of
(28) Robbery in an uninhabited house the offended party or any third person;
or public building or edifice devoted to (38) Estafa by using a fictitious name,
worship. or falsely pretending to possess power,
influence, qualifications, property, credit,
(F) Jueteng and Masiao punished as agency, business or imaginary transactions,
illegal gambling under P.D. No. 1602; or by means of other similar deceits;
(29) Jueteng; (39) Estafa by altering the quality,
(30) Masiao. fineness or weight of anything pertaining to
his art or business;
(G) Piracy on the high seas under the (40) Estafa by pretending to have bribed
Revised Penal Code, as amended and P.D. any government employee;
No. 532; (41) Estafa by postdating a check, or
(31) Piracy on the high seas; issuing a check in payment of an obligation

APP. P-6
09.12.31
when the offender has no funds in the bank, of the owner of the computer or information
or his funds deposited therein were not and communications system; including
sufficient to cover the amount of the check; (57) the introduction of computer
(42) Estafa by inducing another, by viruses and the like, resulting in the
means of deceit, to sign any document; corruption, destruction, alteration, theft or
(43) Estafa by resorting to some loss of electronic data messages or electronic
fraudulent practice to ensure success in a document.
gambling game;
(44) Estafa by removing, concealing or K.2. Piracy, which refers to:
destroying, in whole or in part, any court (58) the unauthorized copying,
record, office files, document or any other reproduction;
papers. (59) the unauthorized dissemination,
distribution;
(J) Smuggling under R.A. Nos. 455 (60) the unauthorized importation;
and 1937; (61) the unauthorized use, removal,
(45) Fraudulent importation of any alteration, substitution, modification;
vehicle; (62) the unauthorized storage,
(46) Fraudulent exportation of any uploading, downloading, communication,
vehicle; making available to the public; or
(47) Assisting in any fraudulent (63) the unauthorized broadcasting, of
importation; protected material, electronic signature or
(48) Assisting in any fraudulent copyrighted works including legally
exportation; protected sound recordings or phonograms
(49) Receiving smuggled article after or information material on protected works,
fraudulent importation; through the use of telecommunication
(50) Concealing smuggled article after networks, such as, but not limited to, the
fraudulent importation; internet, in a manner that infringes
(51) Buying smuggled article after intellectual property rights.
fraudulent importation;
(52) Selling smuggled article after K.3. Violations of the Consumer Act or
fraudulent importation; R.A. No. 7394 and other relevant or
(53) Transportation of smuggled article pertinent laws through transactions covered
after fraudulent importation; by or using electronic data messages or
(54) Fraudulent practices against electronic documents:
customs revenue. (64) Sale of any consumer product that
is not in conformity with standards under
(K) Violations under R.A. No. 8792, the Consumer Act;
otherwise known as the Electronic (65) Sale of any product that has been
Commerce Act of 2000; banned by a rule under the Consumer Act;
K.1. Hacking or cracking, which refers to: (66) Sale of any adulterated or
(55) unauthorized access into or mislabeled product using electronic
interference in a computer system/server or documents;
information and communication system; or (67) Adulteration or misbranding of any
(56) any access in order to corrupt, alter, consumer product;
steal, or destroy using a computer or other (68) Forging, counterfeiting or
similar information and communication simulating any mark, stamp, tag, label or
devices, without the knowledge and consent other identification device;

APP. P-6
09.12.31
(69) Revealing trade secrets; known as the Securities Regulation Code

(70) Alteration or removal of the of 2000;
labeling of any drug or device held for sale; (89) Sale, offer or distribution of
(71) Sale of any drug or device not securities within the Philippines without a
registered in accordance with the provisions registration statement duly filed with and
of the E-Commerce Act; approved by the SEC;
(72) Sale of any drug or device by any (90) Sale or offer to the public of any
person not licensed in accordance with the pre-need plan not in accordance with the
provisions of the E-Commerce Act; rules and regulations which the SEC shall
(73) Sale of any drug or device beyond prescribe;
its expiration date; (91) Violation of reportorial
(74) Introduction into commerce of any requirements imposed upon issuers of
mislabeled or banned hazardous substance; securities;
(75) Alteration or removal of the (92) Manipulation of security prices by
labeling of a hazardous substance; creating a false or misleading appearance
(76) Deceptive sales acts and practices; of active trading in any listed security traded
(77) Unfair or unconscionable sales in an Exchange or any other trading market;
acts and practices; (93) Manipulation of security prices by
(78) Fraudulent practices relative to effecting, alone or with others, a series of
weights and measures; transactions in securities that raises their
(79) False representations in prices to induce the purchase of a security,
advertisements as the existence of a whether of the same or different class, of
warranty or guarantee; the same issuer or of a controlling, controlled
(80) Violation of price tag requirements; or commonly controlled company by
(81) Mislabeling consumer products; others;
(82) False, deceptive or misleading (94) Manipulation of security prices by
advertisements; effecting, alone or with others, a series of
(83) Violation of required disclosures transactions in securities that depresses their
on consumer loans; price to induce the sale of a security,
(84) Other violations of the provisions whether of the same or different class, of
of the E-Commerce Act. the same issuer or of a controlling, controlled
or commonly controlled company by
(L) Hijacking and other violations others;
under R.A. No. 6235; destructive arson and (95) Manipulation of security prices by
murder, as defined under the Revised Penal effecting, alone or with others, a series of
Code, as amended, including those transactions in securities that creates active
perpetrated by terrorists against non- trading to induce such a purchase or sale
combatant persons and similar targets: though manipulative devices such as
(85) Hijacking; marking the close, painting the tape,
(86) Destructive arson; squeezing the float, hype and dump, boiler
(87) Murder; room operations and such other similar
(88) Hijacking, destructive arson or devices;
murder perpetrated by terrorists against non- (96) Manipulation of security prices by
combatant persons and similar targets. circulating or disseminating information that
the price of any security listed in an
(M) Fraudulent practices and other Exchange will or is likely to rise or fall
violations under R.A. No. 8799, otherwise because of manipulative market operations

APP. P-6
09.12.31
of any one or more persons conducted for (105) Engaging in the business of
the purpose of raising or depressing the buying and selling securities in the
price of the security for the purpose of Philippines as a broker or dealer, or acting
inducing the purchase or sale of such as a salesman, or an associated person of
security; any broker or dealer without any
(97) Manipulation of security prices by registration from the Commission;
making false or misleading statements with (106) Employment by a broker or dealer
respect to any material fact, which he knew of any salesman or associated person or by
or had reasonable ground to believe was an issuer of any salesman, not registered
so false and misleading, for the purpose of with the SEC;
inducing the purchase or sale of any security (107) Effecting any transaction in any
listed or traded in an Exchange; security, or reporting such transaction, in
(98) Manipulation of security prices by an Exchange or using the facility of an
effecting, alone or with others, any series Exchange which is not registered with the
of transactions for the purchase and/or sale SEC;
of any security traded in an Exchange for (108) Making use of the facility of a
the purpose of pegging, fixing or stabilizing clearing agency which is not registered with
the price of such security, unless otherwise the SEC;
allowed by the Securities Regulation Code (109) Violations of margin requirements;
or by the rules of the SEC; (110) Violations on the restrictions on
(99) Sale or purchase of any security borrowings by members, brokers and
using any manipulative deceptive device or dealers;
contrivance; (111) Aiding and Abetting in any
(100) Execution of short sales or stop- violations of the Securities Regulation Code;
loss order in connection with the purchase (112) Hindering, obstructing or delaying
or sale of any security not in accordance the filing of any document required under
with such rules and regulations as the SEC the Securities Regulation Code or the rules
may prescribe as necessary and appropriate and regulations of the SEC;
in the public interest or the protection of (113) Violations of any of the provisions
the investors; of the implementing rules and regulations
(101) Employment of any device, of the SEC;
scheme or artifice to defraud in connection (114) Any other violations of any of the
with the purchase and sale of any securities; provisions of the Securities Regulation
(102) Obtaining money or property in Code.
connection with the purchase and sale of
any security by means of any untrue (N) Felonies or offenses of a similar
statement of a material fact or any omission nature to the afore-mentioned unlawful
to state a material fact necessary in order to activities that are punishable under the penal
make the statements made, in the light of laws of other countries.
the circumstances under which they were In determining whether or not a felony
made, not misleading; or offense punishable under the penal laws
(103) Engaging in any act, transaction, of other countries, is “of a similar nature”,
practice or course of action in the sale and as to constitute the same as an unlawful
purchase of any security which operates or activity under the AMLA, the nomenclature
would operate as a fraud or deceit upon of said felony or offense need not be
any person; identical to any of the predicate crimes listed
(104) Insider trading; under Rule 3.i.

APP. P-6
09.12.31
RULE 4 (a) Suspicious transactions;

MONEY LAUNDERING OFFENSE (b) Covered transactions deemed
suspicious after an investigation conducted
Rule 4.1. Money Laundering Offense by the AMLC;
Money laundering is a crime whereby the (c) Money laundering activities; and
proceeds of an unlawful activity as herein (d) Other violations of this act.
defined are transacted, thereby making
them appear to have originated from Rule 5.3. Attempts at Transactions. Section
legitimate sources. It is committed by the 4 (a) and (b) of the AMLA provides that any
following: person who attempts to transact any monetary
(a) Any person knowing that any instrument or property representing,
monetary instrument or property represents, involving or relating to the proceeds of any
involves, or relates to, the proceeds of any unlawful activity shall be prosecuted for a
unlawful activity, transacts or attempts to money laundering offense. Accordingly, the
transact said monetary instrument or reports required under Rule 9.3 (a) and (b)
property. of these Rules shall include those pertaining
(b) Any person knowing that any to any attempt by any person to transact
monetary instrument or property involves any monetary instrument or property
the proceeds of any unlawful activity, representing, involving or relating to the
performs or fails to perform any act as a proceeds of any unlawful activity.
result of which he facilitates the offense of
money laundering referred to in paragraph RULE 6
(a) above. PROSECUTION OF MONEY
(c) Any person knowing that any LAUNDERING
monetary instrument or property is required
under this Act to be disclosed and filed with Rule 6.1. Prosecution of Money Laundering
the Anti-Money Laundering Council (a) Any person may be charged with
(AMLC), fails to do so. and convicted of both the offense of money
laundering and the unlawful activity as
RULE 5 defined under Rule 3 (i) of the AMLA.
JURISDICTION OF MONEY (b) Any proceeding relating to the
LAUNDERING CASES AND MONEY unlawful activity shall be given precedence
LAUNDERING INVESTIGATION over the prosecution of any offense or
PROCEDURES violation under the AMLA without
prejudice to the application Ex-Parte by the
Rule 5.1. Jurisdiction of Money Laundering AMLC to the Court of Appeals for a Freeze
Cases. The Regional Trial Courts shall have Order with respect to the monetary
the jurisdiction to try all cases on money instrument or property involved therein and
laundering. Those committed by public resort to other remedies provided under the
officers and private persons who are in AMLA, the rules of court and other pertinent
conspiracy with such public officers shall laws and rules.
be under the jurisdiction of the
Sandiganbayan. Rule 6.2. When the AMLC finds, after
investigation, that there is probable cause
Rule 5.2. Investigation of Money to charge any person with a money
Laundering Offenses. The AMLC shall laundering offense under Section 4 of the
investigate: AMLA, it shall cause a complaint to be filed,

APP. P-6
09.12.31
pursuant to Section 7 (4) of the AMLA, before RULE 7

the Department of Justice or the CREATION OF ANTI-MONEY
Ombudsman, which shall then conduct the LAUNDERING COUNCIL (AMLC)
preliminary investigation of the case.
Rule 7.1.a. Composition. The Anti-Money
Rule 6.3. After due notice and hearing in Laundering Council is hereby created and
the preliminary investigation proceedings shall be composed of the Governor of the
before the Department of Justice, or the BSP as Chairman, the Commissioner of the
Ombudsman, as the case may be, and the Insurance Commission and the Chairman
latter should find probable cause of a money of the SEC as members.
laundering offense, it shall file the necessary
information before the Regional Trial Courts Rule 7.1.b. Unanimous Decision. The
or the Sandiganbayan. AMLC shall act unanimously in discharging
its functions as defined in the AMLA and in
Rule 6.4. Trial for the money laundering these Rules. However, in the case of the
offense shall proceed in accordance with incapacity, absence or disability of any
the Code of Criminal Procedure or the Rules member to discharge his functions, the
of Procedure of the Sandiganbayan, as the officer duly designated or authorized to
case may be. discharge the functions of the Governor of
the BSP, the Chairman of the SEC or the
Rule 6.5. Knowledge of the offender that Insurance Commissioner, as the case may
any monetary instrument or property be, shall act in his stead in the AMLC.
represents, involves, or relates to the
proceeds of an unlawful activity or that any Rule 7.2. Functions. The functions of the
monetary instrument or property is required AMLC are defined hereunder:
under the AMLA to be disclosed and filed (1) to require and receive covered or
with the AMLC, may be established by direct suspicious transaction reports from covered
evidence or inferred from the attendant institutions;
circumstances. (2) to issue orders addressed to the
appropriate Supervising Authority or the
Rule 6.6. All the elements of every money covered institution to determine the true
laundering offense under Section 4 of the identity of the owner of any monetary
AMLA must be proved by evidence beyond instrument or property subject of a covered
reasonable doubt, including the element of or suspicious transaction report, or request
knowledge that the monetary instrument or for assistance from a foreign State, or
property represents, involves or relates to believed by the Council, on the basis of
the proceeds of any unlawful activity. substantial evidence, to be, in whole or in
part, wherever located, representing,
Rule 6.7. No element of the unlawful involving, or related to, directly or indirectly,
activity, however, including the identity of in any manner or by any means, the
the perpetrators and the details of the actual proceeds of an unlawful activity;
commission of the unlawful activity need (3) to institute civil forfeiture
be established by proof beyond reasonable proceedings and all other remedial
doubt. The elements of the offense of money proceedings through the Office of the
laundering are separate and distinct from Solicitor General;
the elements of the felony or offense (4) to cause the filing of complaints
constituting the unlawful activity. with the Department of Justice or the

APP. P-6
09.12.31
Ombudsman for the prosecution of money (9) to develop educational programs on

laundering offenses; the pernicious effects of money laundering,
(5) to investigate suspicious transactions the methods and techniques used in money
and covered transactions deemed suspicious laundering, the viable means of preventing
after an investigation by the AMLC, money money laundering and the effective ways of
laundering activities and other violations of prosecuting and punishing offenders.
this Act; (10) to enlist the assistance of any
(6) to apply before the Court of branch, department, bureau, office, agency
Appeals, Ex-Parte, for the freezing of any or instrumentality of the government,
monetary instrument or property alleged to including government-owned or-controlled
be proceeds of any unlawful activity as corporations, in undertaking any and all anti-
defined under Section 3(i) hereof; money laundering operations, which may
(7) to implement such measures as may include the use of its personnel, facilities
be inherent, necessary, implied, incidental and resources for the more resolute
and justified under the AMLA to counteract prevention, detection and investigation of
money laundering. Subject to such money laundering offenses and prosecution
limitations as provided for by law, the of offenders. The AMLC may require the
AMLC is authorized under Rule 7 (7) of the intelligence units of the Armed Forces of
AMLA to establish an information sharing the Philippines, the Philippine National
system that will enable the AMLC to store, Police, the Department of Finance, the
track and analyze money laundering Department of Justice, as well as their
transactions for the resolute prevention, attached agencies, and other domestic or
detection and investigation of money transnational governmental or non-
laundering offenses. For this purpose, the governmental organizations or groups to
AMLC shall install a computerized system divulge to the AMLC all information that
that will be used in the creation and may, in any way, facilitate the resolute
maintenance of an information database; prevention, investigation and prosecution
(8) to receive and take action in respect of money laundering offenses and other
of any request from foreign states for violations of the AMLA.
assistance in their own anti-money (11) To impose administrative sanctions
laundering operations as provided in the for the violation of laws, rules, regulations
AMLA. The AMLC is authorized under and orders and resolutions issued pursuant
Sections 7 (8) and 13 (b) and (d) of the AMLA thereto.
to receive and take action in respect of any
request of foreign states for assistance in their Rule 7.3. Meetings. The AMLC shall meet
own anti-money laundering operations, in every first Monday of the month, or as often
respect of conventions, resolutions and other as may be necessary at the call of the
directives of the United Nations (UN), the Chairman.
UN Security Council, and other
international organizations of which the RULE 8
Philippines is a member. However, the CREATION OF A SECRETARIAT
AMLC may refuse to comply with any such
request, convention, resolution or directive Rule 8.1. The Executive Director. The
where the action sought therein contravenes Secretariat shall be headed by an
the provisions of the Constitution, or the Executive Director who shall be appointed
execution thereof is likely to prejudice the by the AMLC for a term of five (5) years. He
national interest of the Philippines. must be a member of the Philippine Bar, at

APP. P-6
09.12.31
least thirty-five (35) years of age, must have Secretariat, whether permanent, on detail or
served at least five (5) years either at the BSP, on secondment, shall not reveal, in any
the SEC or the IC and of good moral manner, any information known to them by
character, unquestionable integrity and reason of their office. This prohibition shall
known probity. He shall be considered a apply even after their separation from the
regular employee of the BSP with the rank AMLA. In case of violation of this provision,
of Assistant Governor, and shall be entitled the person shall be punished in accordance
to such benefits and subject to such rules with the pertinent provisions of the Central
and regulations, as well as prohibitions, as Bank Act.
are applicable to officers of similar rank.
RULE 9
Rule 8.2. Composition. In organizing the PREVENTION OF MONEY
Secretariat, the AMLC may choose from LAUNDERING; CUSTOMER
those who have served, continuously or IDENTIFICATION REQUIREMENTS
cumulatively, for at least five (5) years in the AND RECORD KEEPING
BSP, the SEC or the IC. All members of the
Secretariat shall be considered regular Rule 9.1. Customer Identification
employees of the BSP and shall be entitled Requirements
to such benefits and subject to such rules
and regulations as are applicable to BSP Rule 9.1.a. Customer Identification
employees of similar rank. Covered institutions shall establish and
record the true identity of its clients based
Rule 8.3. Detail and Secondment. The on official documents. They shall maintain
AMLC is authorized under Section 7 (10) of a system of verifying the true identity of their
the AMLA to enlist the assistance of the BSP, clients and, in case of corporate clients,
the SEC or the IC, or any other branch, require a system of verifying their legal
department, bureau, office, agency or existence and organizational structure, as
instrumentality of the government, including well as the authority and identification of
government-owned or -controlled all persons purporting to act on their behalf.
corporations, in undertaking any and all Covered institutions shall establish
anti-money laundering operations. This appropriate systems and methods based on
includes the use of any member of their internationally compliant standards and
personnel who may be detailed or seconded adequate internal controls for verifying and
to the AMLC, subject to existing laws and recording the true and full identity of their
Civil Service Rules and Regulations. Detailed customers.
personnel shall continue to receive their
salaries, benefits and emoluments from their Rule 9.1.b. Trustee, Nominee and Agent
respective mother units. Seconded personnel Accounts. When dealing with customers
shall receive, in lieu of their respective who are acting as trustee, nominee, agent
compensation packages from their respective or in any capacity for and on behalf of
mother units, the salaries, emoluments and another, covered institutions shall verify and
all other benefits to which their AMLC record the true and full identity of the
Secretariat positions are entitled to. person(s) on whose behalf a transaction is
being conducted. Covered institutions shall
Rule 8.4. Confidentiality Provisions. The also establish and record the true and full
members of the AMLC, the Executive identity of such trustees, nominees, agents
Director, and all the members of the and other persons and the nature of their

APP. P-6
09.12.31
capacity and duties. In case a covered with shell companies and corporations,
institution has doubts as to whether such being legal entities which have no business
persons are being used as dummies in substance in their own right but through
circumvention of existing laws, it shall which financial transactions may be
immediately make the necessary inquiries conducted, should be undertaken with
to verify the status of the business extreme caution. The following minimum
relationship between the parties. information/documents shall be obtained
from customers that are corporate or
Rule 9.1.c. Minimum Information/ juridical entities, including shell companies
Documents Required for Individual and corporations:
Customers. Covered institutions shall (1) Articles of Incorporation/
require customers to produce original Partnership;
documents of identity issued by an official (2) By-laws;
authority, bearing a photograph of the (3) Official address or principal
customer. Examples of such documents are business address;
identity cards and passports. The following (4) List of directors/partners;
minimum information/documents shall be (5) List of principal stockholders
obtained from individual customers: owning at least two percent (2%) of the
(1) Name; capital stock;
(2) Present address; (6) Contact numbers;
(3) Permanent address; (7) Beneficial owners, if any; and
(4) Date and place of birth; (8) Verification of the authority and
(5) Nationality; identification of the person purporting to
(6) Nature of work and name of act on behalf of the client.
employer or nature of self-employment/
business; Rule 9.1.e. Prohibition Against Certain
(7) Contact numbers; Accounts. Covered institutions shall
(8) Tax identification number, Social maintain accounts only in the true and full
Security System number or Government name of the account owner or holder. The
Service and Insurance System number; provisions of existing laws to the contrary
(9) Specimen signature; notwithstanding, anonymous accounts,
(10) Source of fund(s); and accounts under fictitious names, and all
(11) Names of beneficiaries in case of other similar accounts shall be absolutely
insurance contracts and whenever prohibited.
applicable.
Rule 9.1.f. Prohibition Against Opening of
Rule 9.1.d. Minimum Information/ Accounts Without Face-to-face Contact
Documents Required for Corporate and No new accounts shall be opened and
Juridical Entities. Before establishing created without face-to-face contact and full
business relationships, covered institutions compliance with the requirements under
shall endeavor to ensure that the customer Rule 9.1.c of these Rules.
is a corporate or juridical entity which has
not been or is not in the process of being, Rule 9.1.g. Numbered Accounts. Peso and
dissolved, wound up or voided, or that its foreign currency non-checking numbered
business or operations has not been or is accounts shall be allowed: Provided, That
not in the process of being, closed, shut the true identity of the customers of all peso
down, phased out, or terminated. Dealings and foreign currency non-checking

APP. P-6
09.12.31
numbered accounts are satisfactorily stored for five (5) years from 17 October
established based on official and other 2001 or from the dates of the accounts or
reliable documents and records, and that the transactions, whichever is later.
information and documents required under
the provisions of these Rules are obtained Rule 9.2.c. Closed Accounts. With respect
and recorded by the covered institution. No to closed accounts, the records on customer
peso and foreign currency non-checking identification, account files and business
accounts shall be allowed without the correspondence shall be preserved and
establishment of such identity and in the safely stored for at least five (5) years from
manner herein provided. The BSP may the dates when they were closed.
conduct annual testing for the purpose of
determining the existence and true identity Rule 9.2.d. Retention of Records in Case a
of the owners of such accounts. The SEC Money Laundering Case has been Filed in
and the IC may conduct similar testing more Court. If a money laundering case based on
often than once a year and covering such any record kept by the covered institution
other related purposes as may be allowed concerned has been filed in court, said file
under their respective charters. must be retained beyond the period
stipulated in the three (3) immediately
Rule 9.2. Record Keeping Requirements preceding Sub-Rules, as the case may be,
until it is confirmed that the case has been
Rule 9.2.a. Record Keeping: Kinds of finally resolved or terminated by the court.
Records and Period for Retention. All
records of all transactions of covered Rule 9.2.e. Form of Records. Records shall
institutions shall be maintained and safely be retained as originals in such forms as are
stored for five (5) years from the dates of admissible in court pursuant to existing laws
transactions. Said records and files shall and the applicable rules promulgated by the
contain the full and true identity of the Supreme Court.
owners or holders of the accounts involved
in the covered transactions and all other Rule 9.3. Reporting of Covered Transaction
customer identification documents. Covered
institutions shall undertake the necessary Rule 9.3.a. Period of Reporting Covered
adequate security measures to ensure the Transactions and SuspiciousTransactions
confidentiality of such file. Covered Covered institutions shall report to the
institutions shall prepare and maintain AMLC all covered transactions and
documentation, in accordance with the suspicious transactions within five (5)
aforementioned client identification working days from occurrence thereof,
requirements, on their customer accounts, unless the supervising authority concerned
relationships and transactions such that any prescribes a longer period not exceeding ten
account, relationship or transaction can be (10) working days.
so reconstructed as to enable the AMLC, Should a transaction be determined to
and/or the courts to establish an audit trail be both a covered and a suspicious
for money laundering. transaction, the covered institution shall
report the same as a suspicious transaction.
Rule 9.2.b. Existing and New Accounts The reporting of covered transactions by
and New Transactions. All records of covered institutions shall be deferred for a
existing and new accounts and of new period of sixty (60) days after the effectivity
transactions shall be maintained and safely of R.A. No. 9194, or as may be determined

APP. P-6
09.12.31
by the AMLC, in order to allow the Rule 9.3.d. Confidentiality Provisions

covered institutions to configure their When reporting covered transactions or
respective computer systems: Provided, suspicious transactions to the AMLC,
That all covered transactions during said covered institutions and their officers,
deferment period shall be submitted employees, representatives, agents,
thereafter. advisors, consultants or associates are
prohibited from communicating, directly or
Rule 9.3.b. Covered and Suspicious indirectly, in any manner or by any means,
Transaction Report Forms. The Covered to any person, entity, or the media, the fact
Transaction Report (CTR) and the Suspicious that a covered transaction report was made,
Transaction Report (STR) shall be in the the contents thereof, or any other
forms prescribed by the AMLC. information in relation thereto. Neither may
such reporting be published or aired in any
Rule 9.3.b.1. Covered institutions shall use manner or form by the mass media,
the existing forms for Covered Transaction electronic mail, or other similar devices. In
Reports and Suspicious Transaction case of violation hereof, the concerned
Reports, until such time as the AMLC has officer, employee, representative, agent,
issued new sets of forms. advisor, consultant or associate of the
covered institution, or media shall be held
Rule 9.3.b.2. Covered Transaction Reports criminally liable.
and Suspicious Transaction Reports shall be
submitted in a secured manner to the AMLC Rule 9.3.e. Safe Harbor Provisions. No
in electronic form, either via diskettes, leased administrative, criminal or civil proceedings,
lines, or through internet facilities, with the shall lie against any person for having made
corresponding hard copy for suspicious a covered transaction report or a suspicious
transactions. The final flow and procedures transaction report in the regular performance
for such reporting shall be mapped out in of his duties and in good faith, whether or
the manual of operations to be issued by not such reporting results in any criminal
the AMLC. prosecution under this Act or any other
Philippine law.
Rule 9.3.c. Exemption from Bank Secrecy
Laws. When reporting covered or RULE 10
suspicious transactions to the AMLC, APPLICATION FOR FREEZE ORDERS
covered institutions and their officers and
employees, shall not be deemed to have Rule 10.1. When the Anti-Money Laundering
violated R.A. No. 1405, as amended, Council May Apply for the Freezing of Any
R.A. No. 6426, as amended, R.A. No. Monetary Instrument or Property.
8791 and other similar laws, but are (a) After an investigation conducted by
prohibited from communicating, directly the AMLC and upon determination that
or indirectly, in any manner or by any probable cause exists that a monetary
means, to any person the fact that a instrument or property is in any way related
covered or suspicious transaction report to any unlawful activity as defined under
was made, the contents thereof, or any Section 3 (i), the AMLC may file an Ex-Parte
other information in relation thereto. In application before the Court of Appeals for
case of violation thereof, the concerned the issuance of a freeze order on any
officer and employee of the covered monetary instrument or property subject
institution, shall be criminally liable. thereof prior to the institution or in the

APP. P-6
09.12.31
course of, the criminal proceedings Rule 10.3.b. The covered institution shall
involving the unlawful activity to which said likewise immediately furnish a copy of the
monetary instrument or property is any way notice of the freeze order upon the owner
related. or holder of the monetary instrument or
(b) Considering the intricate and property or related web of accounts subject
diverse web of related and interlocking thereof.
accounts pertaining to the monetary
instrument(s) or property(ies) that any person Rule 10.3.c. Within twenty-four (24) hours
may create in the different covered from receipt of the freeze order, the covered
institutions, their branches and/or other institution concerned shall submit to the
units, the AMLC may apply to the Court of Court of Appeals and the AMLC, by personal
Appeals for the freezing, not only of the delivery, a detailed written return on the
monetary instruments or properties in the freeze order, specifying all the pertinent and
names of the reported owner(s)/holder(s), relevant information which shall include the
and monetary instruments or properties following:
named in the application of the AMLC but 1. The account number(s);
also all other related web of accounts 2. The name(s) of the account owner(s)
pertaining to other monetary instruments or holder(s);
and properties, the funds and sources of 3. The amount of the monetary
which originated from or are related to the instrument, property or related web of
monetary instrument(s) or property(ies) accounts as of the time they were frozen;
subject of the freeze order(s). 4. All relevant information as to the
(c) The freeze order shall be effective nature of the monetary instrument or
for twenty (20) days unless extended by the property;
Court of Appeals upon application by the 5. Any information on the related web
AMLC. of accounts pertaining to the monetary
instrument or property subject of the freeze
Rule 10.2. Definition of Probable Cause order; and
Probable cause includes such facts and 6. The time when the freeze thereon
circumstances which would lead a took effect.
reasonably discreet, prudent or cautious
man to believe that an unlawful activity and/ Rule 10.4. Definition of Related Web of
or a money laundering offense is about to Accounts.
be, is being or has been committed and that Related Web of Accounts pertaining to
the account or any monetary instrument or the money instrument or property subject
property subject thereof sought to be frozen of the freeze order is defined as those
is in any way related to said unlawful activity accounts, the funds and sources of which
and/or money laundering offense. originated from and/or are materially linked
to the monetary instrument(s) or
Rule 10.3. Duty of Covered Institution property(ies) subject of the freeze order(s).
Upon Receipt Thereof. Upon receipt of the freeze order issued
by the court of appeals and upon verification
Rule 10.3.a. Upon receipt of the notice of by the covered institution that the related
the freeze order, the covered institution web of accounts originated from and/or are
concerned shall immediately freeze the materially linked to the monetary instrument
monetary instrument or property and related or property subject of the freeze order, the
web of accounts subject thereof. covered institution shall freeze these related

APP. P-6
09.12.31
web of accounts wherever these funds may Section 3 (i) hereof or a money laundering
be found. offense under Section 4 hereof; except in
The return of the covered institution as cases as provided under Rule 11.2.
required under rule 10.3.c shall include the
fact of such freezing and an explanation as Rule 11.2. Authority to Inquire into Bank
to the grounds for the identification of the Deposits Without Court Order. The AMLC
related web of accounts. may inquire into or examine deposit and
investments with any banking institution or
Rule 10.5. Extension of the Freeze Order non-bank financial institution and their
Before the twenty (20) day period of the subsidiaries and affiliates without a Court
freeze order issued by the court of appeals Order where any of the following unlawful
expires, the AMLC may apply in the same activities are involved:
court for an extension of said period. Upon (a) Kidnapping for ransom under Article
the timely filing of such application and 267 of Act No. 3815, otherwise known as
pending the decision of the Court of Appeals the Revised Penal Code, as amended;
to extend the period, said period shall be (b) Sections 4,5,6, 8, 9, 10, 12, 13, 14,
deemed suspended and the freeze order 15 and 16 of R.A. No. 9165, otherwise
shall remain effective. known as the Comprehensive Dangerous
However, the covered institution shall not Drugs Act of 2002;
lift the effects of the freeze order without (c) Hijacking and other violations under
securing official confirmation from the AMLC. R.A. No. 6235; destructive arson and
murder, as defined under the Revised Penal
Rule 10.6. Prohibition Against Issuance of Code, as amended, including those
Freeze Orders Against Candidates for an perpetrated by terrorists against non-
Electoral Office During Election Period. - combatant persons and similar targets.
No assets shall be frozen to the prejudice
of a candidate for an electoral office during Rule 11.2.a. Procedure For Examination
an election period. Without A Court Order. Where any of the
unlawful activities enumerated under the
RULE 11 immediately preceding Rule 11.2 are
AUTHORITY TO INQUIRE INTO BANK involved, and there is probable cause that
DEPOSITS the deposits or investments with any
banking or non-banking financial institution
Rule 11.1. Authority to Inquire into Bank and their subsidiaries and affiliates are in
Deposits with Court Order. Notwithstanding anyway related to these unlawful activities
the provisions of R.A. No. 1405, as the AMLC shall issue a resolution
amended; R.A. No. 6426, as amended; R.A. authorizing the inquiry into or examination
No. 8791, and other laws, the AMLC may of any deposit or investment with such
inquire into or examine any particular banking or non-banking financial institution
deposit or investment with any banking and their subsidiaries and affiliates concerned.
institution or non-bank financial institution
and their subsidiaries and affiliates upon Rule 11.2.b. Duty of the Banking
order of any competent court in cases of Institution or Non-Banking Institution upon
violation of this Act, when it has been Receipt of the Anti-Money Laundering
established that there is probable cause that Council Resolution. The banking institution
the deposits or investments involved are or the non-banking financial institution and
related to an unlawful activity as defined in their subsidiaries and affiliates shall,

APP. P-6
09.12.31
immediately upon receipt of the AMLC whole or in part, directly or indirectly,

Resolution, allow the AMLC and/or its related to said report, the Revised Rules of
authorized representative(s) full access to Court on civil forfeiture shall apply.
all records pertaining to the deposit or
investment account. Rule 12.3. Claim on Forfeited Assets
Where the court has issued an order of
Rule 11.3. Bangko Sentral Authority to forfeiture of the monetary instrument or
Examine Deposits and Investments; property in a criminal prosecution for any
Additional Exception to the Bank Secrecy money laundering offense under Section 4
Act. To ensure compliance with this act, of the AMLA, the offender or any other
the BSP may inquire into or examine any person claiming an interest therein may
particular deposit or investment with any apply, by verified petition, for a declaration
banking institution or non-bank financial that the same legitimately belongs to him,
institution and their subsidiaries and and for segregation or exclusion of the
affiliates when the examination is made in monetary instrument or property
the course of a periodic or special corresponding thereto. The verified petition
examination, in accordance with the rules shall be filed with the court which rendered
of examination of the BSP. the judgment of conviction and order of
forfeiture within fifteen (15) days from the
Rule 11.3.a. Bangko Sentral Rules of date of the order of forfeiture, in default of
Examination. The BSP shall promulgate its which the said order shall become final and
rules of examination for ensuring executory. This provision shall apply in both
compliance by banks and non-bank civil and criminal forfeiture.
financial institutions and their subsidiaries
and affiliates with the AMLA and these rules. Rule 12.4. Payment in Lieu of Forfeiture
Any findings of the BSP which may Where the court has issued an order of
constitute a violation of any provision of this forfeiture of the monetary instrument or
act shall be transmitted to the AMLC for property subject of a money laundering
appropriate action. offense under Section 4 of the AMLA, and
said order cannot be enforced because any
RULE 12 particular monetary instrument or property
FORFEITURE PROVISIONS cannot, with due diligence, be located, or it
has been substantially altered, destroyed,
Rule 12.1. Authority to Institute Civil diminished in value or otherwise rendered
Forfeiture Proceedings. The AMLC is worthless by any act or omission, directly
authorized under Section 7 (3) of the AMLA or indirectly, attributable to the offender,
to institute civil forfeiture proceedings and or it has been concealed, removed,
all other remedial proceedings through the converted or otherwise transferred to
Office of the Solicitor General. prevent the same from being found or to
avoid forfeiture thereof, or it is located
Rule 12.2. When Civil Forfeiture May be outside the Philippines or has been placed
Applied. When there is a Suspicious or brought outside the jurisdiction of the
Transaction Report or a Covered Transaction court, or it has been commingled with
Report deemed suspicious after investigation other monetary instruments or property
by the AMLC, and the court has, in a petition belonging to either the offender himself or
filed for the purpose, ordered the seizure of a third person or entity, thereby rendering
any monetary instrument or property, in the same difficult to identify or be segregated

APP. P-6
09.12.31
for purposes of forfeiture, the court may, officer of the requesting state stating that the
instead of enforcing the order of forfeiture conviction and the order of forfeiture are
of the monetary instrument or property or final and that no further appeal lies in
part thereof or interest therein, accordingly respect of either.
order the convicted offender to pay an
amount equal to the value of said monetary Rule 13.3. Obtaining Assistance from
instrument or property. This provision shall Foreign States. The AMLC may make a
apply in both civil and criminal forfeiture. request to any foreign state for assistance in
(1) tracking down, freezing, restraining and
RULE 13 seizing assets alleged to be proceeds of any
MUTUAL ASSISTANCE AMONG unlawful activity; (2) obtaining information
STATES that it needs relating to any covered
transaction, money laundering offense or
Rule 13.1. Request for Assistance from a any other matter directly or indirectly related
Foreign State. Where a foreign state makes thereto; (3) to the extent allowed by the law
a request for assistance in the investigation of the foreign state, applying with the proper
or prosecution of a money laundering court therein for an order to enter any
offense, the AMLC may execute the request premises belonging to or in the possession
or refuse to execute the same and inform or control of, any or all of the persons named
the foreign state of any valid reason for not in said request, and/or search any or all such
executing the request or for delaying the persons named therein and/or remove any
execution thereof. The principles of document, material or object named in said
mutuality and reciprocity shall, for this request: Provided, That the documents
purpose, be at all times recognized. accompanying the request in support of the
application have been duly authenticated in
Rule 13.2. Powers of the Anti-Money accordance with the applicable law or
Laundering Council to Act on a Request for regulation of the foreign state; and (4)
Assistance from a Foreign State. The AMLC applying for an order of forfeiture of any
may execute a request for assistance from a monetary instrument or property in the
foreign state by: (1) tracking down, freezing, proper court in the foreign state: Provided,
restraining and seizing assets alleged to be That the request is accompanied by an
proceeds of any unlawful activity under the authenticated copy of the order of the
procedures laid down in the AMLA and in Regional Trial Court ordering the forfeiture
these Rules; (2) giving information needed of said monetary instrument or property of
by the foreign state within the procedures a convicted offender and an affidavit of the
laid down in the AMLA and in these Rules; clerk of court stating that the conviction and
and (3) applying for an order of forfeiture of the order of forfeiture are final and that no
any monetary instrument or property in the further appeal lies in respect of either.
court: Provided, That the court shall not
issue such an order unless the application Rule 13.4. Limitations on Requests for
is accompanied by an authenticated copy Mutual Assistance. The AMLC may refuse
of the order of a court in the requesting state to comply with any request for assistance
ordering the forfeiture of said monetary where the action sought by the request
instrument or property of a person who has contravenes any provision of the
been convicted of a money laundering Constitution or the execution of a request
offense in the requesting state, and a is likely to prejudice the national interest of
certification or an affidavit of a competent the Philippines, unless there is a treaty

APP. P-6
09.12.31
between the Philippines and the the person administering the government
requesting state relating to the provision or a department of the requesting territory,
of assistance in relation to money protectorate or colony. The certificate of
laundering offenses. authentication may also be made by a
secretary of the embassy or legation, consul
Rule 13.5. Requirements for Requests for general, consul, vice consul, consular agent
Mutual Assistance from Foreign States. A or any officer in the foreign service of the
request for mutual assistance from a foreign Philippines stationed in the foreign state in
state must (1) confirm that an investigation which the record is kept, and authenticated
or prosecution is being conducted in respect by the seal of his office.
of a money launderer named therein or that
he has been convicted of any money Rule 13.7. Suppletory Application of the
laundering offense; (2) state the grounds on Revised Rules of Court.
which any person is being investigated or
prosecuted for money laundering or the Rule 13.7.1. For attachment of Philippine
details of his conviction; (3) give sufficient properties in the name of persons convicted
particulars as to the identity of said person; of any unlawful activity as defined in
(4) give particulars sufficient to identify any Section 3 (i) of the AMLA, execution and
covered institution believed to have any satisfaction of final judgments of forfeiture,
information, document, material or object application for examination of witnesses,
which may be of assistance to the procuring search warrants, production of
investigation or prosecution; (5) ask from bank documents and other materials and
the covered institution concerned any all other actions not specified in the AMLA
information, document, material or object and these Rules, and assistance for any of
which may be of assistance to the the aforementioned actions, which is
investigation or prosecution; (6) specify the subject of a request by a foreign state,
manner in which and to whom said resort may be had to the proceedings
information, document, material or object pertinent thereto under the Revised Rules
obtained pursuant to said request, is to be of Court.
produced; (7) give all the particulars
necessary for the issuance by the court in Rule 13.7.2. Authority to Assist the United
the requested state of the writs, orders or Nations and other International
processes needed by the requesting state; Organizations and Foreign States. The
and (8) contain such other information as AMLC is authorized under Section 7 (8) and
may assist in the execution of the request. 13 (b) and (d) of the AMLA to receive and
take action in respect of any request of
Rule 13.6. Authentication of Documents foreign states for assistance in their own
For purposes of Section 13 (f) of the AMLA anti-money laundering operations. It is
and Section 7 of the AMLA, a document also authorized under Section 7 (7) of the
is authenticated if the same is signed or AMLA to cooperate with the National
certified by a judge, magistrate or Government and/or take appropriate action
equivalent officer in or of, the requesting in respect of conventions, resolutions and
state, and authenticated by the oath or other directives of the United Nations (UN),
affirmation of a witness or sealed with an the UN Security Council, and other
official or public seal of a minister, international organizations of which the
secretary of state, or officer in or of, the Philippines is a member. However, the
government of the requesting state, or of AMLC may refuse to comply with any such

APP. P-6
09.12.31
request, convention, resolution or directive Million, shall be imposed upon a person

where the action sought therein contravenes convicted under Section 4 (b) of the AMLA.
the provision of the Constitution or the
execution thereof is likely to prejudice the Rule 14.1.c. Penalties under Section 4 (c)
national interest of the Philippines. of the Anti-Money Laundering Act. The
penalty of imprisonment from six (6) months
Rule 13.8. Extradition. The Philippines to four (4) years or a fine of not less than
shall negotiate for the inclusion of money Php100,000.00 but not more than
laundering offenses as defined under Php500,000.00, or both, shall be imposed
Section 4 of the AMLA among the on a person convicted under Section 4(c) of
extraditable offenses in all future treaties. the AMLA.
With respect, however, to the state parties
that are signatories to the United Nations Rule 14.1.d. Administrative Sanctions
Convention Against Transnational (1) After due notice and hearing, the AMLC
Organized Crime that was ratified by the shall, at its discretion, impose fines upon
Philippine Senate on 22 October 2001, any covered institution, its officers and
money laundering is deemed to be employees, or any person who violates any
included as an extraditable offense in any of the provisions of R.A. No. 9160, as
extradition treaty existing between said amended by R.A. No. 9194 and rules,
state parties, and the Philippines shall regulations, orders and resolutions issued
include money laundering as an pursuant thereto. The fines shall be in
extraditable offense in every extradition amounts as may be determined by the
treaty that may be concluded between the council, taking into consideration all the
Philippines and any of said state parties attendant circumstances, such as the nature
in the future. and gravity of the violation or irregularity,
but in no case shall such fines be less than
RULE 14 Php100,000.00 but not to exceed
PENAL PROVISIONS Php500,000.00. The imposition of the
administrative sanctions shall be without
Rule 14.1. Penalties for the Crime of Money prejudice to the filing of criminal charges
Laundering. against the persons responsible for the
violations.
Rule 14.1.a. Penalties under Section 4 (a)
of the Anti-Money Laundering Act. The Rule 14.2. Penalties for Failure to Keep
penalty of imprisonment ranging from seven Records. The penalty of imprisonment from
(7) to fourteen (14) years and a fine of not six (6) months to one (1) year or a fine of
less than Php3.0 Million but not more than not less than Php100,000.00 but not more
twice the value of the monetary instrument than Php500,000.00, or both, shall be
or property involved in the offense, shall be imposed on a person convicted under
imposed upon a person convicted under Section 9 (b) of the AMLA.
Section 4 (a) of the AMLA.
Rule 14.3. Penalties for Malicious
Rule 14.1.b. Penalties under Section 4 (b) Reporting. Any person who, with malice,
of the Anti-Money Laundering Act. The or in bad faith, reports or files a completely
penalty of imprisonment from four (4) to unwarranted or false information relative
seven (7) years and a fine of not less than to money laundering transaction against
Php1.5 Million but not more than Php3.0 any person shall be subject to a penalty

APP. P-6
09.12.31
of six (6) months to four (4) years RULE 15

imprisonment and a fine of not less than PROHIBITIONS AGAINST POLITICAL
Php100,000.00 but not more than HARASSMENT
court: Provided, That the offender is not Rule 15.1. Prohibition against Political
entitled to avail the benefits of the Probation Persecution. The AMLA and these Rules
Law. shall not be used for political persecution
or harassment or as an instrument to hamper
Rule 14.4. Where Offender is a Juridical competition in trade and commerce. No
Person. If the offender is a corporation, case for money laundering may be filed to
association, partnership or any juridical the prejudice of a candidate for an electoral
person, the penalty shall be imposed upon office during an election period.
be, who participated in, or allowed by Rule 15.2. Provisional Remedies
their gross negligence the commission of Application; Exception.
the crime. If the offender is a juridical
person, the court may suspend or revoke Rule 15.2.a. The AMLC may apply, in the
its license. If the offender is an alien, he course of the criminal proceedings, for
shall, in addition to the penalties herein provisional remedies to prevent the
prescribed, be deported without further monetary instrument or property subject
proceedings after serving the penalties thereof from being removed, concealed,
herein prescribed. If the offender is a converted, commingled with other
public official or employee, he shall, in property or otherwise to prevent its being
addition to the penalties prescribed herein, found or taken by the applicant or
suffer perpetual or temporary absolute otherwise placed or taken beyond the
disqualification from office, as the case jurisdiction of the court. However, no
may be. assets shall be attached to the prejudice
of a candidate for an electoral office during
Rule 14.5. Refusal by a Public Official or an election period.
Employee to Testify. Any public official or
employee who is called upon to testify and Rule 15.2.b. Where there is conviction for
refuses to do the same or purposely fails to money laundering under Section 4 of the
testify shall suffer the same penalties AMLA, the court shall issue a judgment of
prescribed herein. forfeiture in favor of the Government of the
Philippines with respect to the monetary
Rule 14.6. Penalties for Breach of instrument or property found to be proceeds
Confidentiality. The punishment of of one or more unlawful activities.
imprisonment ranging from three (3) to eight However, no assets shall be forfeited to the
(8) years and a fine of not less than prejudice of a candidate for an electoral
Php500,000.00 but not more than Php1.0 office during an election period.
Million, shall be imposed on a person
convicted for a violation under Section 9(c). RULE 16
In case of a breach of confidentiality that is RESTITUTION
published or reported by media, the
responsible reporter, writer, president, Rule 16. Restitution. Restitution for any
publisher, manager and editor-in-chief shall aggrieved party shall be governed by the
be liable under this act. provisions of the New Civil Code.

APP. P-6
09.12.31
RULE 17 Rule 17.2.b. Every money laundering

IMPLEMENTING RULES AND program shall establish detailed procedures
REGULATIONS AND MONEY implementing a comprehensive, institution-
LAUNDERING PREVENTION wide “know-your-client” policy, set-up an
PROGRAMS effective dissemination of information on
money laundering activities and their
Rule 17.1. Implementing Rules and prevention, detection and reporting, adopt
Regulations. internal policies, procedures and controls,
(a) Within thirty (30) days from the designate compliance officers at
effectivity of R.A. No. 9160, as amended management level, institute adequate
by R.A. No. 9194, the BSP, the Insurance screening and recruitment procedures,
Commission and the Securities and and set-up an audit function to test the
Exchange Commission shall promulgate the system.
Implementing Rules and Regulations of the
AMLA, which shall be submitted to the Rule 17.2.c. Covered institutions shall
Congressional Oversight Committee for adopt, as part of their money laundering
approval. programs, a system of flagging and
(b) The Supervising Authorities, the BSP, monitoring transactions that qualify as
the SEC and the IC shall, under their own suspicious transactions, regardless of
respective charters and regulatory authority, amount or covered transactions involving
issue their Guidelines and Circulars on amounts below the threshold to facilitate
anti-money laundering to effectively the process of aggregating them for purposes
implement the provisions of R.A. No. 9160, of future reporting of such transactions to
as amended by R.A. No. 9194. the AMLC when their aggregated amounts
breach the threshold. All covered
Rule 17.2. Money Laundering Prevention institutions, including banks insofar as
Programs. non-deposit and non-government bond
investment transactions are concerned, shall
Rule 17.2.a. Covered institutions shall incorporate in their money laundering
formulate their respective money laundering programs the provisions of these Rules and
prevention programs in accordance with such other guidelines for reporting to the
Section 9 and other pertinent provisions of AMLC of all transactions that engender the
the AMLA and these Rules, including, but reasonable belief that a money laundering
not limited to, information dissemination on offense is about to be, is being, or has been
money laundering activities and their committed.
prevention, detection and reporting, and the
training of responsible officers and Rule 17.3. Training of Personnel. Covered
personnel of covered institutions, subject to institutions shall provide all their responsible
such guidelines as may be prescribed by officers and personnel with efficient and
their respective supervising authority. effective training and continuing education
Every covered institution shall submit its programs to enable them to fully comply
own money laundering program to the with all their obligations under the AMLA
supervising authority concerned within and these Rules.
the non-extendible period that the
supervising authority has imposed in the Rule 17.4. Amendments. These Rules or
exercise of its regulatory powers under its any portion thereof may be amended by
own charter. unanimous vote of the members of the

APP. P-6
09.12.31
AMLC and submitted to the Congressional be included in the General Appropriations

Oversight Committee as provided for under Act. The BSP shall advance the funds
Section 19 of R.A. No. 9160, as amended necessary to defray the capital outlay,
by R.A. No. 9194. maintenance and other operating expenses
and personnel services of the AMLC subject
RULE 18 to reimbursement from the budget of the
CONGRESSIONAL OVERSIGHT AMLC as appropriated under the AMLA and
COMMITTEE subsequent appropriations.
Rule 18.1. Composition of Congressional Rule 19.2. Costs and Expenses. The budget
Oversight Committee. There is hereby shall answer for indemnification for legal
created a Congressional Oversight costs and expenses reasonably incurred for
Committee composed of seven (7) members the services of external counsel in
from the Senate and seven (7) members from connection with any civil, criminal or
the House of Representatives. The members administrative action, suit or proceedings to
from the Senate shall be appointed by the which members of the AMLC and the
Senate President based on the proportional Executive Director and other members of
representation of the parties or coalitions the Secretariat may be made a party by
therein with at least two (2) Senators reason of the performance of their functions
representing the minority. The members or duties. The costs and expenses incurred
from the House of Representatives shall in defending the aforementioned action, suit
be appointed by the Speaker also based or proceeding may be paid by the AMLC in
on proportional representation of the advance of the final disposition of such
parties or coalitions therein with at least action, suit or proceeding upon receipt of
two (2) members representing the an undertaking by or on behalf of the
minority. member to repay the amount advanced
should it be ultimately determined that said
Rule 18.2. Powers of the Congressional member is not entitled to such
Oversight Committee. The Oversight indemnification.
Committee shall have the power to
promulgate its own rules, to oversee the RULE 20
implementation of this Act, and to review SEPARABILITY CLAUSE
or revise the implementing rules issued by
the Anti-Money Laundering Council within Rule 20. Separability Clause. If any
thirty (30) days from the promulgation of provision of these Rules or the application
the said rules. thereof to any person or circumstance is
held to be invalid, the other provisions of
RULE 19 these Rules, and the application of such
APPROPRIATIONS FOR AND provision or Rule to other persons or
BUDGET OF THE ANTI-MONEY circumstances, shall not be affected thereby.
LAUNDERING COUNCIL
RULE 21
Rule 19.1. Budget. The budget of Php25.0 REPEALING CLAUSE
million appropriated by Congress under the
AMLA shall be used to defray the initial Rule 21. Repealing Clause. All laws, decrees,
operational expenses of the AMLC. executive orders, rules and regulations or
Appropriations for succeeding years shall parts thereof, including the relevant

APP. P-6
09.12.31
provisions of R.A. No. 1405, as amended; RULE 23

R.A. No. 6426, as amended; R.A. No. TRANSITORY PROVISIONS
8791, as amended, and other similar laws,
as are inconsistent with the AMLA, are Rule 23.1. Transitory Provisions. Existing
hereby repealed, amended or modified freeze orders issued by the AMLC shall
accordingly. remain in force for a period of thirty (30)
days after effectivity of this act, unless
RULE 22 extended by the Court of Appeals.
EFFECTIVITY OF THE RULES
Rule 23.2. Effect of R.A. No. 9194 on Cases
Rule 22. Effectivity. These Rules shall take for Extension of Freeze Orders Resolved
effect after its approval by the Congressional by the Court of Appeals. All existing freeze
Oversight Committee and fifteen (15) days orders which the Court of Appeals has
after its complete publication in the Official extended shall remain effective, unless
Gazette or in a newspaper of general otherwise dissolved by the same court.
circulation. (As amended by Circular No. 656 dated 02 June 2009)

APP. P-7
09.12.31
“Know-Your-Pawner” Policy
(Appendix to Subsection 4301P.3)
A pawner who transacts with a • Overseas Workers Welfare

pawnshop for the first time shall be required Administration (OWWA) ID;
to present the original and submit a clear • OFW ID;
copy of at least one (1) valid photo-bearing • Seaman’s Book;
identification document (ID) issued by an • Alien Certification of Registration/
official authority. Immigrant Certificate of Registration;
The valid ID should indicate the • Government Office and GOCC ID,
pawner’s residential address, otherwise, he e.g. Armed forces of the Philippines (AFP ID),
she is also required to present the original Home Development Mutual Fund (HDMF ID);
and submit a clear copy of a certification • Certification from the National
from the barangay where the pawner resides Council for the Welfare of Disabled Persons
or a billing statement that indicates his/her (NCWDP);
residential address. • Department of Social Welfare and
Valid IDs include the following: Development (DSWD) Certification;
• Passport; • Integrated Bar of the Philippines
• Driver’s License; (IBP) ID;
• Professional Regulation Commission • Company IDs issued by private
(PRC) ID; entities or institutions registered with or
• National Bureau of Investigation supervised or regulated either by the Bangko
(NBI) Clearance; Sentral ng Pilipinas, Securities and Exchange
• Police Clearance; Commission or Insurance Commission.
• Postal ID; The copy of the ID, barangay certificate
• Voter’s ID; or billing statement shall be kept by the
• Barangay Certification; pawnshop for convenience of the pawner
• Government Service Insurance who continues to transact with the
System (GSIS) e-Card; pawnshop but said documents should be
• Social Security System (SSS) Card; updated at least every three (3) years.
• Senior Citizen Card; (As amended by Circular No. 656 dated 02 June 2009)

APP. P-8
09.12.31
ABSTRACT OF “SECTION 13 AND 14 OF P.D. NO. 114”

(PAWNSHOP REGULATION ACT)
(Appendix to Subsection 4324P.1)
Redemption of Pawn Items • A pawnshop shall publish a notice

A pawner who fails to pay his obligation of public auction in at least two
has ninety (90) days from maturity date to newspapers circulated in the city or
redeem the pawn by paying the principal municipality where the pawnshop has its
and interest. place of business six (6) days prior to the
date of public auction. In remote areas
Disposition of Unredeemed Pawn Items where newspapers are neither published
• Unredeemed pawn items shall be nor circulated, notice by newspaper
sold/disposed of only through public auction; publication shall be complied with by
• Pawner shall be notified of the public posting notices at the city or municipal
auction at least thirty (30) days before the hall and in two (2) other conspicuous
expiration of the ninety (90)-day grace period public places where the pawnshop has its
through his/her preferred mode of notification; place of business;
• The notice to pawner shall contain • Pawner may participate in the said
the date, hour and place where the public public auction.
auction shall be conducted; (Circular No. 656 dated 02 June 2009)

APP. P-9
09.12.31

(Appendix to Sec. 4190P and Subsec. 4164P.4)

a. RBs;
follows:

APP. P-9
09.12.31
and accounting principles and standards, for a. Mathematical or clerical mistakes in
the purpose of expressing an opinion on the underlying records and accounting data;
such statements. b. Oversight or misinterpretation of
2. Non-audit services – any facts; or
professional services provided to the c. Unintentional misapplication of
covered institution by an external auditor, accounting policies.
other than those provided to a covered 6. Gross negligence - wanton or
institution in connection with an audit or a reckless disregard of the duty of due care in
review of the financial statements of said complying with generally accepted auditing
covered institution. standards.
3. Professional Standards - includes: 7. Material fact/information - any fact/
(a) accounting principles that are information that could result in a change in
(1) established by the standard setting body; the market price or value of any of the
and (2) relevant to audit reports for particular issuer’s securities, or would potentially affect
issuers, or dealt with in the quality control the investment decision of an investor.
system of a particular registered public 8. Subsidiary - a corporation or firm
accounting firm; and (b) auditing standards, more than fifty percent (50%) of the
standards for attestation engagements, outstanding voting stock of which is directly
quality control policies and procedures, or indirectly owned, controlled or held with
ethical and competency standards, and power to vote by a bank, QB, trust entity,
independence standards that the BSP or SEC NSSLA or pawnshop.
determines (1) relate to the preparation or 9. Affiliate - a corporation, not more
issuance of audit reports for issuers; and than fifty percent (50%) but not less than
(2) are established or adopted by the BSP or ten percent (10%) of the outstanding voting
promulgated as SEC rules. stock of which is directly or indirectly
4. Fraud – an intentional act by one (1) owned, controlled or held with power to
or more individuals among management, vote by a bank, QB, trust entity, NSSLA or
employees, or third parties that results in a pawnshop and a juridical person that is
misrepresentation of financial statements, under common control with the bank, QB,
which will reduce the consolidated total trust entity, NSSLA or pawnshop.

APP. P-9
09.12.31


APP. P-9
09.12.31
engagement; and

APP. P-9
09.12.31


APP. P-9
09.12.31


APP. P-9
09.12.31
following;

APP. P-9
09.12.31

APP. P-9
09.12.31

and Appendix; or

APP. P-9
09.12.31


APP. P-9
09.12.31


N REGULATIONS
(Regulations Governing Other Non-Bank Financial Institutions)
TABLE OF CONTENTS
SECTION 4101N Applicable Regulations on Trust and Other Fiduciary

Activities
4101N.1 Sanctions
SECTION 4102N Minimum Capital for Investment Houses
SECTION 4103N Prior Bangko Sentral Authority on Quasi-Banking Functions

4103N.1 Quasi-banking functions
4103N.2 Transactions not considered quasi-banking
4103N.3 Delivery of securities
4103N.4 Securities custodianship operations
SECTION 4104N Anti-Money Laundering Regulations

4104N.1 - 4104N.8 (Reserved)
4104N.9 Sanctions and penalties
SECTIONS 4105N - 4109N (Reserved)

4109N.1 - 4109N.15 (Reserved)
4109N.16 Qualification and accreditation of non-bank
financial institutions acting as trustee on any
mortgage or bond issuance by any municipality,
GOCC, or any body politic
SECTION 4140N Interlocking Directorships and/or Officerships

4140N.1 Representatives of government
SECTION 4143N Disqualification of Directors and Officers

4143N.1 Persons disqualified to become directors
4143N.2 Persons disqualified to become officers
4143N.3 Disqualification procedures
4143N.4 Effect of possession of disqualifications
4143N.5 (Reserved)
4143N.6 Watchlisting
iii
SECTION 4144N Securities Custodianship and Securities Registry Operations
4144N.1 Statement of policy
4144N.2 Applicability of this regulation
4144N.3 Prior Bangko Sentral approval
4144N.4 Application for authority
4144N.5 Pre-qualification requirements for a securities
custodian/registry
4144N.6 Functions and responsibilities of a securities
custodian
4144N.7 Functions and responsibilities of a securities
registry
4144N.8 Protection of securities of the customer
4144N.9 Independence of the registry and custodian
4144N.10 Registry of scripless securities of the Bureau of
the Treasury
4144N.11 Confidentiality
4144N.12 Compliance with anti-money laundering laws/
regulations
4144N.13 Basic security deposit
4144N.14 Reportorial requirements
4144N.15 - 4144N.28 (Reserved)
4144N.29 Sanctions
SECTION 4150N Rules of Procedure on Administrative Cases Involving

Directors and Officers of Trust Entities
SECTION 4157N Batas Pambansa Blg. 344 - An Act to Enchance the Mobility
of Disabled Persons by Requiring Certain Buildings,
Institutions, Establishments and Public Utilities to Install
Facilities and other Devices
SECTION 4161N Philippine Financial Reporting Standards/Philippine

Accounting Standards
SECTION 4162N Reports

4162N.1 Categories and signatories of reports
4162N.2 Manner of filing
4162N.3 Sanctions in case of willful delay in the
submission of reports
iv
SECTION 4163N (Reserved)
SECTION 4164N Internal Audit Function

4164N.1 Status
4164N.2 Scope
4164N.3 Qualification standards of the internal auditor
4164N.4 Code of Ethics and Internal Auditing Standards
SECTION 4172N Financial Audit

4172N.1 Audited financial statements of non-bank
financial institutions
4172N.2 Posting of audited financial statements
SECTION 4180N Selection, Appointment, Reporting Requirements and Delisting

of External Auditors and/or Auditing Firm; Sanction
SECTION 4181N Publication Requirements
SECTION 4190N Duties and Responsibilities of Non-Bank Financial Institutions

and their Directors/Officers in All Cases of Outsourcing of Non-
Bank Financial Institution Functions
SECTION 4192N Prompt Corrective Action Framework
SECTION 4193N Supervision by Risks
SECTION 4194N Market Risk Management
SECTION 4195N Liquidity Risk Management
SECTION 4301N Credit Card Operations; General Policy

4301N.1 Definition of terms
v
4301N.2 Risk management system
4301N.3 Minimum requirements
4301N.4 Information to be disclosed
4301N.5 Interest accrual on past due loans
4301N.6 Finance charges
4301N.7 Deferral charges
4301N.8 Late payment/penalty fees
4301N.9 Confidentiality of information
4301N.10 Suspension, termination of effectivity and
reactivation
4301N.11 Inspection of records covering credit card
transactions
4301N.12 Offsets
4301N.13 Handling of complaints
4301N.14 Unfair collection practices
4301N.15 Sanctions
SECTION 4302N Classification of Credit Card Receivables
SECTION 4303N Updating of Information Provided to Credit Information

Bureaus
SECTION 4312N Grant of Loans and Other Credit Accommodations

4312N.1 General guidelines
4312N.2 Purpose of loans and other credit
accommodations
4312N.3 Prohibited use of loan proceeds
4312N.4 Signatories
4312N.5 Sanctions
SECTION 4313N Bank DOSRI Rules and Regulations Applicable to Government

Borrowings in Government-Owned or Controlled Financial
Institutions
SECTION 4314N Loans Against Personal Security
SECTION 4391N Investment in Debt and Marketable Equity Securities
vi
SECTION 4511N Foreign Exchange Dealers/Money Changers and/or

Remittance Agents Operations
4511N.1 Registration
4511N.2 Application for registration
4511N.3 Applicability of other laws/regulations
4511N.4 Required seminar/training
4511N.5 Sale and purchase of foreign currencies by FXDs/
MCs
4511N.6 Application to sell/purchase foreign currencies by
FXDs/MCs
4511N.7 Additional requirement
4511N.8 Requirements for remittance agents
4511N.9 Anti-money laundering council reportorial
requirements
4511N.10 - 4511N.14 (Reserved)
4511N.15 Sanctions
4511N.16 Industry association
SECTION 4601N Fines and Other Charges

4601N.1 Guidelines on the imposition of monetary
penalties; payment of penalties or fines
SECTION 4603N Non-Bank BSP Supervised Entities
SECTION 4641N Electronic Services
SECTION 4642N Issuance and Operations of Electronic Money

4642N.1 Declaration of policy
4642N.2 Definitions
4642N.3 Prior Bangko Sentral approval
vii
4642N.4 Common provisions
4642N.5 Quasi-bank license requirement
4642N.6 Sanctions
4642N.7 Transitory provisions
SECTION 4653N Accounting for Financial Institution Premises; Other Fixed

Assets
SECTION 4660N Disclosure of Remittance Charges and Other Relevant

Information
SECTION 4695N Valid Identification Cards for Financial Transactions
SECTION 4699N General Provision on Sanctions
viii
List of Appendices
09.12.31
LIST OF APPENDICES
No. SUBJECT MATTER
N-1 List of Reports Required from Non-Bank Financial Institutions
N-2 Guidelines on Prescribed Reports Signatories and Signatory Authorization

Annex N-2-a - Format of Resolution for Signatories of Category A-2
Reports
Annex N-2-b - Format of Resolution for Signatories of Category B
Reports
N-3 Anti-Money Laundering Regulations

Annex N-3-a - Certification of Compliance with Anti-Money
Annex N-3-b - Rules on Submission of Covered Transaction Reports
Institutions
N-4 Revised Implementing Rules and Regulations R.A. No. 9160, as

N-5 Guidelines to Govern the Selection, Appointment, Reporting

of Covered Entities
N-6 Qualification Requirements for a Bank/Non-Bank Financial Institution

Applying for Accreditation to Act as Trustee on any Mortgage or Bond
Issued by any Municipality, Government-Owned or Controlled
Corporation, or any Body Politic
N-7 Format Certification
N-8 Registration and Operations of Foreign Exchange Dealers/Money

Changers and Remittance Agents
Attachment 2 - Computation Sheet
ix
§§ 4101N - 4103N.1
09.12.31
BSP Manual of Regulations for Non-Bank Financial Institutions
N Regulations
(Regulations Governing Other Non-Bank Financial Institutions)
Section 4101N Applicable Regulations on shall govern the imposition of monetary

Trust and Other Fiduciary Activities. Trust penalty for violations/offenses with
operations and investment management administrative sanctions falling under
activities of NBFIs not performing Section 37 of R.A. No. 7653 on NBFIs not
quasi-banking functions shall be subject to performing quasi-banking functions, their
the applicable regulations on such activities directors and/or officers.
of NBFIs performing quasi-banking (Circular No. 673 dated 10 December 2009)
functions in Part IV of the Q Regulations of
this Manual, to the regulations in the other Sec. 4102N Minimum Capital for
parts of the Q Regulations addressed also Investment Houses. Investment houses not
to trust entities and to the regulations performing quasi-banking functions shall
implementing the Truth in Lending Act in also be subject to the minimum capital
Sec. 4307Q. requirement in Sec. 4112Q of this Manual.
§ 4101N.1 Sanctions. Pursuant to Sec. 4103N Prior Bangko Sentral Authority

Section 91 of R.A. No. 8791, the Monetary on Quasi-Banking Functions. Borrowing by
Board may impose sanctions and monetary NBFIs from twenty (20) or more lenders for
penalty for any violation of the provisions the purpose of relending or purchase of
of Part IV of the Q Regulations, of the receivables or other obligations, which
regulations in the other parts of the Q constitutes quasi-banking functions, shall be
Regulations addressed also to trust entities, subject to prior BSP authority on
and of the regulations implementing the performance of quasi-banking functions
Truth in Lending Act in Sec. 4309Q. This is under BSP regulations.
without prejudice to the imposition of other
sanctions as the Monetary Board may § 4103N.1 Quasi-banking functions
consider warranted that may include the Quasi-banking functions shall consist of the
suspension or revocation of an institution’s following:
authority to engage in trust and other a. Borrowing funds for the borrower’s
fiduciary business or in investment own account;
management activities, and such other b. Twenty (20) or more lenders at any
sanctions as may be provided by law. If one (1) time;
the offender is a director or officer of the c. Methods of borrowing: issuance,
trust entity, the Monetary Board may also endorsement, or acceptance of debt
suspend or remove such director or officer. instruments of any kind, other than deposits,
If the violation is committed by a such as:
corporation, such corporation may be (1) acceptances;
dissolved by quo warranto proceedings (2) promissory notes;
instituted by the Solicitor General. (3) participations;
The guidelines for the imposition of (4) certificates of assignment or similar
monetary penalty shown in Appendix Q-39 instruments with recourse;
Manual of Regulations for Non-Bank Financial Institutions N Regulations

Page 1
§ 4103N.1
08.12.31
(5) trust certificates; payees on the face of each debt instrument

(6) repurchase agreements; and shall serve as the primary basis for counting
(7) such other instruments as the the lenders/placers except when proof to the
Monetary Board may determine; and contrary is adduced such as the official
d. Purpose: receipts or documents other than the debt
(1) relending, or instrument itself. In such case the actual/
(2) purchasing receivables or other real lenders/placers as appearing in such
obligations. proof, shall be the basis for counting the
As used in the definition of quasi- number of lenders/placers.
banking functions, the following terms and In a debt instrument issued to two (2)
phrases shall be understood as follows: or more named payees under an and/or and
Borrowing shall refer to all forms of or arrangement, the number of payees
obtaining or raising funds through any of appearing on the instrument shall be the
the methods and for any of the purposes basis for counting the number of lenders/
provided in Item "c" and "d", above whether placers: Provided, however, That a debt
the borrower’s liability thereby is treated as instrument issued in the name of a husband
real or contingent. and wife followed by the word spouses,
For the borrower’s own account shall whether under an and, and/or or or
refer to the assumption of liability in one’s arrangement or in the name of a designated
own capacity and not in representation, or payee under an in trust for (ITF) arrangement
as an agent or trustee, of another. shall be counted as one borrowing/
Purchasing of receivables or other placement.
obligations shall refer to the acquisition of 2. Each debt instrument payable to
claims collectible in money, including bearer shall be counted as one (1) lender/
interbank borrowings or borrowings placer, except when the NBFI can prove
between FIs, or of securities, of any amount that there is only one (1) owner for several
and maturity, from domestic or foreign sources. debt instruments so payable.
Relending shall refer to the extension 3. Two (2) or more debt instruments
of loans by an institution with antecedent issued to the same payee, irrespective of
borrowing transactions. Relending shall be the date and amount shall be counted as
presumed in the absence of express one (1) borrowing or placement.
stipulation, when the institution is regularly 4. Debt instruments underwritten by
engaged in lending. investment houses or traded by securities
Regularly engaged in lending shall dealers/brokers whether on a firm, standby
refer to the practice of extending loans, or best efforts basis shall be counted on the
advances, discounts or rediscounts as a basis of the number or purchasers thereof
matter of business, i.e., continuous or and shall not be treated as having been
consistent lending as distinguished from issued solely to the underwriter or trader:
isolated lending transactions. Provided, however, That in case of unsold
The following guidelines shall govern debt instruments in a firm commitment
lender count on borrowings or funds underwriting, the underwriter shall be
mobilized by NBFIs not performing quasi- counted as a lender.
banking functions: 5. Each buyer, assignee, and/or
1. For purposes of ascertaining the indorsee shall be counted in determining the
number of lenders/placers to determine number of lenders/placers of funds
whether or not an NBFI is engaged in mobilized through sale, assignment,
quasi-banking functions, the names of and/or indorsement of securities or
N Regulations Manual of Regulations for Non-Bank Financial Institutions

Page 2
§§ 4103N.1 - 4103N.2
08.12.31
receivables on a without recourse basis be counted in determining the number of

whenever the terms and/or attendant lenders/placers.
documentation, practice, or circumstances
indicate that the sale, assignment, and/or § 4103N.2 Transactions not considered
indorsement thereof legally obligates the quasi-banking. The following shall not
NBFI not performing quasi-banking constitute quasi-banking:
functions to repurchase or reacquire the a. Borrowing by commercial,
securities/receivables sold, assigned, industrial and other non-financial
indorsed or to pay the buyer, assignee, or companies, through the means listed in
indorsee at some subsequent time. Subsec. 4103N.1 for the limited purpose
6. Funds obtained by way of advances of financing their own needs or the needs
from stockholders, directors, or officers, of their agents or dealers; and
regardless of nature, shall be considered b. The mere buying and selling without
borrowed funds or funds mobilized and recourse of instruments mentioned in
such stockholders, directors or officers shall Subsec. 4103N.1: Provided, That:
(Next page is Page 3)

Page 2a
§§ 4103N.2 - 4103N.3
08.12.31
(1) The institution selling without § 4103N.3 Delivery of securities1

recourse shall indicate or stamp in a. Securities sold on a without
conspicuous print on the instrument/s, as recourse basis allowed under Subsec.
well as on the confirmation of sale, the 4101Q.3 (b) shall be delivered physically
phrase without recourse or sans recourse to the purchaser, or to his designated
and the following statement: custodian duly accredited by the BSP, if
certificated, or by means of book-entry
(Name of non-bank) assumes transfer to the appropriate securities account
no liability for the payment, of the purchaser or his designated BSP
directly or indirectly, of accredited custodian in a registry for said
this instrument. securities, if immobilized or dematerialized,
while the confirmation of sale or document
(2) In the absence of the phrase of conveyance by the seller shall be
without recourse or sans recourse and the physically delivered to the purchaser. The
above-required accompanying statement, custodian shall hold the securities in the
the instrument so issued, endorsed or name of the buyer: Provided, That an NBFI
accepted shall automatically be considered authorized by the BSP to perform
as falling within the purview of the rules custodianship function may not be allowed
on quasi-banking: to be custodian of securities issued or sold
Provided, further, That any of the on a without recourse basis by said NBFI,
following practices or practices similar its subsidiaries or affiliates, or of securities
and/or tantamount thereto in connection in bearer form.
with a without recourse transaction The delivery shall be effected upon
renders such transaction as with recourse payment and shall be evidenced by a
and within the purview of the rules on securities delivery receipt duly signed by
quasi-banking. the authorized officer of the custodian and
(a) Issuance of postdated checks by a delivered to the purchaser.
financial intermediary, whether for its own Sanctions. Violation of any provision of
account or as an agent of the debt Item “a” shall be subject to the following
instrument issuer, in payment of the debt sanctions/penalties:
instrument sold, assigned or transferred (1) Monetary penalties
without recourse; First offense – Fine of P10,000 a day
(b) Issuance by a financial intermediary for each violation reckoned from the date
of any form of guaranty on sale transactions the violation was committed up to the date
or on negotiations or assignment of debt it was corrected.
instruments without recourse; or Subsequent offenses – Fine of P20,000
(c) Payment with the funds of the a day for each violation reckoned from the
financial intermediary which assigned, sold date the violation was committed up to the
or transferred the debt instrument without date it was corrected.
recourse, unless the financial intermediary (2) Other sanctions
can show that the issuer has with the said First offense – Reprimand for the
financial intermediary funds corresponding directors/officers responsible for the
to the amount of the obligation. violation.
Any investment house violating the Subsequent offense –
provisions of this Subsection shall be subject (a) Suspension for ninety (90) days
to the sanctions provided in Sections 12 and without pay of directors/officers responsible
16 of P.D. No. 129, as amended. for the violation;
1
Effective 16 November 2004 under Circular No. 450 dated 06 September 2004.

Page 3
§§ 4103N.3 - 4103N.4
08.12.31
(b) Suspension or revocation of the (1) the custody arrangements with

accreditation to perform custodianship clients have been in existence prior to
function; 05 November 2004 (effectivity date of
(c) Suspension or revocation of the Circular 457 dated 14 October 2004);
authority to engage in quasi-banking (2) the dealing NBFI under BSP
function; and/or supervision had been informed in writing
(d) Suspension or revocation of the by the client that he is not willing to have
authority to engage in trust and other his existing securities delivered to a third
fiduciary business. party custodian;
b. The guidelines to implement the (3) any BSP-regulated institution shall
delivery by the seller of securities to the not enter into securities transactions with a
buyer or to his designated third party client who has outstanding securities not
custodian are shown in Appendix Q-38. delivered to a BSP accredited third party
Sanctions. Violation of any of the custodian; and
provisions of Appendix Q-38 shall be (4) it shall be the responsibility of any
subject to the sanctions/penalties under BSP-regulated institution to satisfy itself that
Subsec. 4144N.29. the person purchasing securities from it has
(As amended by M-2007-002 dated 23 January 2007, no outstanding securities holdings which
M-2006-009 dated 18 July 2006, M-2006-002 dated 05 June were not delivered to a BSP accredited third
2006 and Circular No. 524 dated 31 March 2006) party custodian.
Sanctions. Without prejudice to the
§ 4103N.4 Securities custodianship penal and administrative sanctions
operations provided for under Sections 36 and 37,
a. Securities sold on a without respectively, of the R.A. No. 7653, violation
recourse basis shall be delivered to the of any provision of this Subsection shall be
purchaser, or to his designated custodian subject to the following sanctions/penalties:
duly accredited by the BSP: Provided, That (1) First offense –
the other entity authorized by the BSP to (a) Fine of up to P10,000 a day for the
perform custodianship function may not be institution for each violation reckoned from
allowed to be custodian of securities issued the date the violation was committed up
or sold on a without recourse basis by said to the date it was corrected; and
entity, its subsidiaries or affiliates, or of (b) Reprimand for the directors/officers
securities in bearer form. Existing securities responsible for the violation.
being held under custodianship by other (2) Second offense -
entities under BSP supervision, which are (a) Fine of up to P20,000 a day for the
not in accordance with said regulation, institution for each violation reckoned from
must therefore, be delivered to a BSP the date the violation was committed up
accredited third party custodian. However, to the date it was corrected; and
other FIs under BSP supervision may (b) Suspension for ninety (90) days
maintain custody of existing securities of without pay of directors/officers responsible
their clients who are unable or unwilling for the violation.
to take delivery pursuant to the provisions (3) Subsequent offenses –
of this Subsection but who declined to (a) Fine of up to P30,000 a day for the
deliver their existing securities to a BSP institution for each violation from the date
accredited third party custodian subject to the violation was committed up to the date
the following conditions: it was corrected;

Page 4
§§ 4103N.4 - 4109N.16
08.12.31
(b) Suspension or revocation of the covered institution, its directors and/or

authority to act as securities custodian officers for any violation of Section 9 of R.A.
and/or registry; and No. 9160, as amended, the administrative
(c) Suspension for 120 days without pay sanctions provided under Section 37 of R.A.
of the directors/officers responsible for the No. 7653.
violation.
b. Sec. 4144N and its subsections Secs. 4105N - 4109N (Reserved)
shall also govern the securities
custodianship and securities registry §§ 4109N.1 - 4109N.15 (Reserved)
operations relative to the sale of securities
on a without recourse basis. § 4109N.16 Qualification and
(As amended by M-2006-009 dated 18 July 2006, M-2006-002 accreditation of non-bank financial
dated 05 June 2006 and Circular No. 524 dated 31 March 2006) institutions acting as trustee on any
mortgage or bond issuance by any
Sec. 4104N Anti-Money Laundering municipality, GOCC, or any body politic
Regulations. Banks, OBUs, QBs, trust a. Applicability. NBFIs duly
entities, NSSLAs, pawnshops, and all other accredited by the BSP may act as trustee
institutions, including their subsidiaries and on any mortgage or bond issued by any
affiliates supervised and/or regulated by the municipality, GOCC, or any body politic.
BSP, otherwise known as “covered b. Application for accreditation. An
institutions” shall comply with the NBFI desiring to act as trustee on any
provisions of R.A. No. 9160, as amended, mortgage or bond issued by any
otherwise known as the “Anti-Money municipality, GOCC, or any body politic
Laundering Act of 2001” and its Revised shall file an application for accreditation
Implementing Rules and Regulations with the appropriate department of the SES.
(IRRs) in Appendix N-4 and those in The application shall be signed by the
Appendix N-3. president or officer of equivalent rank of
(As amended by Circular No. 612 dated 13 June 2008) the NBFI and shall be accompanied by the
following documents:
§§ 4104N.1 - 4104N.8 (Reserved) (1) certified true copy of the resolution
of the institution’s board of directors
§ 4104N.9 Sanctions and penalties authorizing the application; and
a. Whenever a covered institution (2) a certification signed by the
violates the provisions of Section 9 of R.A. president or officer of equivalent rank that
No. 9160, as amended the officer(s) or other the institution has complied with all the
persons responsible for such violation shall qualification requirements for accreditation.
be punished by a fine of not less than c. Qualification requirements. An
P50,000 nor more than P200,000 or by NBFI applying for accreditation to act as
imprisonment of not less than two (2) years trustee on any mortgage or bond issued by
nor more than ten (10) years, or both, at any municipality, GOCC, or any body
the discretion of the court pursuant to politic must comply with the requirements
Section 36 of R.A. No. 7653, otherwise in Appendix N-6.
known as “The New Central Bank Act”. d. Independence of the trustee. An
b. Without prejudice to the criminal NBFI is prohibited from acting as trustee
sanctions prescribed above against the of a mortgage or bond issuance if any
culpable persons, the Monetary Board elective or appointive official of the LGU,
may, at its discretion, impose upon any GOCC, or body politic which issued said

Page 5
§ 4109N.16
08.12.31
mortgage or bond and/or his related interests f. Waiver of confidentiality. An NBFI

own such number of shares of the NBFI that designated as trustee of any mortgage or
will allow him or his related interests to elect bond issued by any municipality, GOCC,
at least one (1) member of the board of or any body politic shall submit to the
directors of such NBFI or is directly or appropriate department of the SES a waiver
indirectly the registered or beneficial owner of the confidentiality of information under
of more than ten percent (10%) of any class Sections 2 and 3 of R.A. No. 1405, as
of its equity security. amended, duly executed by the issuer of
e. Investment and management of the mortgage or bond in favor of the BSP.
the funds. A domestic NBFI designated as g. Reportorial requirements. An NBFI
trustee of a mortgage or bond issuance authorized by the BSP to act as trustee of
may hold and manage, in accordance with the proceeds of mortgage or bond issuance
the provisions of the trust indenture or of a municipality, GOCC, or body politic
agreement, the proceeds of the mortgage shall comply with reportorial requirements
or bond issuance and such assets and funds that may be prescribed by the BSP.
of the issuing municipality, GOCC, or h. Applicability of the rules and
body politic as may be required to be regulations on trust, other fiduciary
delivered to the trustee under the trust business and investment management
indenture/agreement, subject to the activities. The provisions of the Rules and
following conditions/restrictions: Regulations on Trust, Other Fiduciary
(1) Pending the utilization of such Business and Investment Management
funds pursuant to the provisions of the trust Activities not inconsistent with the
indenture/agreement, the same shall only provisions of this Subsection shall form part
be (i) deposited in any bank authorized to of these rules.
accept deposits from the Government or i. Sanctions. Without prejudice to the
government entities: Provided, That the penal and administrative sanctions
depository bank is not a subsidiary or provided for under Sections 36 and 37,
affiliate of the trustee NBFI, or (ii) invested respectively, of R.A. No. 7653, violation
in peso-denominated treasury bills of any provision of this Subsection shall be
acquired/purchased from any securities subject to the following sanctions/penalties
dealer/entity, other than the trustee or any depending on the gravity of the offense:
of its unit/department, its subsidiary or (1) First offense –
affiliate. (a) Fine of up to P10,000 a day for the
(2) Investments of funds constituting or institution for each violation reckoned from
forming part of the sinking fund created as the date the violation was committed up
the primary source for the payment of the to the date it was corrected; and
principal and interests due the mortgage (b) Reprimand for the directors/officers
or bonds shall also be limited to deposits responsible for the violation.
in any bank authorized to accept deposits (2) Second offense –
from the Government or government (a) Fine of up to P20,000 a day for the
entities and investments in government institution for each violation reckoned from
securities that are consistent with such the date the violation was committed up
purpose which must be acquired/ to the date it was corrected;
purchased from any securities dealer/entity, (b) Suspension for ninety (90) days
other than the trustee or any of its unit/ without pay for directors/officers
department, its subsidiary or affiliate. responsible for the violation; and

Page 6
§§ 4109N.16 - 4140N
08.12.31
(c) Revocation of the authority to act as changers, lending investors, pawnshops,

trustee on any mortgage or bond issuance fund managers, mutual building and loan
by any municipality, GOCC, or body politic. associations, remittance agents and all other
(3) Subsequent offense – NBFIs without quasi-banking functions.
(a) Fine of up to P30,000 a day for the a. Interlocking directorships.
institution for each violation reckoned from While concurrent directorship may
the date the violation was committed up be the least prejudicial of the various
to the date it was corrected; relationships cited in this Section to the
(b) Suspension or revocation of the interests of the FIs involved, certain
trust license; measures are still necessary to safeguard
(c) Suspension for 120 days without against the disadvantages that could
pay of the directors/officers responsible for result from indiscriminate concurrent
the violation. directorship.
(1) Except as may be authorized by the
Secs. 4110N - 4139N (Reserved) Monetary Board or as otherwise provided
hereunder, there shall be no concurrent
Sec. 4140N Interlocking Directorships directorships between QBs or between a
and/or Officerships. In order to safeguard QB and a bank; and
against the excessive concentration of (2) Without the need for prior approval
economic power, unfair competitive of the Monetary Board, concurrent
advantage or conflict of interest situations directorships between entities not
to the detriment of others through the involving an investment house shall be
exercise by the same person or group of allowed in the following cases:
persons of undue influence over the policy- (a) A bank and one (1) or more of its
making and/or management functions of subsidiary bank/s, QB/s, and NBFI/s; and
similar FIs while at the same time allowing (b) A QB and an NBFI.
banks, QBs and NBFIs without quasi- For purposes of the foregoing, a
banking functions to benefit from husband and his wife shall be considered
organizational synergy or economies of as one (1) person.
scale and effective sharing of managerial b. Interlocking directorships and
and technical expertise, the following officerships.
regulations shall govern interlocking In order to prevent any conflict of
directorships and/or officerships within the interest resulting from the exercise of
financial system consisting of banks, QBs directorship coupled with the reinforcing
and NBFIs. influence of an officer’s decision-making
For purposes of this Section, QBs and implementing powers, the following
shall refer to investment houses, finance rules shall be observed.
companies, trust entities and all other (1) Except as may be authorized by the
QBs while NBFIs shall refer to Monetary Board or as otherwise provided
investment houses, finance companies, hereunder, there shall be no concurrent
trust entities, insurance companies, directorship and officership between QBs,
securities dealers/brokers, credit card or between a QB and a bank, and between
companies, NSSLAs, holding companies, a QB and an NBFI.
investment companies, government (2) Without the need for prior approval
NBFIs, asset management companies, of the Monetary Board, concurrent
insurance agencies/brokers, venture directorship and officership between a
capital corporations, FX dealers, money bank and one (1) or more of its subsidiary

Page 7
§ 4140N
08.12.31
bank/s, QB/s, and NBFI/s, other than (4) Between a bank and not more than
investment house/s, shall be allowed. two (2) of its subsidiary bank/s, QB/s, and
c. Interlocking officerships. NBFIs, other than investment house/s;
A concurrent officership in different FIs (5) Between a bank and not more than
may present more serious problems of two (2) of its subsidiary QB/s, and NBFI/s.
self-dealing and conflict of interest. Multiple Aforementioned concurrent officerships
positions may result in poor governance may be allowed, subject to the following
or unfair competitive advantage. conditions:
Considering the full-time nature of officer (a) that the positions do not involve any
positions, the difficulties of serving two (2) functional conflict of interests;
offices at the same time, and the need for (b) that any officer holding the positions
effective and efficient management, the of president, chief executive officer, chief
following rules shall be observed: operating officer or chief financial officer
As a general rule, there shall be no may not be concurrently appointed to any
concurrent officerships, including of said positions or their equivalent;
secondments, between QBs or between a (c) that the officer involved, or his
QB and a bank or between a QB and an spouse or any of his relatives within the
NBFI. For this purpose, secondment shall first degree of consanguinity or affinity or
refer to the transfer/detachment of a person by legal adoption, or a corporation,
from his regular organization for temporary association or firm wholly- or majority-
assignment elsewhere where the owned or controlled by such officer or his
seconded employee remains the employee relatives enumerated above, does not own
of the home employer although his salaries in his/its own capacity more than twenty
and other remuneration may be borne by percent (20%) of the subscribed capital
the host organization. stock of the entities in which the QB has
However, subject to prior approval of equity investments; and
the Monetary Board, concurrent (d) that where any of the positions
officerships, including secondments, may involved is held on full-time basis, adequate
be allowed in the following cases: justification shall be submitted to the
(1) Between a QB, other than an Monetary Board; or
investment house, and not more than two (6) Concurrent officership positions
(2) of its subsidiary bank/s, QB/s, and in the same capacity which do not
NBFI/s, other than investment house/s; involve management functions, i.e.,
(2) Between two (2) QBs, or between internal auditors, corporate secretary,
a QB, other than an investment house, assistant corporate secretary and security
and a bank, or between a QB and an NBFI: officer, between a QB and one (1) or
Provided, That at least twenty percent (20%) more of its subsidiary QB/s and NBFI/s,
of the equity of each of the banks, QBs or or between a bank and one (1) or more
NBFIs is owned by a holding company or a of its subsidiary QBs and NBFIs, or
QB/bank and the interlocking arrangement between bank/s, QB/s and NBFI/s, other
is necessary for the holding company or the than investment house/s: Provided, That at
QB/bank to provide technical expertise or least twenty percent (20%) of the equity
managerial assistance to its subsidiaries/ of each of the banks, QBs and NBFIs is
affiliates; owned by a holding company or by any of
(3) Between a QB and not more than the banks/QBs within the group.
two (2) of its subsidiary QB/s, and For purposes of this Section, members
NBFI/s; of a group or committee, including

Page 8
§§ 4140N - 4143N.1
08.12.31
sub-groups or sub-committees, whose (1) Persons who have been convicted

duties include functions of management by final judgment of the court for offenses
such as those ordinarily performed by involving dishonesty or breach of trust such
regular officers, shall likewise be considered as estafa, embezzlement, extortion, forgery,
as officers. malversation, swindling and theft;
It shall be the responsibility of the (2) Persons who have been convicted
Corporate Governance Committee to by final judgment of the court for violation
conduct an annual performance evaluation of banking laws;
of the board of directors and senior (3) Persons who have been judicially
management. When a director or officer declared insolvent, spendthrift or
has multiple positions, the Committee incapacitated to contract; or
should determine whether or not said (4) Directors, trustees, officers or
director or officer is able to and has been employees of closed institutions under the
adequately carrying out his/her duties and, supervisory and regulatory powers of the
if necessary, recommend changes to the BSP who were responsible for such
board based upon said performance/review. institutions’ closure as determined by the
(Circular No. 592 dated 28 December 2007) Monetary Board.
b. Temporarily disqualified
§ 4140N.1 Representatives of Directors/trustees/officers/employees
government. The provisions of this Section disqualified by the Monetary Board from
shall apply to persons appointed to such holding a director/trustee position for a
positions as representatives of the specific/indefinite period of time. Included
government or government-owned or are:
controlled entities unless otherwise (1) Persons who refuse to fully disclose
provided under existing laws. the extent of their business interest to the
(Circular No. 592 dated 28 December 2007) appropriate department of the SES when
required pursuant to a provision of law or of
Secs. 4141N - 4142N (Reserved) a circular, memorandum or rule or regulation
of the BSP. This disqualification shall be in
Sec. 4143N Disqualification of Directors effect as long as the refusal persists;
and Officers. The following regulations (2) Directors who have been absent or
shall govern the disqualification of directors who have not participated for whatever
and officers of institutions under the reasons in more than fifty percent (50%) of
supervisory and regulatory powers of the all meetings, both regular and special, of
BSP other than banks, QBs, NSSLAs and the board of directors during their
pawnshops. incumbency, or any twelve (12)-month
period during said incumbency. This
§ 4143N.1 Persons disqualified to disqualification applies for purposes of the
become directors. Without prejudice to succeeding election;
specific provisions of law prescribing (3) Persons who are delinquent in the
disqualifications for directors, the following payment of their obligations as defined
are disqualified from becoming directors: hereunder:
a. Permanently disqualified (a) Delinquency in the payment of
Directors/trustees/officers/employees obligations means that an obligation of a
permanently disqualified by the Monetary person with the institution where he/she is
Board from holding a director/trustee a director or officer, or at least two (2)
position: obligations with other FIs, under different

Page 9
§§ 4143N.1 - 4143N.2
08.12.31
credit lines or loan contracts, are past due (7) Persons dismissed from
pursuant to Secs. X306, 4306Q, 4306S employment for cause. This disqualification
and 4303P; shall be in effect until they have cleared
(b) Obligations shall include all themselves of involvement in the alleged
borrowings from any FI obtained by: irregularity or upon clearance, on their
(i) A director, trustee or officer for his request, from the Monetary Board after
own account or as the representative or showing good and justifiable reasons, or
agent of others or where he/she acts as a after the lapse of five (5) years from the
guarantor, endorser or surety for loans from time they were officially advised by the
such FIs; appropriate department of the SES of their
(ii) The spouse or child under the disqualification;
parental authority of the director, trustee (8) Those under preventive
or officer; suspension; and
(iii) Any person whose borrowings or (9) Persons with derogatory records
loan proceeds were credited to the account with the NBI, court, police, Interpol and
of, or used for the benefit of a director, monetary authority (central bank) of other
trustee or officer; countries (for foreign directors and officers)
(iv) A partnership of which a director, involving violation of any law, rule or
trustee or officer, or his/her spouse is the regulation of the Government or any of its
managing partner or a general partner instrumentalities adversely affecting the
owning a controlling interest in the integrity and/or ability to discharge the
partnership; and duties of a director/trustee/officer. This
(v) A corporation, association or firm disqualification applies until they have
wholly-owned or majority of the capital of cleared themselves of involvement in the
which is owned by any or a group of alleged irregularity.
persons mentioned in the foregoing Items (As amended by Circular No. 584 dated 28 September 2007)
“(i)”, “(ii)” and “(iv)”;
This disqualification shall be in effect § 4143N.2 Persons disqualified to
as long as the delinquency persists. become officers
(4) Persons convicted for offenses a. The disqualifications for directors
involving dishonesty, breach of trust or mentioned in Subsec. 4143N.1 shall
violation of banking laws but whose likewise apply to officers, except those
conviction has not yet become final and stated in Item “b(2)”.
executory; b. Except as may be authorized by the
(5) Directors, trustees and officers of Monetary Board or the Governor, the
closed institutions under the supervisory spouse or a relative within the second
and regulatory powers of the BSP pending degree of consanguinity or affinity of any
their clearance by the Monetary Board; person holding the position of chairman,
(6) Directors and trustees disqualified president, executive vice president or any
for failure to observe/discharge their duties position of equivalent rank, general
and responsibilities prescribed under manager, treasurer, chief cashier or chief
existing regulations. This disqualification accountant is disqualified from holding or
applies until the lapse of the specific period being elected or appointed to any of said
of disqualification or upon approval by the positions in the same NBFI; and the spouse
Monetary Board on recommendation by or relative within the second degree of
the appropriate department of the SES of consanguinity or affinity of any person
such directors’ election/re-election; holding the position of manager, cashier,

Page 10
§§ 4143N.2 - 4143N.3
08.12.31
or accountant of a branch or office of an the SES shall proceed to evaluate the case.
NBFI is disqualified from holding or being The director/officer concerned shall be
appointed to any of said positions in the afforded the opportunity to defend/clear
same branch or office. himself/herself.
d. If no reply has been received from
§ 4143N.3 Disqualification procedures the director/officer concerned upon the
a. The board of directors and expiration of the period prescribed under
management of every institution shall be Item “b” above, said failure to reply shall
responsible for determining the existence be deemed a waiver and the appropriate
of the ground for disqualification of the department of the SES shall proceed to
institution’s director/officer or employee evaluate the case based on available
and for reporting the same to the BSP. records/evidence.
While the concerned institution may e. If the ground for disqualification is
conduct its own investigation and impose delinquency in the payment of obligation,
appropriate sanction/s as are allowable, this the concerned director or officer shall be
shall be without prejudice to the authority given a period of thirty (30) calendar days
of the Monetary Board to disqualify a within which to settle said obligation or,
director/officer/employee from being restore it to its current status or, to explain
elected/appointed as director/officer in any why he/she should not be disqualified and
FI under the supervision of the BSP. included in the watchlisted file, before the
Grounds for disqualification made known evaluation on his disqualification and
to the institution shall be reported to the watchlisting is elevated to the Monetary
appropriate department of the SES within Board.
seventy-two (72) hours from knowledge f. For directors/officers of closed
thereof. banks, the concerned department of the
b. On the basis of knowledge and SES shall make appropriate
evidence on the existence of any of the recommendation to the Monetary Board
grounds for disqualification mentioned in clearing said directors/officers when there
Subsecs. 4143N.1 and 4143N.2, the is no pending case/complaint or evidence
director or officer concerned shall be against them. When there is evidence that
notified in writing either by personal a director/officer has committed
service or through registered mail with irregularity, the appropriate department of
registry return receipt card at his/her last the SES shall make recommendation to the
known address by the appropriate Monetary Board that his/her case be
department of the SES of the existence of referred to the OSI for further investigation
the ground for his/her disqualification and and that he/she be included in the masterlist
shall be allowed to submit within fifteen of temporarily disqualified persons until the
(15) calendar days from receipt of such final resolution of his/her case. Directors/
notice an explanation on why he/she should officers with pending cases/complaints shall
not be disqualified and included in the also be included in said masterlist of
watchlisted file, together with the evidence temporarily disqualified persons upon
in support of his/her position. The head of approval by the Monetary Board until the
said department may allow an extension final resolution of their cases. If the director/
on meritorious ground. officer is cleared from involvement in any
c. Upon receipt of the reply/ irregularity, the appropriate department of
explanation of the director/officer the SES shall recommend to the Monetary
concerned, the appropriate department of Board his/her delisting. On the other hand,

Page 11
§§ 4143N.3 - 4143N.6
08.12.31
if the director/officer concerned is found to j. The board of directors of the

be responsible for the closure of the concerned institution shall be immediately
institution, the concerned department of the informed of cases of disqualification
SES shall recommend to the Monetary Board approved by the Monetary Board and shall
his/her delisting from the masterlist of be directed to act thereon not later than
temporarily disqualified persons and his/ the following board meeting. Within
her inclusion in the masterlist of seventy-two (72) hours thereafter, the
permanently disqualified persons. corporate secretary shall report to the
g. If the disqualification is based on Governor of the BSP through the
dismissal from employment for cause, the appropriate department of the SES the
appropriate department of the SES shall, as action taken by the board on the director/
much as practicable, endeavor to establish officer involved.
the specific acts or omissions constituting k. Persons who are elected or
the offense or the ultimate facts which appointed as director or officer in any of
resulted in the dismissal to be able to the BSP-supervised institutions for the first
determine if the disqualification of the time but are subject to any of the grounds
director/officer concerned is warranted or for disqualification provided for under
not. The evaluation of the case shall be Subsecs. 4143N.1 and 4143N.2, shall be
made for the purpose of determining if afforded the procedural due process
disqualification would be appropriate and prescribed above.
not for the purpose of passing judgment on l. Whenever a director/officer is
the findings and decision of the entity cleared in the process mentioned under
concerned. The appropriate department of Item “c” above or, when the ground for
the SES may decide to recommend to the disqualification ceases to exist, he/she
Monetary Board a penalty lower than would be eligible to become director or
disqualification (e.g., reprimand, officer of any bank, QB, trust entity or any
suspension, etc.) if, in its judgment the act institution under the supervision of the BSP
committed or omitted by the director only upon prior approval by the Monetary
officer concerned does not warrant Board. It shall be the responsibility of the
disqualification. appropriate department of the SES to
h. All other cases of disqualification, elevate to the Monetary Board the lifting
whether permanent or temporary shall be of the disqualification of the concerned
elevated to the Monetary Board for director/officer and his/her delisting from
approval and shall be subject to the the masterlist of watchlisted persons.
procedures provided in paragraphs “a”, “b”, (As amended by Circular No. 584 dated 28 September 2007)
“c” and “d” above.
i. Upon approval by the Monetary § 4143N.4 Effect of possession of
Board, the concerned director/officer shall disqualifications. Directors/officers elected
be informed by the appropriate department or appointed possessing any of the
of the SES in writing either by personal disqualifications as enumerated herein,
service or through registered mail with shall vacate their respective positions
registry return receipt card, at his/her last immediately.
known address of his/her disqualification
from being elected/appointed as director § 4143N.5 (Reserved)
officer in any FI under the supervision of
BSP and/or of his/her inclusion in the § 4143N.6 Watchlisting. To provide
masterlist of watchlisted persons so the BSP with a central information file to
disqualified. be used as reference in passing upon and

Page 12
§ 4143N.6
08.12.31
reviewing the qualifications of persons BSP, except with the authority of the person
elected or appointed as trustee or officer of concerned and with the approval of the
an institution under the supervisory and Deputy Governor, SES, the Governor, or the
regulatory powers of the BSP, the SES shall Monetary Board.
maintain a watchlist of disqualified The BSP will disclose information on
directors/trustees/officers under the its watchlist files only upon submission of
following procedures: a duly accomplished and notarized
a. Watchlist categories. Watchlisting authorization from the concerned person
shall be categorized as follows: and approval of such request by the Deputy
(1) Disqualification File “A” Governor, SES or the Governor or the
(Permanent) –Directors/trustees/officers/ Monetary Board. The prescribed
employees permanently disqualified by authorization form to be submitted to the
the Monetary Board from holding a director/ appropriate department of the SES is in
trustee/officer position. Appendix Q-45.
(2) Disqualification File “B” FIs can gain access to information in
(Temporary) – Directors/trustees/officers/ the said watchlist for the sole purpose of
employees temporarily disqualified by the screening their applicants for hiring and/or
Monetary Board from holding a director/ confirming their elected directors and
trustee/officer position. appointed officers. FIs must obtain the said
b. Inclusion of directors/trustees/ authorization on an individual basis.
officers/employees in the watchlist. Upon e. Delisting. All delistings shall be
recommendation by the appropriate approved by the Monetary Board upon
department of the SES, the inclusion of recommendation of the appropriate
directors/trustees/officers/employees in department of the SES except in cases of
watchlist disqualification files “A” and “B” persons known to be dead where delisting
on the basis of decisions, actions or reports shall be automatic upon proof of death and
of the courts, institutions under the need not be elevated to the Monetary
supervisory and regulatory powers of the Board. Delisting may be approved by the
BSP, NBI or any other administrative Monetary Board in the following cases:
agencies shall first be approved by the (1) Watchlist - Disqualification File “B”
Monetary Board. (Temporary) -
c. Notification of directors/trustees/ (a) After the lapse of the specific period
officer s/employees. Upon approval by the of disqualification;
Monetary Board, the concerned director/ (b) When the conviction by the court
trustee/officer/employee shall be informed for crimes involving dishonesty, breach of
through registered mail, with registry trust and/or violation of banking laws
return receipt card, at his last known becomes final and executory, in which
address of his inclusion in the masterlist of case the director/trustee/officer/employee
watchlisted persons disqualified to be a is relisted to Watchlist – Disqualification
director/trustee/officer in any institution File “A” (Permanent); or
under the supervisory and regulatory (c) Upon favorable decision or
powers of the BSP. clearance by the appropriate body, i.e.,
d. Confidentiality. Watchlisting shall court, NBI, institutions under the
be for internal use only and may not be supervisory and regulatory powers of the
accessed or queried upon by outside parties BSP, or such other agency/body where the
including such institutions under the concerned individual had derogatory
supervisory and regulatory powers of the record.

Page 13
§§ 4143N.6 - 4144N.5
08.12.31
Directors/trustees/officers/employees that are sold, borrowed, purchased, traded,

delisted from the Watchlist – held under custody or otherwise transacted
Disqualification File “B” other than those in the Philippines where at least one (1) of
upgraded to Watchlist – Disqualification File the parties is a bank or an NBFI under BSP
“A” shall be eligible for re-employment with supervision. However, this regulation shall
any institution under the supervisory and not cover the operations of stock and
regulatory powers of the BSP. transfer agents duly registered with the SEC
(As amended by CL-2007-001 dated 04 January 2007; and pursuant to the provisions of SRC Rule
CL-2006-046 dated 21 December 2006) 36-4.1 and whose only function is to
maintain the stock and transfer book for
Sec. 4144N Securities Custodianship and shares of stock.
Securities Registry Operations. The
following rules and regulations shall § 4144N.3 Prior Bangko Sentral
govern securities custodianship and approval. NBFIs under BSP supervision
securities registry operations of NBFIs may act as securities custodian and/or
under BSP supervision. registry only upon prior Monetary Board
The guidelines to implement the approval.
delivery by the seller of securities to the
buyer or to his designated third party § 4144N.4 Application for authority
custodian are shown in Appendix Q-38. A BSP-supervised entity desiring to act as
Violation of any provision of the securities custodian and/or registry shall file
guidelines in Appendix Q-38 shall be an application with the appropriate
subject to the sanctions/penalties under department of the SES. The application shall
Subsec. 4144N.29. be signed by the highest ranking officer of
(As amended by M-2007-002 dated 23 January 2007; the NBFI and shall be accompanied by a
M-2006-009 dated 06 July 2006, M-2006-002 dated 05 June certified true copy of the resolution of the
2006 and Circular No. 524 dated 31 March 2006) NBFI’s board of directors authorizing the
NBFI to engage in securities custodianship
§ 4144N.1 Statement of policy. It is and/or registry.
the policy of the BSP to promote the
protection of investors in order to gain their § 4144N.5 Pre-qualification
confidence and encourage their requirements for a securities custodian/
participation in the development of the registry
domestic capital market. Therefore, the a. It must be an NBFI under BSP
following rules and regulations are supervision;
promulgated to enhance transparency of b. It must have complied with the
securities transactions with the end in view minimum capital accounts required under
of protecting investors. existing regulations not lower than an
adjusted capital of P 300.0 million or such
§ 4144N.2 Applicability of this amounts as may be required by the
regulation. This regulation shall govern Monetary Board in the future;
securities custodianship and securities c. It must have a CAMELS composite
registry operations of banks and NBFIs rating of at least “4” (as rounded off) in the
under BSP supervision. It shall cover all last regular examination;
their transactions in securities as defined d. It must have in place a
in Section 3 of the SRC, whether exempt comprehensive risk management system
or required to be registered with the SEC, approved by its board of directors

Page 14
§§ 4144N.5 - 4144N.6
08.12.31
appropriate to its operations characterized last six (6) months preceding the date of
by a clear delineation of responsibility for application;
risk management, adequate risk j. It has generally complied with laws,
measurement systems, appropriately rules and regulations, orders or instructions
structured risk limits, effective internal of the Monetary Board and/or BSP
control and complete, timely and efficient Management;
risk reporting systems. In this connection, k. It has submitted additional
a manual of operations (which includes documents/information which may be
custody and/or registry operations) and requested by the appropriate department of
other related documents embodying the the SES, such as, but not limited to:
risk management system must be (1) Standard custody/registry agreement
submitted to the appropriate department of and other standard documents;
the SES at the time of application for (2) Organizational structure of the
authority and within thirty (30) days from custody/registry business;
updates; (3) Transaction flow; and
e. It must have adequate (4) For those already in the custody or
technological capabilities and the necessary registry business, a historical background
technical expertise to ensure the for the past three (3) years;
protection, safety and integrity of client l. It shall be conducted in a separate
assets, such as: unit headed by a qualified person with at
(1) It can maintain an electronic least two (2) years experience in custody/
registry dedicated to recording of registry operations; and
accountabilities to its clients; and m. It can interface with the clearing
(2) It has an updated and and settlement system of any recognized
comprehensive computer security system exchange in the country capable of
covering system, network and achieving a real time gross settlement of
telecommunication facilities that will: trades.
(a) limit access only to authorized
users; § 4144N.6 Functions and responsibilities
(b) preserve data integrity; and of a securities custodian. A securities
(c) provide for audit trail of custodian shall have the following basic
transactions. functions and responsibilities:
f. It has complied, during the period a. Safekeeps the securities of the
immediately preceding the date of client;
application, with the following: b. Holds title to the securities in a
(1) ceilings on credit accommodation nominee capacity;
to DOSRI; and c. Executes purchase, sale and other
(2) single borrower’s limit. instructions;
g. It has no reserve deficiencies d. Performs at least a monthly
during the eight (8) weeks immediately reconciliation to ensure that all positions
preceding the date of application; are properly recorded and accounted for;
h. It has set up the prescribed e. Confirms tax withheld;
allowances for probable losses, both f. Represents clients in corporate
general and specific, as of date of actions in accordance with the direction
application; provided by the securities owner;
i. It has not been found engaging in g. Conducts mark-to-market valuation
unsafe and unsound practices during the and statement rendition;

Page 15
§§ 4144N.6 - 4144N.8
08.12.31
h. Does earmarking of encumbrances same from the claims of its general

or liens such as, but not limited to, deeds creditors.
of assignment and court orders; and All securities held under custodianship
In addition to the above basic functions, shall be recorded in the books of the
it may perform the following value-added custodian at the face value of said securities
service to clients: in a separate subsidiary ledger account
i. Acts as a collecting and paying “Securities Held Under Custodianship” if
agent: Provided, That the management of booked in the Bank Proper or the subsidiary
funds that may be collected shall be clearly ledger account “Safekeeping and
defined in the custody contract or in a Custodianship – Securities Held Under
separate document or agreement attached Custodianship”, if booked in the Trust
thereto: Provided, further, That the Department: Provided, That securities held
custodian shall immediately make known under custodianship where the custodian
to the securities owner all payments made also performs securities borrowing and
and collections received with respect to the lending as agent shall be booked in the
securities under custody; and Trust Department.
j. Securities borrowing and lending b. Documentation. The appropriate
operations as agent. documentation for custodianship shall be
made and it shall clearly define, among
§ 4144N.7 Functions and others, the authority, role, responsibilities,
responsibilities of a securities registry fees and provision for succession in the
a. Maintains an electronic registry event the custodian can no longer discharge
book; its functions. It shall be accepted in writing
b. Delivers confirmation of transactions by the counterparties.
and other documents within agreed trading The governing custodianship
periods; agreement shall be pre-numbered and this
c. Issues registry confirmations for number shall be referred to in all
transfers of ownership as it occurs; amendments and supplements thereto.
d. Prepares regular statement of c. Confirmation of custody. The
securities balances at such frequency as may custodian shall issue a custody confirmation
be required by the owner on record but not to the purchaser or borrower of securities
less frequent than every quarter; and to evidence receipt or transfer of securities
e. Follows appropriate legal as they occur. It shall contain, as a
documentation to govern its relationship minimum, the following information on the
with the Issuer. securities under custody:
(1) Owner of securities;
§ 4144N.8 Protection of securities of (2) Issuer;
the customer. A custodian must incorporate (3) Securities type;
the following procedures in the discharge (4) Identification or serial numbers;
of its functions in order to protect the (5) Quantity;
securities of the customer: (6) Face value; and
a. Accounting and recording for (7) Other information, which may be
securities. Custodians must employ requested by the parties.
accounting and safekeeping procedures d. Periodic reporting. The custodian
that fully protect customer securities. It is shall prepare at least quarterly (or as
essential that custodians segregate frequent as the owner of securities will
customer securities from one another and require) securities statements delivered to
from its proprietary holdings to protect the the registered owner’s address on record.

Page 16
§§ 4144N.8 - 4144N.12
08.12.31
Said statement shall present detailed which is acting as a registry for government
information such as, but not limited to, securities is deemed to be automatically
inventory of securities, outstanding accredited for purposes of this Section and
balances, and market values. is likewise exempted from the
independence requirement under Subsec.
§ 4144N.9 Independence of the 4144N.9. However, securities registered
registry and custodian. A BSP-accredited under the RoSS shall only be considered
securities registry must be a third party with delivered if said securities were transferred
no subsidiary/affiliate relationship with the by means of book entry to the appropriate
issuer of securities while a BSP-accredited securities account of the purchaser or his
custodian must be a third party with no designated custodian. Book entry transfer
subsidiary/affiliate relationship with the to a sub-account for clients under the
issuer or seller of securities. An NBFI primary account of the seller shall not
accredited by BSP as securities custodian constitute delivery for purposes of this
may, however, continue holding securities Section.
it sold under the following cases:
a. where the purchaser is a related § 4144N.11 Confidentiality. A BSP-
entity acting in its own behalf and not as accredited securities custodian/registry
agent or representative of another; shall not disclose to any unauthorized
b. where the purchaser is a person any information relative to the
non-resident with existing global custody securities under its custodianship/registry.
agreement governed by foreign laws and The management shall likewise ensure the
conventions wherein the NBFI is confidentiality of client accounts of the
designated as custodian or sub-custodian; custody or registry unit from other units
and within the same organization.
c. upon approval by the BSP, where
the purchaser is an insurance company § 4144N.12 Compliance with anti-
whose custody arrangement is either money laundering laws/regulations. For
governed by a global custody agreement purposes of compliance with the
where the NBFI is designated as custodian requirements of R.A. No. 9160, otherwise
or sub-custodian or by a direct custody known as the “Anti-Money Laundering Act
agreement with features at par with the of 2001,” as amended, particularly the
standards set under this Subsection drawn provisions regarding customer
or prepared by the parent company owning identification, record keeping and reporting
more than fifty percent (50%) of the capital of suspicious transactions, a BSP-accredited
stock of the purchaser and executed by the custodian may rely on referral by the seller/
purchaser itself and its custodian. issuer of securities: Provided, That it
Purchases by non-residents and maintains a record of such referral together
insurance companies that are exempted with the minimum identification,
from the independence requirement of this information/documents required under the
Subsection shall, however, be subject to law and its implementing rules and
all other provisions of this Subsection. regulations.
A BSP accredited custodian must
§ 4144N.10 Registry of Scripless maintain accounts only in the true and full
Securities of the Bureau of the Treasury name of the owners of the security.
The Registry of Scripless Securities (RoSS), However, said securities owners may be
operated by the Bureau of the Treasury, identified by number or code in reports and

Page 17
§§ 4144N.12 - 4156N
08.12.31
correspondences to keep his identity § 4144N.29 Sanctions. Without

confidential. prejudice to the penal and administrative
Securities subject of pledge and/or deed sanctions provided for under Sections 36
of assignment as of 14 October 2004 (date and 37, respectively, of the R.A. No. 7653,
of Circular 457), may be held by a lending violation of any provision of this Section
NBFI up to the original maturity of the loan shall be subject to the following sanctions
or full payment thereof, whichever comes penalties:
earlier. a. First offense –
(1) Fine of up to P10,000 a day for the
§ 4144N.13 Basic security deposit institution for each violation reckoned from
Securities held under custodianship the date the violation was committed up
whether booked in the Trust Department to the date it was corrected; and
or carried in the regular books of the NBFI (2) Reprimand for the directors/officers
shall be subject to a security deposit for responsible for the violation.
faithful performance of duties at the rate of b. Second offense -
1/25 of one percent (1%) of the total face (1) Fine of up to P20,000 a day for the
value or P500,000 whichever is higher. institution for each violation reckoned from
However, securities held under the date the violation was committed up
custodianship where the custodian also to the date it was corrected; and
performs securities borrowing and lending (2) Suspension for ninety (90) days
as agent shall be subject to a higher basic without pay of directors/officers responsible
security deposit of one percent (1%) of the for the violation.
total face value. For this purpose, the c. Subsequent offenses–
following subsidiary ledger account shall (1) Fine of up to P30,000 a day for the
be created in the Trust Department Books: institution for each violation from the date
“Safekeeping and Custodianship - the violation was committed up to the date
Securities Held Under Custodianship with it was corrected;
Securities Borrowing and Lending As (2) Suspension or revocation of the
Agent” authority to act as securities custodian
Compliance shall be in the form of and/or registry; and
government securities deposited with the (3) Suspension for 120 days without pay
BSP eligible pursuant to existing of the directors/officers responsible for the
regulations governing security for the violation.
faithful performance of trust and other
fiduciary business. Secs. 4145N – 4149N (Reserved)
§ 4144N.14 Reportorial requirements Sec. 4150N Rules of Procedure on

An accredited securities custodian shall Administrative Cases Involving Directors
comply with reportorial requirements that and Officers of Trust Entities. The rules
may be prescribed by the BSP, which shall of procedure on administrative cases
include as a minimum, the face and market involving directors and officers of
value of securities held under quasi-banks in Sec. 4150Q shall apply to
custodianship. directors and officers of trust entities.
§§ 4144N.15 - 4144N.28 (Reserved) Secs. 4151N – 4156N (Reserved)

Page 18
§§ 4157N - 4161N
08.12.31
Sec. 4157N Batas Pambansa Blg. 344 –An regulations and PFRS/PAS as when more
Act To Enhance The Mobility Of Disabled than one (1) option are allowed or certain
Persons By Requiring Certain Buildings, maximum or minimum limits are prescribed
Institutions, Establishments And Public by the PFRS/PAS, the option or limit
Utilities To Install Facilities And Other prescribed by BSP regulations shall be
Devices. In order to promote the realization adopted by banks.
of the rights of disabled persons to participate For purposes hereof, the PFRS/PAS
fully in the social life and the development shall refer to issuances of the ASC and
of the societies in which they live and the approved by the PRC.
enjoyment of the opportunities available to Accounting treatment for prudential
other citizens, no license or permit for the reporting. For prudential reporting, FIs shall
construction, repair or renovation of public adopt in all respect the PFRS and PAS
and private buildings for public use, except as follows:
educational institutions, airports, sports and a. In preparing consolidated financial
recreation centers and complexes, shopping statements, only investments in financial
centers or establishments, public parking allied subsidiaries except insurance
places, workplaces, public utilities, shall be subsidiaries shall be consolidated on a
granted or issued unless the owner or line-by-line basis; while insurance and
operator thereof shall install and incorporate non-financial allied subsidiaries shall be
in such building, establishment or public accounted for using the equity method.
utility, such architectural facilities or Financial/non-financial allied/non-allied
structural features as shall reasonably associates shall be accounted for using the
enhance the mobility of disabled persons such equity method in accordance with the
as sidewalks, ramps, railings and the like. provisions of PAS 28 “Investments in
If feasible, all such existing buildings, Associates”.
institutions, establishments, or public utilities b. For purposes of preparing separate
may be renovated or altered to enable the financial statements, financial/non-financial
disabled persons to have access to them. allied/non-allied subsidiaries/associates,
including insurance subsidiaries/associates,
Secs. 4158N-4160N (Reserved) shall also be accounted for using the equity
method; and
Sec. 4161N Philippine Financial Reporting c. FIs shall be required to meet the
Standards/Philippine Accounting Standards BSP recommended valuation reserves.
Statement of policy. It is the policy of Government grants extended in the
the BSP to promote fairness, transparency form of loans bearing nil or low interest
and accuracy in financial reporting. It is in rates shall be measured upon initial
this light that the BSP aims to adopt all PFRS recognition at its fair value (i.e., the present
and PAS issued by the ASC to the greatest value of the future cash flows of the
extent possible. financial instrument discounted using the
Other NBFIs not performing quasi- market interest rate). The difference
banking functions shall adopt the PFRS and between the fair value and the net
PAS which are in accordance with proceeds of the loan shall be recorded
generally accepted accounting principles under “Unearned Income-Others”, which
in recording transactions and in the shall be amortized over the term of the loan
preparation of financial statements and using the effective interest method.
reports to BSP. However, in cases where The provisions on government grants
there are differences between BSP shall be applied retroactively to all

Page 19
§§ 4161N - 4162N.3
08.12.31
outstanding government grants received. FI requirements on signatory authorization.

that adopted an accounting treatment other Reports submitted by NBFIs in computer
than the foregoing shall consider the media shall be subject to the same
adjustment as a change in accounting requirements.
policy, which shall be accounted for in A report submitted to the BSP under
accordance with PAS 8. the signature of an officer who is not
Notwithstanding the exceptions in authorized in accordance with the
Items “a”, “b” and “c”, the audited annual requirements in this Subsection shall be
financial statements required to be considered as not having been
submitted to the BSP in accordance with submitted.
the provision of Sec. 4172N shall in all
respect be PFRS/PAS compliant: Provided, § 4162N.2 Manner of filing. The
That FIs shall submit to the BSP adjusting submission of the reports shall be effected
entries reconciling the balances in the by filing them personally with the
financial statements for prudential reporting appropriate department of the SES or with
with that in the audited annual financial the BSP Regional Offices/Units, or by
statements. sending them by registered mail or special
(As amended by Circular Nos. 572 dated 22 June 2007 and delivery through private couriers unless
494 dated 20 September 2004) otherwise specified in the circular or
memorandum of the BSP.
Sec. 4162N Reports. NBFIs without
quasi-banking functions but are § 4162N.3 Sanctions in case of willful
subsidiaries/affiliates of banks and QBs and delay in the submission of reports
investment houses without quasi-banking a. Definition of terms. For purposes
functions but with trust operations shall of this Subsection, the following definitions
submit to the appropriate department of the shall apply:
SES the reports listed in Appendix N-1 in (1) Report shall refer to any report or
the forms as may be prescribed by the statement required of an NBFI to be
Deputy Governor, SES, BSP. submitted to the BSP periodically or
Any change in, or amendment to, the within a specified period.
articles of incorporation, by-laws or (2) Willful delay in the submission of
material documents required to be reports shall refer to the failure of an NBFI
submitted to the BSP shall be reported by to submit a report on time. Failure to
submitting copies of the amended articles submit a report on time due to fortuitous
of incorporation, by-laws, or material events, such as fire and other natural
documents to the appropriate department calamities and public disorders, including
of the SES within fifteen (15) days strike or lockout affecting an NBFI as
following such change. defined in the Labor Code or national
emergency affecting operations of
§ 4162N.1 Categories and signatories NBFIs, shall not be considered as
of reports. Reports required to be willful delay.
submitted to the BSP are classified into b. F i n e s f o r w i l l f u l d e l a y i n
Categories A-2 and B reports as indicated submission of reports. NBFIs incurring
in the list of reports required to be willful delay in the submission of
submitted to the BSP in Appendix N-1. required reports shall pay a fine in
Appendix N-2 prescribes the signatories accordance with the following
for each report category and the schedule:

Page 20
§§ 4162N.3 - 4164N.2
08.12.31
I. For Categories A-2 reports management, internal control, and

Per day of default governance processes of an organization.
until the report is filed P300
II. For Category B reports § 4164N.1 Status. The internal audit
Per day of default function must be independent of the
until the report is filed P 60 activities audited and from day-to-day
internal control process. It must be free to
Delay or default shall start to run on report audit results, findings, opinions,
the day following the last day required for appraisals and other information to the
the submission of reports. However, appropriate level of management. It shall
should the last day of filing fall on a have authority to directly access and
non-working day in the locality where the communicate with any officer or
reporting FI is situated, delay or default employee, to examine any activity or
shall start to run on the day following the entity of the institution, as well as to access
next working day. The due date/deadline any records, files or data whenever relevant
for submission of reports to BSP as to the exercise of its assignment. The Audit
prescribed under Sec. 4162N governing Committee or senior management should
the frequency and deadlines indicated in take all necessary measures to provide the
Appendix N-1 shall be automatically moved appropriate resources and staffing that
to the next business day whenever a would enable internal audit to achieve its
half-day suspension of business operations objectives.
in government offices is declared due to
an emergency such as typhoon, floods, etc. § 4164N.2 Scope. The scope of internal
For purposes of establishing delay or audit shall include:
default, the date of acknowledgment by the a. Examination and evaluation of the
appropriate department of the SES or the BSP adequacy and effectiveness of the internal
Regional Offices/Units appearing on the control systems;
copies of such reports filed or submitted, or b. Review of the application and
the date of mailing postmarked on the effectiveness of risk management procedures
envelope/the date of registry/special delivery and risk assessment methodologies;
receipt, as the case may be, shall be c. Review of the management and
considered as the date of filing by the NBFI. financial information systems, including the
c. Manner of payment or collection of electronic information system and
fines – NBFIs shall, within fifteen (15) electronic banking services;
calendar days from receipt of the statement d. Assessment of the accuracy and
of account from the appropriate department reliability of the accounting system and of
of the BSP, pay the fines imposed thereon for the resulting financial reports;
willful delay on the submission of reports. e. Review of the systems and
(As amended by Circular No. 585 dated 15 October 2007) procedures of safeguarding assets;
f. Review of the system of assessing
Sec. 4163N (Reserved) capital in relation to the estimate of
organizational risk;
Sec. 4164N Internal Audit Function g. Transaction testing and assessment
Internal audit is an independent, objective of specific internal control procedures; and
assurance and consulting function h. Review of the compliance system
established to examine, evaluate and and the implementation of established
improve the effectiveness of risk policies and procedures.

Page 21
§§ 4164N.3 - 4172N
08.12.31
§ 4164N.3 Qualification standards of qualified to audit QBs, trust entities, RBs,

the internal auditor. The internal auditor NSSLAs, local coop banks, subsidiaries and
of subsidiaries and/or affiliates of a UB or a affiliates engaged in allied activities, and
KB must be a CPA and must have at least other FIs under BSP supervision.
five (5) years experience in the regular
audit (internal or external) of a UB or KB as § 4164N.4 Code of Ethics and Internal
auditor-in-charge, senior auditor or audit Auditing Standards. The internal auditor
manager. He must possess the knowledge, should conform with the Code of
skills, and other competencies to examine Professional Ethics for CPAs and ensure
all areas in which the institution operates. compliance with sound internal auditing
Professional competence as well as standards, such as the Institute of Internal
continuing training and education shall be Auditors’ International Standards for the
required to face up to the increasing Professional Practice of Internal Auditing
complexity and diversity of the institution’s (e-mail: standards@theiia.org; Web: http://
operations. www.theiia.org.) and other supplemental
The internal auditor of subsidiaries standards issued by regulatory authorities/
and/or affiliates of a TB, QB, trust entity government agencies. The standards
or national cooperative bank must be a CPA address independence and objectivity,
with at least five (5) years experience in professional proficiency, scope of work,
the regular audit (internal or external) of a performance of audit work, management
TB, QB, trust entity or national cooperative of internal audit, quality assurance reviews,
bank as auditor-in-charge, senior auditor or communication and monitoring of results.
audit manager or, in lieu thereof, at least
three (3) years experience in the regular Secs. 4165N - 4171N (Reserved)
audit (internal or external) of a UB or KB as
auditor-in-charge, senior auditor or audit Sec. 4172N Financial Audit. NBFIs shall
manager. cause an annual financial audit by an
The internal auditor of subsidiaries external auditor acceptable to the BSP not
and/or affiliates of an RB, NSSLA or local later than thirty (30) calendar days after
cooperative bank must be at least an the close of the calendar year or the fiscal
accounting graduate with two (2) years year adopted by the FI. Report of such
experience in external audit or in the audit shall be submitted to the board of
regular audit of an RB, NSSLA or local coop directors and the appropriate department
bank or, in lieu thereof, at least one (1) year of the SES not later than 120 calendar
experience in the regular audit (internal or days after the close of the calendar year
external) of a UB, KB, TB, QB, trust entity or the fiscal year adopted by the FI. The
or national coop bank as auditor-in-charge, report to the BSP shall be accompanied
senior auditor or audit manager. by the: (1) certification by the external
A qualified internal auditor of a UB or auditor on the: (a) dates of start and
a KB shall be qualified to audit TBs, QBs, termination of audit; (b) date of submission
trust entities, national cooperative banks, of the financial audit report and certification
RBs, NSSLAs, local coop banks, under oath stating that no material
subsidiaries and affiliates engaged in allied weakness or breach in the internal control
activities, and other FIs under BSP and risk management systems was noted in
supervision. the course of the audit of the FI to the board
A qualified internal auditor of a TB or of directors; and (c) the absence of any direct
national coop bank shall likewise be or indirect financial interest and other

Page 22
§ 4172N
08.12.31
circumstances that may impair the future events are likely to occur or are
independence of the external auditor; reasonably possible to occur.
(2) reconciliation statement between the The board of directors, in a regular or
AFS and the balance sheet and income special meeting, shall consider and act on
statement for FI and trust department the financial audit report and the certification
submitted to the BSP including copies of under oath submitted in lieu of the LOC and
adjusting entries on the reconciling items; shall submit, within thirty (30) banking days
and (3) other information that may be after receipt of the reports, a copy of its
required by the BSP. resolution to the appropriate department of
In addition, the external auditor shall be the SES. The resolution shall show, among
required by the FI to submit to the board of other things, the actions(s) taken on the
directors, a LOC indicating any material reports and the names of the directors
weakness or breach in the institution’s present and absent.
internal control and risk management The board shall likewise consider and
systems within thirty (30) calendar days act on the LOC and shall submit, within
after submission of the financial audit thirty (30) banking days after receipt thereof,
report. If no material weakness or breach a copy of its resolution together with said
is noted to warrant the issuance of an LOC to the appropriate department of SES.
LOC, a Certification under oath stating The resolution shall show the action(s) taken
that no material weakness or breach in on the findings and recommendations and,
the internal control and risk management the names of the directors present and
systems was noted in the course of the absent, among other things.
audit of the FI shall be submitted in its The LOC shall be accompanied by the
stead, together with the financial audit certification of the external auditor of the date
report. of its submission to the board of directors.
Material weakness shall be defined as Government-owned or -controlled
a significant control deficiency, or banks, including their subsidiaries and
combination of deficiencies, that results in affiliates, as well as other FIs under BSP
more than a remote likelihood that a material supervision which are under the concurrent
misstatement of the financial statements will jurisdiction of the COA shall be exempt
not be detected or prevented by the entity’s from the aforementioned annual financial
internal control. A material weakness does audit by an acceptable external auditor:
not mean that a material misstatement has Provided, That when warranted by
occurred or will occur, but that it could supervisory concern such as material
occur. A control deficiency exists when the weakness/breach in internal control and/or
design or operation of a control does not risk management systems, the Monetary
allow management or employees, in the Board may, upon recommendation of the
normal course of performing their assigned appropriate department of the SES, require
functions, to prevent or detect misstatements the financial audit to be conducted by an
on a timely basis. A significant deficiency external auditor acceptable to the BSP, at
is a control deficiency, or combination of the expense of the institution concerned:
control deficiencies, that adversely affects Provided, further, That when circumstances
the entity’s ability to initiate, authorize, such as, but not limited to, loans from
record, process, or report financial data multilateral FIs, privatization, or public
reliably in accordance with generally listing warrant, the financial audit of the
accepted accounting principles. The term concerned institution by an acceptable
more than remote likelihood shall mean that external auditor may also be allowed.

Page 23
§§ 4172N - 4180N
09.12.31
Banks and other FIs under the subject to the penalties under Subsec.
concurrent jurisdiction of the BSP and COA 4162N.3
shall, however, submit a copy of the AAR (As amended by Circular Nos. 554 dated 22 December 2006
of the COA to the appropriate department and 540 dated 09 August 2006)
of the SES within thirty (30) banking days
after receipt of the report by the board of § 4172N.1 Audited financial statements
directors. The AAR shall be accompanied of non-bank financial institutions. The
by the: (1) certification by the institution following rules shall govern the utilization
concerned on the date of receipt of the AAR and submission of AFS of NBFIs.
by the board of directors; (2) reconciliation For purposes of this Section, AFS shall
statement between the AFS in the AAR and include the balance sheets, income
the balance sheet and income statement of statements, statements of changes in equity,
the FI and trust department submitted to statements of cash flows and notes to
the BSP, including copies of adjusting financial statements which shall include
entries on the reconciling items; and among other information, disclosure of the
(3) other information that may be required volume of past due loans as well as loan-
by the BSP. loss provisions. On the other hand,
The board of directors of said financial audit report shall refer to the AFS
institutions, in a regular or special meeting, and the opinion of the auditor. The AFS
shall consider and act on the AAR, as well of NBFIs with subsidiaries shall be
as on the comments and observations and presented side by side on a solo basis
shall submit, within thirty (30) banking days (parent) and on a consolidated basis
after receipt of the report, a copy of its (parent and subsidiaries).
resolution to the appropriate department of (Circular No. 540 dated 09 August 2006)
the SES. The resolution shall show the
action(s) taken on the report, including the § 4172N.2 Posting of audited financial
comments and observations and the names statements. FIs shall post in conspicuous
of the directors present and absent, among places in their head offices, all their branches
other things.” and other offices, as well as in their
FIs as well as external auditors shall respective websites, their latest financial
strictly observe the requirements in the audit report.
submission of the financial audit report and (Circular No. 540 dated 09 August 2006)
reports required to be submitted under
Appendix Q-33. Secs. 4173N - 4179N (Reserved)
The audited annual financial
statements required to be submitted shall Sec. 4180N Selection, Appointment,
in all respect be PFRS/PAS compliant: Reporting Requirements and Delisting of
Provided, That FIs shall submit to the BSP External Auditors and/or Auditing Firm;
adjusting entries reconciling the balances Sanction
in the financial statements for prudential a. Rules and regulations. The revised
reporting with that in the audited annual rules and regulations that shall govern
financial statements. the selection, appointment, reporting
The reports and certifications of requirements and delisting of external
institutions concerned, schedules and auditors and auditing firms by the BSP of
attachments required under this Subsection covered institutions which under special
shall be considered Category B reports, laws are subject to BSP supervision are
delayed submission of which shall be shown in Appendix N-5.

Page 24
§§ 4180N - 4193N
09.12.31
b. Sanctions. The applicable sanctions/ subsidiaries/associates, including insurance

penalties prescribed under Sections 36 and subsidiaries/associates, shall be accounted
37 of R.A. No. 7653 to the extent applicable for using the equity method.
shall be imposed on the covered institution, (As amended by Circular No. 494 dated 20 September 2004)
its audit committee and the directors
approving the hiring of external auditors/ Secs. 4182N - 4189N (Reserved)
auditing firm who/which are not in the BSP
list of selected auditors for covered Sec. 4190N Duties and Responsibilities of
institutions or for hiring, and/or retaining the Non-Bank Financial Institutions and their
services of the external auditor/auditing firm Directors/Officers in All Cases of
in violation of any of the provisions of this Outsourcing of Non-Bank Financial
Section and for non-compliance with the Institution Functions. The rules on
Monetary Board directive under Item “K” in outsourcing of banking functions as shown
Appendix N-5. Erring external auditors/ in Appendix Q-37 shall be adopted in so
auditing firm may also be reported by the BSP far as they are applicable to FIs.
to the PRC for appropriate disciplinary action. (As amended by Circular Nos. 642 dated 30 January 2009,
(As amended by Circular Nos. 660 dated 25 August 2009 and 610 dated 26 May 2008, 596 dated 11 January 2008, 548 dated
529 dated 11 May 2006) 25 September 2006 and 543 dated 08 September 2006)
Sec. 4181N Publication Requirements. The Sec. 4191N (Reserved)

quarterly CSOC of a trust entity and its
subsidiaries and affiliates shall be published Sec. 4192N Prompt Corrective Action
side by side with the statement of condition Framework. The framework for the
of its head office and its branches/other enforcement of PCA on banks which is in
offices as of such dates as the BSP may Appendix Q-40, shall govern the PCA taken
require within twenty (20) working days on FIs to the extent applicable, or by analogy.
from receipt of call letter, in any newspaper (Circular No. 523 dated 31 March 2006, as amended by Circular
of general circulation in the country in the No. 664 dated 15 September 2009)
prescribed format.
The CSOC of a QB/trust entity and its Sec. 4193N Supervision by Risks. The
subsidiaries and associates shall conform guidelines on supervision by risk in
with the guidelines of PAS 27 “Consolidated Appendix Q-42 which provide guidance on
and Separate Financial Statements”, except how QBs should identify, measure, monitor
that for purposes of consolidated financial and control risks shall govern the
statements, only investments in financial supervision by risks of FIs to the extent
allied subsidiaries except insurance applicable.
subsidiaries shall be consolidated on a line- The guidelines set forth the expectations
by-line basis; while insurance and non- of the BSP with respect to the management
financial allied subsidiaries shall be of risks and are intended to provide more
accounted for using the equity method. consistency in how the risk-focused
Financial/non-financial allied/non-allied supervision function is applied to these risks.
associates shall be accounted for using the The BSP will review the risks to ensure that
equity method in accordance with the an FI’s internal risk management processes
provisions of PAS 28 “Investments in are integrated and comprehensive. All FIs
Associates”. For purposes of separate should follow the guidance in risk
financial statements, investments in management efforts.
financial/non-financial allied/non-allied (Circular No. 510 dated 03 February 2006)

Page 25
§§ 4194N - 4195N
08.12.31
Sec. 4194N Market Risk Management The BSP is aware of the increasing
The guidelines on market risk management diversity of financial products and that
for QBs as shown in Appendix Q-43 shall industry techniques for measuring and
govern the market risk management of FIs managing market risk are continuously
to the extent applicable. evolving. As such, the guidelines are
The guidelines set forth the expectations intended for general application;
of the BSP with respect to the management specific application will depend to some
of market risk and are intended to provide extent on the size, complexity and
more consistency in how the risk-focused range of activities undertaken by
supervision is applied to this risk. FIs are individual FIs.
expected to have an integrated approach to (Circular No. 544 dated 15 September 2006)
risk management to identify, measure,
monitor and control risks. Market risk Sec. 4195N Liquidity Risk Management. The
should be reviewed together with other risks guidelines on liquidity risk management for
to determine overall risk profile. QBs as shown in Appendix Q-44 shall govern

Page 26
§§ 4195N - 4301N.1
08.12.31
the liquidity risk management of FIs to the membership/renewal fees as well as interest,
extent applicable. penalties, insurance fees, processing/service
The guidelines set forth the expectations fees and other charges.
of the BSP with respect to the management c. Minimum amount due or
of liquidity risk and are intended to provide minimum payment required. Means the
more consistency in how the risk-focused minimum amount that the credit
supervision function is applied to this risk. cardholder needs to pay on or before the
FIs are expected to have an integrated payment due date for a particular billing
approach to risk management to identify, period/cycle as defined under the terms
measure, monitor and control risks. Liquidity and conditions or reminders stated in the
risk should be reviewed together with other statement of account/billing statement
risks to determine overall risk profile. which may include: (1) total outstanding
These guidelines are intended for general balance multiplied by the required
application; specific application will depend payment percentage or a fixed amount
on the size and sophistication of a particular whichever is higher; (2) any amount which
FI and the nature and complexity of its is part of any fixed monthly installment that
activities. is charged to the card; (3) any amount in
(Circular No. 545 dated 15 September 2006) excess of the credit line; and (4) all past
due amounts, if any.
Secs. 4196N - 4200N (Reserved) d. Default or delinquency. Shall
mean non-payment of, or payment of any
Secs. 4201N - 4300N (Reserved) amount less than, the “Minimum Amount
Due” or “Minimum Payment Required”
Sec. 4301N Credit Card Operations; within two (2) cycle dates, in which case,
General Policy. The BSP shall foster the the “Total Amount Due” for the particular
development of consumer credit through billing period as reflected in the monthly
innovative products such as credit cards statement of account may be considered
under conditions of fair and sound consumer in default or delinquent.
credit practices. The BSP likewise e. Acceleration clause. Shall mean
encourages competition and transparency to any provision in the contract between the
ensure more efficient delivery of services bank and the cardholder that gives the
and fair dealings with customers. bank the right to demand the obligation
Towards this end, the following rules in full in case of default or non-payment
and regulations shall govern the credit card of any amount due or for whatever valid
operations of subsidiary/affiliate credit card reason.
companies of banks/QBs, aligned with f. Subsidiary refers to a corporation
global best practices. or firm more than fifty percent (50%) of
the outstanding voting stock of which is
§ 4301N.1 Definition of terms directly or indirectly owned, controlled or
a. Credit card. Means any card, plate, held with the power to vote by a bank or
coupon book or other credit device existing other FI.
for the purpose of obtaining money, g. Affiliate refers to an entity linked
property, labor or services on credit. directly or indirectly to a bank or other FI
b. Credit card receivables. Represents through any one (1) or a combination of any
the total outstanding balance of credit of the following:
cardholders arising from purchases of goods (1) Ownership, control or power to
and services, cash advances, annual vote, whether by permanent or temporary

Page 27
§§ 4301N.1 - 4301N.3
08.12.31
proxy or voting trust, or other similar j. Collection of past due accounts;

contracts, by a bank or other FI of at least k. Handling of accounts for write-off;
ten percent (10%) or more of the l. Suspension, cancellation and
outstanding voting stock of the entity, or withdrawal or termination of card;
vice-versa; m. Renewal of cards, upgrade or
(2) Interlocking directorship or downgrade of credit limit;
officership, except in cases involving n. Lost or stolen cards and their
independent directors as defined under replacement;
existing regulations; o. Accounts of DOSRI and employees;
(3) Common stockholders owning at p. Disposition of errors and/or
least ten percent (10%) of the outstanding questions about the billing statement
voting stock of each FI and the entity; or statement of account and other customers’
(4) Management contract or any complaints; and
arrangement granting power to the bank q. Dealings with marketing agents/
or other FI to direct or cause the direction of collection agents.
management and policies of the entity, or
vice-versa. § 4301N.3 Minimum requirements
Before issuing credit cards, subsidiary/
§ 4301N.2 Risk management system affiliate credit card companies of banks/QBs
To safeguard their interests, subsidiary/ must exercise proper diligence by
affiliate credit card companies of ascertaining that applicants possess good
banks/QBs are required to establish an credit standing and are financially capable
appropriate system for managing risk of fulfilling their credit commitments. The
exposures from credit card operations net take home pay of applicants who are
which shall be documented in a complete employed, the net monthly receipts of those
and concise manner. The risk engaged in trade or business, or the net
management system shall cover the worth or cash flow inferred from deposits
organizational set-up, records and reports, of those who are neither employed nor
accounting, policies and procedures and engaged in trade or business or the credit
internal control. behavior exhibited by the applicant from his
Written policies, procedures and other existing credit cards, or other lifestyle
internal control guidelines shall be indicators such as but not limited to club
established on the following aspects of memberships, ownership and location of
credit card operations: residence and motor vehicle ownership
a. Requirements for application; shall be determined and used as basis for
b. Solicitation and application setting credit limits. The gross monthly
processing; income may also be used provided
c. Determination and approval of reasonable deductions are estimated for
credit limits; income taxes, premium contributions, loan
d. Pre-approved cards; amortizations and other deductions.
e. Issuance, distribution and activation All credit card applications, especially
of cards; those solicited by third party representatives
f. Supplementary or extension cards; agents, shall undergo a strict credit risk
g. Cash advances; assessment process and the information
h. Billing and payments; stated thereon validated and verified by
i. Deferred payment program or persons other than those handling
special installment plans; marketing.

Page 28
§§ 4301N.4 - 4301N.7
08.12.31
§ 4301N.4 Information to be disclosed j. other fees, such as membership/

Subsidiary/affiliate credit card companies of renewal fees, processing fees, collection
banks/QBs shall disclose to each person to fees, credit investigation fees and attorney’s
whom the credit card privilege is extended fees.
in the agreement, contract or any equivalent k. for transactions made in foreign
document governing the issuance or use of currencies and/or outside the Philippines,
the credit card or any amendment thereto for dual currency accounts (peso and dollar
or in such other statement furnished the billings), as well as payments made by
cardholder from time to time, prior to the credit cardholders in any currency other
imposition of the charges and to the extent than the billing currency: the application
applicable, the following information: of payments; the manner of conversion
a. non-finance charges, individually from the transaction currency and payment
itemized, which are paid or to be paid by currency to Philippine pesos or billing
the cardholder in connection with the currency; definition or general description
transaction but which are not incident to of verifiable blended exchange/conversion
the extension of credit; rates (e.g., MASTERCARD and/or VISA
b. the percentage that the interest International rates on the day the item was
bears to the total amount to be financed processed/posted to the billing statement,
expressed as a simple monthly or annual plus mark-up, if any) including conversion
rate, as the case may be, on the outstanding commission; and/or other currency
balance of the obligation; conversion charges and costs arising from
c. the effective interest rate per the purchase by the card company of
annum; foreign currency to settle the customer’s
d. for installment loans, the number transactions shall also be disclosed.
of installments, amount and due dates or
periods of payment schedules to repay the § 4301N.5 Interest accrual on past due
indebtedness; loans. Interest income on past due loans
e. the default, late payment/penalty arising from discount amortization (and not
fees or similar delinquency-related charges from the contractual interest of the
payable in the event of late payments; accounts) shall be accrued as provided in
f. the conditions under which interest PAS 39.
may be imposed, including the time
period, within which any credit extended § 4301N.6 Finance charges. T h e
may be repaid without interest; amount of finance charges in
g. the method of determining the connection with any credit card
balance upon which interest and/or transaction shall refer to interest
delinquency charges may be imposed; charged to the cardholder.
h. the method of determining the
amount of interest and/or delinquency § 4301N.7 Deferral charges. The bank
charges, including any minimum or fixed and the cardholder may, prior to the
amount imposed as interest and/or consummation of the transaction, agree
delinquency charge; in writing to a deferral of all or part of
i. where one (1) or more periodic one or more unpaid installments and the
rates may be used to compute interest, each bank may collect a deferral charge which
such rate, the range of balances to which it shall not exceed the rate previously
is applicable, and the corresponding simple disclosed pursuant to the provisions on
annual rate; and disclosure.

Page 29
§§ 4301N.8 - 4301N.12
08.12.31
§ 4301N.8 Late payment/penalty fees f. disclosure to third parties such as

No late payment or penalty fee shall be insurance companies, solely for the purpose
collected from cardholders unless the of insuring the bank from cardholder default
collection thereof is fully disclosed in the or other credit loss, and the cardholder from
contract between the issuer and the fraud or unauthorized charges.
cardholder: Provided, That late payment
or penalty fees shall be based on the § 4301N.10 Suspension, termination
unpaid minimum amount due or a of effectivity and reactivation. Subsidiary/
prescribed minimum fixed amount: affiliate credit card companies of banks/
Provided, further, That said late payment QBs shall formulate criteria or parameters
or penalty fees may be based on the total for suspension, revocation and reactivation
outstanding balance of the credit card of the right to use the card and shall include
obligation, including amounts payable in their contract with cardholders a
under installment terms or deferred provision authorizing the issuer to suspend
payment schemes, if the contract between or terminate its effectivity, if circumstances
the issuer and the cardholder contains an warrant.
“acceleration clause” and the total
outstanding balance of the credit card is § 4301N.11 Inspection of records
classified and reported as past due. covering credit card transactions
Subsidiary/affiliate credit card companies
§ 4301N.9 Confidentiality of of banks/QBs shall make available for
information. Subsidiary/affiliate credit card inspection or examination by the
companies of banks/QBs shall keep strictly appropriate department of the SES
confidential the data on the cardholder or complete and accurate files on card
consumer, except under the following applicant/cardholder to support the
circumstances: consideration for approval of the
a. disclosure of information is with application and determination of the
the consent of the cardholder or credit limit which shall be in accordance
consumer; with the verified debt repayment ability
b. release, submission or exchange and/or net worth of the card applicant/
of customer information with other FIs, cardholder.
credit information bureaus, credit card
issuers, their subsidiaries and affiliates; § 4301N.12 Offsets. For purposes of
c. upon orders of court of competent transparency and adequate disclosure, the
jurisdiction or any government office or credit card issuer shall inform/notify the
agency authorized by law, or under such credit cardholder in the agreement,
conditions as may be prescribed by the contract or any equivalent document
Monetary Board; governing the issuance or use of the credit
d. disclosure to collection agencies, card that, pursuant to the provisions of
counsels and other agents of the bank or Articles 1278 to 1290 of the New Civil
card company to enforce its rights against Code of the Philippines, as amended the
the cardholder; use of his credit card will subject his
e. disclosure to third party service deposit/s with the bank to offset against
providers solely for the purpose of assisting any amount/s due and payable on his
or rendering services to the bank or card credit card which have not been paid in
company in the administration of its credit accordance with the terms of the
card business; and agreement/contract.

Page 30
§§ 4301N.13 - 4302N
08.12.31
§ 4301N.13 Handling of complaints a. the use or threat of violence or other

Subsidiary/affiliate credit card companies of criminal means to harm the physical person,
banks/QBs shall give cardholders at least reputation, or property of any person;
twenty (20) calendar days from statement b. the use of obscenities, insults, or
date to examine charges posted in his/her profane language which amount to a
statement of account and inform the credit criminal act or offense under applicable laws;
card company in writing of any billing error c. disclosure of the names of credit
or discrepancy. Within ten (10) calendar cardholders who allegedly refuse to pay
days from receipt of such written notice, the debts, except as allowed under Subsec.
credit card company shall send a written 4301N.9;
acknowledgement to the cardholder unless d. threat to take any action that cannot
the action required is taken within such ten legally be taken;
(10)-day period. e. communicating or threat to
Not later than two (2) billing cycles or communicate to any person credit
two (2) months which in no case shall information which is known to be false,
exceed ninety (90) days after receipt of the including failure to communicate that a
notice and prior to taking any action to debt is being disputed;
collect the contested amount, or any part f. any false representation or
thereof, banks/subsidiary credit card deceptive means to collect or attempt to
companies shall make appropriate collect any debt or to obtain information
corrections in their records and/or send a concerning a cardholder; and
written explanation or clarification to the g. making contact at unreasonable/
cardholder after conducting an inconvenient times or hours which shall be
investigation. Nothing in this Subsection defined as contact before 6:00 A.M. or after
shall be construed to prohibit any action 10:00 P.M., unless the account is past due
by the bank/subsidiary credit card company for more than sixty (60) days or the
to collect any amount which has not been cardholder has given express permission
indicated by the cardholder to contain a or said times are the only reasonable or
billing error or apply against the credit limit convenient opportunities for contact.
of the cardholder the amount indicated to
be in error. § 4301N.15 Sanctions. Violations of the
provisions of this Section shall be subject
§ 4301N.14 Unfair collection to any or all of the following sanctions
practices. Subsidiary/affiliate credit card depending upon their severity:
companies of banks/QBs, collection a. Disqualification of the bank
agencies, counsels and other agents may concerned from the credit facilities of the
resort to all reasonable and legally BSP except as may be allowed under
permissible means to collect amounts due Section 84 of R.A. No. 7653;
them under the credit card agreement: b. Prohibition of the bank concerned
Provided, That in the exercise of their rights from the extension of additional credit
and performance of duties, they must accommodation against personal security; and
observe good faith and reasonable conduct c. Penalties and sanctions provided
and refrain from engaging in unscrupulous under Sections 36 and 37 of R.A. No. 7653.
or untoward acts. Without limiting the
general application of the foregoing, the Sec. 4302N Classification of Credit Card
following conduct is a violation of this Receivables. Credit card receivables shall be
Subsection: classified in accordance with age as follows:

Page 31
§§ 4302N - 4312N.1
08.12.31
and/or guarantor, if applicable, is/are

No. of days past due Classification financially capable of fulfilling
91 - 120 Substandard his/their commitments to the NBFI. For
121 - 180 Doubtful this purpose, an NBFI shall obtain adequate
181 or more Loss information on his/their credit standing and
financial capacities.
The foregoing is the minimum In addition to the usual information
classification requirement. Management sheet about the borrower, an NBFI shall
may therefore formulate additional specific require from the credit applicant the
guidelines. following:
a. A copy of the latest ITR of the
Sec. 4303N Updating of Information borrower and his co-maker, if applicable,
Provided to Credit Information Bureaus duly stamped as received by the BIR;
FIs which have provided adverse b. Except as otherwise provided by
information, such as the past due or law and in other regulations, if the
litigation status of loan accounts, to credit borrower is engaged in business, a copy
information bureaus, or any organization of the borrower’s latest financial statements
performing similar functions, shall submit as submitted for taxation purposes to the
monthly reports to these bureaus or BIR; and
organizations on the full payment or c. A waiver of confidentiality of client
settlement of the previously reported information and/or an authority of the NBFI
accounts within five (5) business days from to conduct random verification with the BIR
the end of the month when such full payment in order to establish authenticity of the ITR
was received. For this purpose, it shall be and accompanying financial statements
the responsibility of the reporting FIs to submitted by the client.
ensure that their disclosure of any information The documents under Items “a” and ”b”
about their borrowers/clients is with the above shall be required to be submitted
consent of borrowers/clients concerned. annually for as long as the loan and/or
(Circular No. 589 dated 18 December 2007) credit accommodation is outstanding. The
consistency of the data/figures in said ITRs
Secs. 4304N – 4311N (Reserved) and financial statements shall also be
checked and considered in the evaluation
Sec. 4312N Grant of Loans and Other of the financial capacity and
Credit Accommodations. The following creditworthiness of credit applicants. The
regulations shall be observed in the grant waiver of confidentiality of client
of loans and other credit accommodations. information and/or an authority of the NBFI
to conduct random verification with the
§ 4312N.1 General guidelines BIR need not be submitted annually since
Consistent with safe and sound business once submitted these documents remain
practices, an NBFI shall grant loans or other valid unless revoked.
credit accommodations only in amounts and Should the document(s) submitted prove
for the periods of time essential for the to be spurious or incorrect in material detail,
effective completion of the operation to be the NBFI may terminate any loan or other
financed. credit accommodation granted on the basis
Before granting loans or other credit of said document(s) and shall have the right
accommodations, an NBFI must ascertain to demand immediate repayment or
that the borrower, co-maker, endorser, surety liquidation of the obligation. Moreover, the

Page 32
§ 4312N.1
08.12.31
NBFI may seek redress from the court for income derived from one (1) employer does
any harm done by the borrower’s submission not exceed P60,000 and the income tax on
of spurious documents. which has been correctly withheld;
The required submission of additional (b) Those whose income has been
documents shall cover loans, other credit subjected to final withholding tax;
accommodations, and credit lines granted, (c) Senior citizens not required to file
restructured, renewed or extended after 02 a return pursuant to R.A. No. 7432, as
November 2006, including any availment amended by R.A. No. 9257, in relation to
and/or re-availment against existing credit the provisions of the NIRC or the Tax
lines, except: Reform Act of 1997; and
(1) Microfinance loans. This (d) An individual who is exempt from
represents small loans granted to the basic income tax pursuant to the provisions of the
sectors such as farmer-peasant, artisanal NIRC and other laws, general or special; and
fisher folk, workers in the formal and (6) Loans to borrowers, whose only
informal sector, migrant workers, source of income is compensation and the
indigenous peoples and cultural corresponding taxes on which has been
communities, women, differently-abled withheld at source: Provided, That the
persons, senior citizens, victims of borrowers submitted, in lieu of the ITR, a
calamities and disasters, youth and copy of their Employer’s Certificate of
students, children, and urban poor, as Compensation Payment/Tax Withheld (BIR
defined in the Social Reform and Poverty Form 2316) or their payslips for at least
Alleviation Act of 1997 (R.A. No. 8425), three (3) months immediately preceding
and other loans granted to poor and the date of loan application.
low-income households for their Loans to micro and small enterprises
microenterprises and small businesses. which are not specifically exempted from
The maximum principal amount of the additional documentary requirements
microfinance loans shall not exceed specified under the third paragraph of this
P150,000 and may be amortized on a Subsection shall be exempted from said
daily, weekly, semi-monthly or monthly additional documentary requirement up to
basis, depending on the cash flow 31 December 2011.
conditions of the borrowers. Said loans are Consumer loans, with original amounts
usually unsecured, for relatively short not exceeding P2.0 million, are exempted
periods of time (180 days) and often from updating requirements or the required
featuring joint and several guarantees of annual submission of the same
one (1) or more persons; requirements forwarded during the initial
(2) Loans to registered BMBEs; submission under this Subsection but not
(3) Interbank loans; in their restructuring, renewal, or
(4) Loans secured by hold-outs on or extensions or availment/re-availment
assignment of deposits or other assets against existing credit lines: Provided, That
considered non-risk by the Monetary Board; these loans are supported by ITRs or by BIR
(5) Loans to individuals who are not Form 2316 or payslips for at least three (3)
required to file ITRs under BIR regulations, months immediately preceding the date of
as follows: loan application, and financial statements
(a) Individuals whose gross submitted for taxation purposes to the BIR,
compensation income does not exceed as may be applicable at the time the loans
their total personal and additional were granted, restructured, renewed, or
exemptions, or whose compensation extended.

Page 33
§§ 4312N.1 - 4313N
08.12.31
For purposes of this Section, the purpose(s) is/are among those for which the
following definitions shall apply: lending NBFI may grant loans and other
1. Micro and small enterprises shall credit accommodations under existing laws
be defined as any business activity or and regulations: Provided, further, That such
enterprise engaged in industry, utilization shall be with prior written
agribusiness and/or services whether single approval of duly authorized officer(s)
proprietorship, cooperative, partnership or committee/board of directors of the lending
corporation whose total assets, inclusive of NBFI and such written approval shall form
those arising from loans but exclusive of part of the contract between the NBFI and
the land on which the particular business the borrower.
entity’s office, plant and equipment are (Circular No. 622 dated 16 September 2008)
situated, must have a value of up to P3.0
million and P15.0 million, respectively, or § 4312N.3 Prohibited use of loan
as may be defined by the MSME proceeds. NBFIs are prohibited from
Development Council or other competent requiring their borrowers to acquire shares
government agency. of stock of the lending NBFI out of the loan
2. Consumer loans is defined to or other credit accommodation proceeds
include housing loans, loans for purchase from the same NBFI.
of car, household appliance(s), furniture and (Circular No. 622 dated 16 September 2008)
fixtures, loans for payment of educational
and hospital bills, salary loans and loans for § 4312N.4 Signatories. NBFIs shall
personal consumption, including credit require that loans and other credit
card loans. accommodations be made under the
(As amended by Circular Nos. 622 dated 16 September 2008, signature of the principal borrower and, in the
and 549 dated 09 October 2006) case of unsecured loans and other credit
accommodations to an individual borrower,
§ 4312N.2 Purpose of loans and other at least one (1) co-maker, except that a co-
credit accommodations. Before granting maker is not required when the principal
a loan or other credit accommodation, an borrower has the financial capacity and a
NBFI shall ascertain the purpose of the loan good track record of paying his obligations.
or other credit accommodation which shall (As amended by Circular No. 622 dated 16 September 2008)
be clearly stated in the application and in
the contract between the NBFI and § 4312N.5 Sanctions. Any violation of
borrower. The proceeds of a loan or other the provisions of this Section shall be
credit accommodation shall be utilized subject to the sanctions provided under
only for the purpose(s) stated in the Sections 36 and 37 of R.A. No. 7653.
application and contract; otherwise, the
NBFI may terminate the loan or other credit Sec. 4313N Bank DOSRI Rules and
accommodation and demand immediate Regulations Applicable to Government
repayment of the obligation. Borrowings in Government-Owned Or -
Notwithstanding the preceding sentence, Controlled Financial Institutions. The
the proceeds of a loan or other credit provisions of Secs. X326 to X337 of the
accommodation may be utilized by the Manual of Regulations for Banks (MORB),
borrower for a purpose(s) other than that to the extent applicable, shall also apply
originally stated in the application and to loans, other credit accommodations,
contract: Provided, That such other and guarantees granted to the National

Page 34
§ 4313N
08.12.31
Government or Republic of the to the agricultural sector and MSMEs;

Philippines, its political subdivisions and and/or (ii) rediscounting and guarantee
instrumentalities as well as GOCCs, facilities for loans granted to the said sector
subject to the following clarifications: or enterprises;
a. Loans, other credit accommodations, c. Loans, other credit accommodations,
and guarantees to the Republic of the and/or guarantees granted to state
Philippines and/or its agencies/departments/ universities and colleges (SUCs) shall be
bureaus shall be considered: (1) non-risk; and excluded from the thirty percent (30%)
(2) not subject to any ceiling; ceiling on unsecured loans under Secs.
b. Loans, other credit accommodations, X330 and X331 of the MORB;
and/or guarantees to: (1) GOCCs; and d. In view of the fiscal autonomy
(2) corporations where the Republic of the granted under R.A. No. 7653 and the
Philippines, its agencies/departments/ independence prescribed under the
bureaus, and/or GOCCs own at least Constitution, the BSP shall be considered
twenty percent (20%) of the subscribed an independent entity, hence, not a related
capital stock shall be considered indirect interest of the Republic of the Philippines
borrowings of the Republic of the and/or its agencies/departments/bureaus.
Philippines and shall form part of the Loans, other credit accommodations and
individual ceiling as well as the aggregate guarantees of the BSP shall be considered:
ceiling: Provided, That the following loans, (1) non-risk; and (2) not subject to any
other credit accommodations, and/or ceiling;
guarantees to GOCCs and corporations e. LGUs shall be considered separate
where the Republic of the Philippines, its from the Republic of the Philippines, other
agencies/departments/bureaus, and/or government entities, and from one another
GOCCs own at least twenty percent (20%) due to the full autonomy in the exercise of
of the subscribed capital stock, shall be their proprietary functions and in the
excluded from the thirty percent (30%) management of their economic enterprises
ceiling on unsecured loans under Secs. granted to them under the Local
X330 and X331 of the MORB: Government Code of the Philippines,
(1) Loans, other credit accommodations, subject to certain limitations provided by
and/or guarantees for the purpose of law, hence, not a related interest of the
undertaking priority infrastructure projects Republic of the Philippines and/or its
consistent with the Medium-Term agencies/departments/bureaus;
Development Plan/Medium-Term Public f. Local Water Districts (LWDs),
Investment Program of the National although GOCCs shall be considered
Government, duly certified as such by the separate from the Republic of the
Secretary of Socio-Economic Planning; Philippines, other government entities, and
(2) Loans, other credit accommodations, from one another due to their fiscal
and/or guarantees granted to participating independence from the National
financial institutions (PFIs) in the lending Government, hence, not related interests
programs of the government wherein the of the Republic of the Philippines and/or
funds borrowed are intended for relending its agencies/department/bureaus, for
to other PFIs or end-user borrowers; and purposes of these regulations;
(3) Loans, other credit accommodations, g. A director who acts as a
and/or guarantees granted for the purpose government representative in the lending
of providing (i) wholesale and retail loans institution shall not be excluded in the

Page 35
§§ 4313N - 4511N.1
08.12.31
deliberation as well as in the a. Fines of P2,000/day to be imposed

determination of majority of the directors on NBFIs for each violation, reckoned from
in cases of loans, other credit the date the violation was committed up to
accommodations, and guarantees to the the date it was corrected; and
Republic of the Philippines and/or its b. Sanctions to be imposed on
agencies/departments/bureaus; and concerned officers:
h. A director of the lending institution (1) First offense – reprimand the
shall be excluded in the deliberation as well officers responsible for the violation; and
as in the determination of majority of the (2) Subsequent offenses – suspension
directors in cases of loans, other credit of ninety (90) days without pay for officers
accommodations, and guarantees to the responsible for the violation.
borrowing government entity other than the (Circular No. 476 dated 16 February 2005 as amended by Circular
Republic of the Philippines, its agencies, Nos. 628 dated 31 October 2008, 626 dated 23 October 2008
departments or bureaus where said director and 585 dated 15 October 2007)
is also a director, officer or stockholder under
existing DOSRI regulations. Secs. 4392N - 4400N (Reserved)
(Circular No. 514 dated 06 March 2006 as amended by Circular
Nos. 635 dated 10 November 2008, 616 dated 30 July 2008, Secs. 4401N - 4500N (Reserved)
and 580 dated 09 September 2007)
Secs. 4501N - 4510N (Reserved)
Sec. 4314N Loans Against Personal
Security. The grant, renewal, restructuring Sec. 4511N Foreign Exchange Dealers/
or extension of unsecured loans shall, in Money Changers and/or Remittance
addition to the requirements of Section Agents Operations. The following rules and
4312N, be made under the signature of the regulations shall govern the registration and
principal borrower and at least one (1) operations of foreign exchange dealers
co-maker, except that a co-maker is not (FXDs)/money changers (MCs) and/or
required when the principal borrower has remittance agents:
the financial capacity and a good track
record of paying his obligations. § 4511N.1 Registration. Qualified
(Circular No. 622 dated 16 September 2008) persons or non-bank institutions wishing to
act as FXDs/MCs and/or remittance agents
Secs. 4315N-4390N (Reserved) are required to register with the BSP before
they can operate as such.
Sec. 4391N Investments in Debt and For this purpose, the term money
Marketable Equity Securities. The changers, interchangeably referred to as
classification, accounting procedures, foreign exchange dealers, shall refer to
valuation, sales and transfers of those regularly engaged in the business of
investments in debt securities and buying and/or selling foreign currencies.
marketable equity securities shall be in Remittance agents, on the other
accordance with the guidelines in hand, shall refer to persons or entities
Appendices Q-20 and Q-20- a. that offer to remit, transfer or transmit
Penalties and sanctions. The money on behalf of any person to
following penalties and sanctions shall another person and/or entity. These
be imposed on FIs and concerned include money or cash couriers, money
officers found to violate the provisions transmission agents, remittance
of these regulations: companies and the like.

Page 36
§§ 4511N.2 - 4511N.5
08.12.31
§ 4511N.2 Application for registration regulations, particularly on customer

The application for a certificate of identification, record keeping and reporting
registration to act as FXD/MC and/or of covered transactions and suspicious
remittance agent, in the prescribed form transactions as well as those which may
(Item “A”, Appendix N-8), must be duly hereafter be issued.
supported by the following documents:
a. Incorporation papers duly § 4511N.4 Required seminar/training
authenticated by the SEC (for corporation/ Prior to the issuance of the certificate of
partnership); or copy of the certificate of registration, the officer(s) as well as the
registration duly authenticated by the personnel directly involved in foreign
Department of Trade and Industry (DTI) (for exchange operations shall attend a seminar
single proprietorship); on the requirements of the Anti-Money
b. Copy of business license/permit Laundering Act (AMLA) particularly on
from the city or municipality having customer identification, record keeping and
territorial jurisdiction over the place of reporting of covered and suspicious
establishment and operation; transactions, to be conducted by the AMLC
c. List of stockholders/partners/ or by any of its recognized or accredited
proprietor/directors/principal officers as the service providers. The provisions of this
case maybe; Section shall also apply to officers appointed
d. Notarized Deed of Undertaking after the issuance of the certificate of
(Item “B”, Appendix N-8) to strictly comply registration.
with the requirements of all relevant laws, The officer(s)-in-charge and the
rules and regulations, signed either by the personnel who attended the required
owner, partner, president or officer of seminar shall echo the said training to all
equivalent rank; and employees within thirty (30) calendar days
e. Any additional document which the from such attendance or as new employees
BSP may require from time to time. are hired.
FXDs/MCs and remittance agents
existing prior to 12 May 2005 (effectivity § 4511N.5 Sale and purchase of foreign
date of Circular 471 dated 24 January 2005) currencies by FXDs/MCs. The following
may continue to operate as such: Provided, minimum procedures shall be observed on
That an application for registration sale and purchase of foreign currencies by
supported by documents mentioned above FXDs/MCs:
has been filed within ninety (90) calendar a. Official receipts, in case of sales, and
days from 12 May 2005. accountable forms in case of purchases, shall
A certificate of registration to act as FXD/ be issued in numerical order to evidence sale/
MC or remittance agent shall be issued by purchase of foreign currencies;
the BSP and shall become the basis for an b. The amount of foreign currencies
electronic registry of all BSP registered sold shall be indicated in the official receipts
FXDs/MCs and remittance agents in the both in words and in figures. The staff
country. serving the particular transaction as well as
the person buying/selling foreign currency
§ 4511N.3 Applicability of other laws/ shall sign in their usual signatures on the
regulations. FXDs/MCs and remittance receipt;
agents are subject to the provisions of c. A daily record of foreign exchange
R.A. No. 7653 and R.A. No. 9160, as transactions shall be maintained where all
amended, and its implementing rules and foreign exchange sale and purchase

Page 37
§§ 4511N.5 - 4511N.8
09.12.31
transactions shall be posted chronologically. (5) Authority and identification of the

The daily record shall be kept on file at the person purporting to act in behalf of the client.
FXD/MC premises and shall be available For subsequent transactions with the
for AMLC inspection/examination any same corporate client, FXDs/MCs need not
time; require submission of additional documents
d. All copies of cancelled receipts shall enumerated in Item “b” above unless there
be marked and stamped “CANCELLED” for are changes thereto.
internal control purposes; and As a means of further identification,
e. Foreign exchange transactions shall FXDs/MCs shall require the presentation of
be conducted only at the entity’s principal a government-issued identification
place of business and other authorized document such as SSS/GSIS/voter’s ID,
branches. driver’s license or passport.
A sample of application to sell/purchase
§ 4511N.6 Application to sell/purchase foreign currencies is shown in Item “C”,
foreign currencies by FXDs/MCs. FXDs/ Appendix N-8.
MCs shall require the seller or buyer of
foreign currency to fill up and sign an § 4511N.7 Additional requirement
application form, which shall contain the FXDs/MCs shall require an accomplished
following minimum data and information: application form and submission/
a. For individual customers - presentation of supporting documents listed
(1) Date; in Item “D” of Appendix N-8 for the sale of
(2) Printed name and signature of foreign exchange in the amount exceeding
customer; US$10,000 or its equivalent for non-trade
(3) Present address; current account purposes. For the sale of
(4) Permanent address; foreign exchange for all other purposes,
(5) Date and place of birth; FXDs/MCs shall require submission of an
(6) Telephone number; accomplished application form and
(7) Nationality; supporting documents listed in Items “B”,
(8) Amount and currency sold/ “C” and “D” of Appendix N-8, regardless
purchased in words and figures; and of the amount involved.
(9) Source of foreign currency/ies or (As amended by Circular No. 652 dated 05 May 2009)
purpose of purchase
b. For corporate/juridical customers - § 4511N.8 Requirements for remittance
In addition to a signed application agents. RAs shall maintain accurate and
containing the applicable information in meaningful originator information on funds
Item “a” above, photocopies of the following transferred/remitted by requiring the sender/
documents shall be required: remitter to fill up and sign an application
(1) Articles of incorporation/ form, which shall contain the following
partnership; minimum data and information:
(2) By-Laws; a. For individual customers -
(3) Official address or principal (1) Date;
business address; (2) Printed name and signature of
(4) List of directors/partners/principal remitter;
stockholders; and (3) Present address;

Page 38
§§ 4511N.8 - 4511N.15
08.12.31
(4) Permanent address; equivalent monetary instrument involving

(5) Date and place of birth; a total amount in excess of P500,000.00
(6) Telephone number; within one (1) banking day while suspicious
(7) Nationality; transactions are transactions, regardless of
(8) Amount and currency to be amount, where any of the following
remitted; circumstances exists:
(9) Source of foreign currency; and a. There is no underlying legal or trade
(10) Name of and relationship with obligation, purpose or economic
beneficiary/ies. justification;
b. For corporate/juridical customers b. The client is not properly identified;
In addition to a signed application c. The amount involved is not
containing the applicable information commensurate with the business or
in Item "a", a photocopy of the authority financial capacity of the client;
and identification of the person d. Taking into account all known
purporting to act in behalf of the client circumstances, it may be perceived that the
shall be required. client’s transaction is structured in order to
As a means of further identification, RAs avoid being the subject of reporting
shall require the presentation of a requirements under the AMLA;
government-issued identification document e. Any circumstance relating to the
such as SSS/GSIS/voter’s ID, driver’s license transaction which is observed to deviate
or passport. from the profile of the client and/or the
For purposes of compliance with the client’s past transactions with the covered
requirements, an RA may rely on the referral institution;
of its office/correspondent bank abroad: f. The transaction is in any way related
Provided, That the RA maintains a record to an unlawful activity or any money
of such referral together with the minimum laundering activity or offense under the
identification, information documents AMLA that is about to be, is being or has
required under the law and its implementing been committed; or
rules and regulations. g. Any transaction that is similar,
analogous or identical to any of the
§ 4511N.9 Anti-money laundering foregoing.
council reportorial requirements. FXDs/
MCs and RAs are required to submit to the § 4511N.10 - 4511N.14 (Reserved)
AMLC a report on covered transactions and
suspicious transactions within five (5) § 4511N.15 Sanctions. Monetary
banking days from the date of said penalties and other sanctions for the
transaction or from date the FXDs/MCs and following violations committed by erring
RAs gained information that the transaction FXDs/MCs and RAs may be imposed:
was done for the purpose of laundering
proceeds of criminal or other illegal activities Nature of Violation/ Sanctions/Penalties
or from the time the FXDs/MCs and RAs Exception
had reasonably suspected that said a. Operating without Applicable penalties
transactions were entered into for the prior BSP under Section 36 of
purpose of laundering proceeds of criminal registration R.A. No. 7653;
and other illegal activities. Watchlisting of
For this purpose, covered transactions partners/principal
shall refer to transactions in cash or other officers

Page 39
§§ 4511N.15 - 4601N.1
09.12.31
Nature of Violation/ Sanctions/Penalties shall be penalized on a per calendar day

Exception basis from the time the acts were committed/
b. Violation of any of Applicable penalty omitted or the transactions were effected up
the provisions of prescribed under to the time they were corrected/rectified.
R.A. No. 9160, as the Act (2) Transactional offenses/violations are
amended and its acts, omissions or transactions entered into
IRR in violation of laws, BSP rules and
c. Other violations of Penalties and sanctions regulations, Monetary Board directives, and
the provisions/ which may be orders of the Governor which cannot be
requirements in imposed by the corrected/rectified by subsequent acts or
this Section AMLC transactions. They shall be meted with one
(1)-time monetary penalty on a per
§ 4511N.16 Industry association transaction basis.
Membership in an existing association of (3) Continuing penalty refers to the
BSP-registered FXDs/MCs as well as RAs is monetary penalty imposed on continuing
encouraged. offenses/violations on a per calendar day
basis reckoned from the time the offense/
Secs. 4512N - 4600N (Reserved) violation occurred or was committed until
the same was corrected/rectified.
Sec. 4601N Fines and Other Charges. The (4) Transactional penalty refers to a one
following regulations shall govern (1)-time penalty imposed on a transactional
imposition of monetary penalties on NBFIs, offense/violation.
their directors and/or officers and the b. Basis for the computation of the
payment of such penalties or fines and other period or duration of penalty. The
charges by these entities . computation of the period or duration of all
(Circular No. 585 dated 15 October 2007) penalties shall be based on calendar days.
For this purpose the terms “per banking
§ 4601N.1 Guidelines on the imposition day”, “per business day”, “per day” and/or
of monetary penalties; payment of “a day” as used in this Manual, and other
penalties or fines. The following are the BSP rules and regulations shall mean “per
guidelines on the imposition of monetary calendar day” and/or “calendar day” as the
penalties on NBFIs, their directors and/or case may be.
officers and the payment of such penalties c. Additional charge for late payment
or fines and other charges by these of monetary penalty. Late payment of
entities: monetary penalty shall be subject to an
a. Definition of terms. For purposes of additional charge of six percent (6%) per
the imposition of monetary penalties, the annum to be reckoned from the business
following definitions are adopted: day immediately following the day said
(1) Continuing offenses/violations are penalty becomes due and payable up to the
acts, omissions or transactions entered into, day of actual payment. The penalty approved
in violation of laws, BSP rules and by the Governor/MB to be imposed on the
regulations, Monetary Board directives, and NBFI, its directors and/or officers shall
orders of the Governor which persist from become due and payable fifteen (15)
the time the particular acts were committed calendar days from receipt of the Statement
or omitted or the transactions were entered of Account from the BSP. For banks which
into until the same were corrected/rectified maintain DDA with the BSP, penalties
by subsequent acts or transactions. They which remain unpaid after the lapse of the

Page 40
§§ 4601N.1 - 4642N.2
09.12.31
fifteen (15) day period shall be automatically provisions under Subsecs. 4625Q to
debited against their corresponding DDA on 4625Q.9, and 4625Q.14.
the following business day without (Circular No. 591 dated 27 December 2007)
additional charge. If the balance of the
concerned NBFI’s DDA is insufficient to Secs. 4604N - 4640N (Reserved)
cover the amount of the penalty, said penalty
shall already be subject to an additional Sec. 4641N Electronic Services. The
charge of six percent (6%) per annum to be guidelines concerning electronic activities
reckoned from the business day immediately as may be applicable, are found in Sec.
following the end of said fifteen (15)-day 4701Q and its Subsections.
period up to the day of actual payment. (Circular No. 649 dated 09 March 2009)
d. Appeal or request for reconsideration
A one (1)-time appeal or request for Sec. 4642N Issuance and Operations of
reconsideration on the monetary penalty Electronic Money. The following guidelines
approved by the Governor/Monetary Board shall govern the issuance of electronic
to be imposed on the NBFI, its directors and/ money (e-money) and the operations of
or officers shall be allowed: Provided, That electronic money issuers (EMIs).
the same is filed with the appropriate (Circular No. 649 dated 09 March 2009)
department of the SES within fifteen (15)
calendar days from receipt of the Statement of § 4642N.1 Declaration of policy. It is
Account billing letter. The appropriate the policy of the BSP to foster the
department of the SES shall evaluate the appeal development of efficient and convenient
or request for reconsideration of the NBFI retail payment and fund transfer
individual and make recommendations mechanisms in the Philippines. The
thereon within thirty (30) calendar days from availability and acceptance of e-money as
receipt thereof. The appeal or request for a retail payment medium will be promoted
reconsideration on the monetary penalty by providing the necessary safeguards and
approved by the Governor/Monetary Board controls to mitigate the risks associated in
shall be elevated to the Monetary Board for an e-money business.
resolution/decision. The running of the penalty (Circular No. 649 dated 09 March 2009)
period in case of continuing penalty and/or
the period for computing additional charge § 4642N.2 Definitions
shall be interrupted from the time the appeal E-money shall mean monetary value as
or request for reconsideration was received represented by a claim on its issuer, that is -
by the appropriate department of the SES up a. electronically stored in an
to the time that the notice of the Monetary instrument or device;
Board decision was received by the NBFI/ b. issued against receipt of funds of an
individual concerned. amount not lesser in value than the
(Circular No. 585 dated 15 October 2007, as amended by monetary value issued;
Circular No .662 dated 09 September 2009) c. accepted as a means of payment by
persons or entities other than the issuer;
Sec. 4602N (Reserved) d. withdrawable in cash or cash
equivalent; and
Sec. 4603N Non-Bank BSP Supervised e. issued in accordance with this
Entities. NBBSEs that may subsequently be Section.
authorized to engage in FX forwards and Electronic money issuer shall be
swaps as dealers shall be covered by the classified as follows:

Page 41
§§ 4642N.2 - 4642N.4
09.12.31
a. Banks (hereinafter called EMI- the entity should have sufficient liquid assets
Bank); equal to the amount of outstanding e-money
b. NBFI supervised by the BSP issued. The liquid assets should remain
(hereinafter called EMI-NBFI); and unencumbered and may take any of the
c. Non-bank institutions registered following forms:
with the BSP as a money transfer agent (1) bank deposits separately maintained
under Section 4511N of the MORNBFI for liquidity purposes;
(hereinafter called EMI-Others). (2) government securities set aside for
For purposes of this Section: the purpose; and
a. Electronic instruments or devices (3) such other liquid assets as the BSP
shall mean cash cards e-wallets accessible may allow.
via mobile phones or other access device, Records pertaining to the above liquid
stored value cards, and other similar assets shall be made available for inspection
products. by BSP at any time and the confidentiality
b. E-money issued by NBFIs shall not of bank deposits and government securities
be considered as deposits. shall be waived.
(Circular No. 649 dated 09 March 2009) e. The BSP shall be allowed access to
review the e-money systems and databases
§ 4642N.3 Prior Bangko Sentral of the entity. Whenever the circumstances
approval. NBFIs planning to be an EMI- warrant, such access shall extend to the
NBFI shall comply with the requirements agents, partners, service providers or
of Sec. 4641N and Sec. 4190N, when outsourced entities of the EMI-Others in
applicable. view of their participation in the e-money
NBFIs planning to be an EMI-Others business; and
shall register with the BSP as a money f. EMI-Others shall submit to the
transfer agent in accordance with the SDC, its AFS within thirty (30) days from
provisions of Sec. 4511N. To qualify for date of report of its external auditors.
registration, they have to comply with the In case the NBFI is already registered
following requirements: with the BSP as a money transfer agent, it is
a. They must be a stock corporation required to meet the additional requirements
with a minimum paid-up capital of P100 mentioned above to qualify as EMI-Others.
million; (Circular No. 649 dated 09 March 2009)
b. They shall engage only in the
business of e-money and other activities § 4642N.4 Common provisions. The
related or incidental to the business of following provisions are applicable to all EMIs:
e-money, such as money transfer/remittance. a. E-money instrument issued shall be
An existing entity engaged in activities not subject to aggregate monthly load limit of
related to the business of e-money but P100,000 unless a higher amount has been
wishing to act as EMI-Others must do so approved by BSP. In case an EMI issues
through a separate entity duly incorporated several e-money instruments to a person
exclusively for such purpose; (e-money holder), the total amount loaded
c. They shall not engage in the in all the e-money instruments shall be
extension of credit, unless they comply with consolidated in determining compliance
the provisions of Subsec. 4633N.5; with the aggregate monthly load limit;
d. To further protect the e-money b. EMIs shall put in place a system to
holders and ensure that e-money maintain accurate and complete record of
redemptions are adequately met at all times, e-money instruments issued, the identity of

Page 42
§§ 4642N.4 - 4642N.5
09.12.31
e-money holders, and the individual and (2) Properly-designed computer

e-money instruments issued to common measures intended to safeguard the integrity,
e-money holders. The susceptibility of a authenticity and confidentiality of data and
system to intentional or unintentional operating processes;
misreporting of transaction and balances (4) Adequate business continuity and
and other similar incentives convertible to i. EMIs shall provide the SDC
cash, nor be purchased at a discount. E-money quarterly statements containing, among
is not considered a deposit hence it is not others, information on investments, volume
insured with the PDIC. of transactions, total outstanding e-money
d. EMIs shall not ensure that e-money balances, and liquid assets in such forms
instruments clearly identify the issuer who as may be prescribed later on.
is ultimately responsible to the e-money j. EMIs shall notify BSP in writing of
holders. This shall be communicated to the any change or enhancement in the
client who shall acknowledge the same in e-money facility thirty (30) days prior to
writing. implementation. If said change or
e. It is the responsibility of EMIs to enhancement requires prior BSP approval,
ensure that their distributors/e-money agents the same shall be evaluated accordingly.
comply with all applicable requirements of Any change or enhancement that shall
the Anti-Money Laundering laws, rules and expand the scope or change the nature of
regulations. the e-money instrument shall be subject to
f. EMIs shall provide an acceptable prior approval of the Deputy Governor,
redress mechanism to address the SES. These changes or enhancements may
complaints of its customers. include the following:
g. EMIs shall disclose in writing and its (1) Additional capabilities of the
customers shall signify agreement to the e-money instrument/s, like access to new
information embodied in Item “c” above upon channels (e.g. inclusion of internet channel
their participation in the e-money system. In in addition to merchant Point of Sale
addition, it shall provide clear guidance in terminals);
English and Filipino on consumers’ right of (2) Change in technology service
redemption, including conditions and fees for providers and other major partners in the
redemption, if any. Information on available e-money business (excluding partner
redress procedures for complaints together merchants), if any; and
with the address and contact information of (3) Other changes or enhancements.
the issuer shall also be provided. (Circular No. 649 dated 09 March 2009)
h. Prior to the issuance of e-money,
EMIs should ensure that the following § 4642N.5 Quasi-bank license
minimum systems and controls are in place: requirement. EMI-NBFIs and EMI-Others
(1) Sound and prudent management, that engage in lending activities must secure
administrative and accounting procedures a quasi-banking license from the BSP.
and adequate internal control mechanisms; (Circular No. 649 dated 09 March 2009)

Page 43
§§ 4642N.6 - 4660N
09.12.31
§ 4642N.6 Sanctions. Monetary submit within the same period the measures
penalties and other sanctions for the they will undertake, with the corresponding
following violations committed by EMI- timelines, to conform to the provisions that
NBFIs, and EMI-Others shall be they have not complied with subject to BSP
imposed: approval.
Nature of Violation Sanction/Penalties
Exception Secs. 4643N - 4652N (Reserved)
1. Issuing e-money Applicable penalties
without prior BSP under Sections 36 & Sec. 4653N Accounting for Financial
approval 37 of R.A. No. 7653;
Institution Premises; Other Fixed Assets
Watchlisting of
owners/partners/
FI premises, furniture, fixture and equipment
principal officers shall be accounted for using the cost model
2. Violation of any Applicable penalties under PAS 16 “Property, Plant and
of the provisions of prescribed under the Equipment.”
R.A. No. 9160 (Anti- Act (Circular No. 494 dated 20 September 2004)
Money Laundering
Law of 2001 as Secs. 4654N - 4659N (Reserved)
amended by R.A.No.
9191 and its Sec. 4660N Disclosure of Remittance
implementing rules
Charges and Other Relevant Information
and regulations
3. Violation/s of Penalties and sanctions
It is the policy of the BSP to promote the
this Section under the efficient delivery of competitively-priced
abovementioned laws remittance services by banks and other
and other applicable remittance service providers by promoting
laws, rules and competition and the use of innovative
regulations payment systems, strengthening the
financial infrastructure, enhancing access to
In addition, the susceptibility of a formal remittance channels in the source
system to intentional or unintentional and destination countries, deepening the
misreporting of transactions and balances financial literacy of consumers, and
shall be sufficient ground for appropriate improving transparency in remittance
BSP action or imposition of sanctions, transactions, consistent with sound
whenever applicable. practices.
(Circular No. 649 dated 09 March 2009) Towards this end, NBFIs under BSP
supervision, including FXDs/MCs and
§ 4642N.7 Transitory provisions. An RAs, providing overseas remittance
EMI-NBFI and EMI-Other granted an services shall disclose to the remittance
authority to issue e-money prior to 26 March sender and to the recipient/beneficiary, the
2009 may continue to exercise such following minimum items of information
authority: Provided, That it shall submit to regarding remittance transactions, as
the BSP, within one (1) month from the 26 defined herein:
March 2009 a certification signed by the a. Transfer/remittance fee - charge for
President or Officer with equivalent rank processing/sending the remittance from the
and function that it is in compliance with country of origin to the country of
all the applicable requirements of this destination and/or charge for receiving the
Section. Otherwise, they are required to remittance at the country of destination;

Page 44
§§ 4660N - 4695N
09.12.31
b. Exchange rate - rate of conversion For this purpose, the term official
from foreign currency to local currency, e.g., authority shall refer to any of the following:
peso-dollar rate; (1) Government of the Republic of the
c. Exchange rate differential/spread - Philippines;
foreign exchange mark-up or the difference (2) Its political subdivisions and
between the prevailing BSP reference/ instrumentalities;
guiding rate and the exchange conversion (3) GOCCs; and
rate; (4) Private entities or institutions
d. Other currency conversion charges registered with or supervised or regulated
- commissions or service fees, if any; either by the BSP or SEC or IC.
e. Other related charges - e.g., Valid IDs include the following:
surcharges, postage, text message or telegram; (a) Passport;
f. Amount/currency paid out in the (b) Driver’s license;
recipient country - exact amount of money (c) PRC ID;
the recipient should receive in local currency (d) NBI clearance;
or foreign currency; and (e) Police clearance;
g. Delivery time to recipients/ (f) Postal ID;
beneficiaries - delivery period of remittance (g) Voter’s ID;
to beneficiary stated in number of days, (h) Barangay certification;
hours or minutes. (i) GSIS e-Card;
Non-bank remittance service providers (j) SSS card;
shall likewise post said information in their (k) Senior Citizen card;
respective websites and display them (l) OWWA ID;
prominently in conspicuous places within (m) OFW ID;
their premises and/or remittance/service (n) Seaman’s Book;
centers. (o) Alien Certification of Registration/
(Circular No. 534 dated 26 June 2006) Immigrant Certificate of Registration;
(p) Government office and GOCC ID
Secs. 4661N - 4694N (Reserved) (e.g., AFP, HDMF IDs);
(q) Certification from the NCWDP;
Sec. 4695N Valid Identification Cards for (r) DSWD certification;
Financial Transactions. The following (s) IBP ID; and
guidelines govern the acceptance of valid (t) Company IDs issued by private
ID cards for all types of financial entities or institutions registered with or
transactions by NBFIs, including financial supervised or regulated either by the BSP,
transactions involving OFWs, in order to SEC or IC; and
promote access of Filipinos to services (u) Passports issued by foreign
offered by formal FIs, particularly those governments
residing in the remote areas, as well as to b. Students who are beneficiaries of
encourage and facilitate remittances of remittances/fund transfers who are not yet
OFWs through the banking system: of voting age may be allowed to present
a. Clients who engage in a financial the original and submit a clear copy of
transaction with covered institutions for the one (1) valid photo-bearing school ID duly
first time shall be required to present the signed by the principal or head of the
original and submit a clear copy of at least school.
one (1) valid photo-bearing ID document c. NBFIs shall require their clients to
issued by an official authority. submit a clear copy of one (1) valid ID on a

Page 45
§§ 4695N - 4699N
09.12.31
one-time basis only, or at the commencement any right or obligation or giving rise to any
of a business relationship. They shall require contractual or legal relationship between the
their clients to submit an updated photo and parties thereto. It also includes any
other relevant information whenever the movement of funds by any means with a
need for it arises. covered institution.
The foregoing shall be in addition to the (Circular No. 564 dated 03 April 2007 as amended by
customer identification requirements under Circular Nos. 657 dated 16 June 2009 and 608 dated
Rule 9.1.c of the Revised IRRs of R.A. No. 20 May 2008)
9160, as amended (Appendix N-4).
For purposes of this Section, financial Secs. 4696N - 4698N (Reserved)
transactions may include remittances,
among others, as falling under the definition Sec. 4699N General Provision on
of financial transaction. Under the Anti- Sanctions. Any violation of the preceding
Money Laundering Act of 2001, as amended, provisions shall be subject to Section 36
a financial transaction is any act establishing of R.A. No. 7653.

Page 46
LIST OF REPORTS REQUIRED FROM NON-BANK FINANCIAL INSTITUTIONS
(Appendix to Sec. 4162N)
A-2 BSP-7-26-02-A 4162N Consolidated Statement of Condition (CSOC) Monthly 15th banking day after Email to SDC @
(M-008 end of the reference sdcnbfi@bsp.gov.ph
dated month
02.14.08)
BSP-7-26-03B Consolidated Statement of Income and Expenses (CSIE) -do- -do- -do-
Control Prooflist -do- -do- messengerial or postal

services
A-2 BSP-7-26-02 4162N Schedule of Loans/Receivables, Trading Account Monthly 15th business day from Original - Appropriate
Schedule 1 Securities (TAS) - Loans and Underwritten Debt end of reference month department of the SES
(IHs only) Securities Duplicate - SDC or
cc:mail/electronic
transmission
Separate report for Head

Office and each Branch;
and a Consolidated
Report for Head Office
and Branches
A-2 BSP-7-26-02 4162N Schedule of Loans/Receivables and Trading Account -do- -do- -do-
Schedule 1 Securities - Loans
Appendix N-1 - Page 1
A-2 BSP-7-26-02 4162N Schedule of Trading Account Securities - Investments, -do- -do- -do-
Schedule 2 Available for Sale Securities and Investment in Bonds
(FCs only) and Other Debt Instruments (IBODI)
N Regulations
A-2 BSP-7-26-02 4162N Interest Rate and Maturities Matching -do- -do- -do-
Schedule 3
APP. N-1
09.12.31
09.12.31
APP. N-1
N Regulations
A-2 BSP-7-26-02 4162N Remaining Maturities of Selected Accounts Monthly 15th business day from Original - Appropriate
Schedule 4 end of reference month department of the SES
Duplicate - SDC or
cc:mail/electronic
transmission
A-2 BSP-7-26-02 4162N Schedule of Bills Payables and Bonds -do- -do- -do-
Schedule 5
A-2 BSP-7-26-02 4162N Data on Firm's Businesses -do- -do- -do-

Schedule 6
(FCs only)
A-2 BSP-7-26-03 4162N Statement of Income and Expenses -do- -do- -do-
A-2 BSP-7-26-24 4162N Credit and Equity Exposures to Individuals/ Quarterly 15th business day from Electronic submission/
(Rev. Aug. Companies/Groups Aggregating P 1.0 Million and end of reference quarter diskette - SDC
2003 per above

CL dated Fax to SDC
08.06.03)
A-2 Unnumbered 4101N Report on required and available reserves on Peso- Weekly 3rd business day Original - Appropriate
(no prescribed form) denominated Common Trust Funds (CTFs), such other following reference department of the SES
(Entities with Trust/ managed peso funds and TOFA-Others week Duplicate - SDC or
Fund Management cc:mail/electronic
Only) transmission
A-2 Unnumbered 4144N.12 Report on Suspicious Transactions As 10th business day from Original and duplicate -
(Rev. May transaction date of transaction/ Anti-Money Laundering
2002 as occurs knowledge Council (AMLC)
amended
by Cir. No. Report on Covered Transactions As 10th business day from To be submitted to the
612 dated transaction date of transaction/ Anti-Money Laundering
06.03.08) occurs knowledge Council

A-2 Unnumbered 4144N.12 Certification of compliance with existing anti-money Annually 20th business day after To be submitted to the
laundering regulations end of reference year appropriate department
of the SES
A-2 Unnumbered 4144N.12 Financial Reporting Package for Trust Institutions Quarterly 20th banking day after SDC
end of reference quarter sdc-frpti@bsp.gov.ph
Schedules:
A-2 Unnumbered (Cir. No. Balance Sheet

609 dated
05.26.08 A1 to A2 Main Report
as amended
by M-2008- B to B2 Details of Investments in Debt and
022 dated Equity Securities
06.26.08)
C to C2 Details of Loans and Receivables
D to D2 Wealth/Assets/Fund Management -
UITF
E Fiduciary Accounts
E1 to E1b Other Fiduciary Services - UITF
Income Statement
Control Prooflist -do- -do- -do-
4101N.16 Waiver of the Confidentiality of Information under As

Sections 2 and 3 of R.A. No. 1405, as amended transaction
occurs
N Regulations
APP. N-1
09.12.31
09.12.31
APP. N-1
N Regulations
A-3 Unnumbered 4162N Report on Borrowings of BSP Personnel Quarterly 15 banking days after Original to SDC
(CL-2007- end of reference quarter
050 dated
10.04.07
and CL-
2007-059
dated
11.28.07)
SES II Form 15 4162N Biographical Data of Directors/Officers After 7th banking day from Electronic mail or diskette
(NP08-TB) (As - If submitted in diskette form - Notarized first page of election the date of the meeting form to SDC or if hard
amended each of the directors'/officers' bio-data saved in diskette or of the board of directors copy Original to
by M-2008- and control prooflist appointment in which the directors/ appropriate department of
024 dated - If sent by electronic mail - Notarized first page of and as officers are elected or the SES, Duplicate to SDC
07.31.08) Biographical Data or Notarized list of names of changes appointed
Directors/Officers whose Biographical Data were occur
submitted thru electronic mail to be faxed to SDC

(CL dated 01.09.01)
B Unnumbered 4162N Board Resolution on NBFIs signatories of reports As 3rd day from date of
submitted to Bangko Sentral authorized resolution
B General Information Sheet Annually 30th day from date of Drop Box - SEC Central
annual stockholders' Receiving Section
meeting Original - SEC
Duplicate - BSP
B Forms I and II M-031 Report on Electronic Money Transactions Quarterly 15 banking days after e-mail -
Schedules 1 to 3 dated Quarterly Statement of E-Money Balances and end of reference quarter sdcothers-emoney @
09.11.09 Activity - Volume and Amount of E-Money bsp.gov.ph
and Cir. Transacations hard copy - SDC
No. 649 Quarterly Statement of Liquidity Cover
dated Schedules
03.09.09 1 - E-Money Balances
2 - Bank Deposits
3 - Government Securities and Others
APP. N-2
08.12.31

(Appendix to Subsec. 4162N.1)
Category A-2 reports of head offices Category B reports shall be signed by

shall be signed by the president, executive officers or their alternates, who shall be
vice-presidents, vice-presidents or officers duly designated in a resolution approved
holding equivalent positions. Such reports by the board of directors in the format as
of other offices/units (such as branches) prescribed in Annex N-2-b.
shall be signed by their respective Copies of the board resolutions on the
managers/officers in-charge. Likewise, the report signatory designations shall be
signing authority in this category shall be submitted to the appropriate supervising
contained in a resolution approved by the and examining department of the BSP
board of directors in the format prescribed within three (3) days from the date of
in Annex N-2-a. resolution.

APP. N-2
08.12.31
Annex N-2-a
Whereas, it is required under Subsec. 4162N.1 that Category A-2 reports of head offices
be signed by the president, executive vice-presidents, vice-presidents or officers holding
equivalent positions, and that such reports of other offices be signed by the respective
managers/officers-in-charge;
a resolution duly approved by the institution’s Board of Directors;
Whereas, we, the members of the Board of Directors of (Name of Institution) , are
Whereas, this Board has full faith and confidence in the institution’s President (and/or
the Executive Vice-President, etc., as the case may be) and, therefore, assumes responsibility
for all the acts which may be performed by aforesaid officers under their delegated authority;
resolved that:
Name of Specimen Position Report
Officer Signature Title No.
are hereby authorized to sign the Category A-2 reports of _______________________________.

(Name of Institution)
Done in the City of ___________, Philippines, this _____ day of __________, 20__ .
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP. N-2
08.12.31
Annex N-2-b
FORMAT OF RESOLUTION FOR SIGNATORIES OF CATEGORY B REPORTS
Whereas, it is required under Subsec. 4162N.1 that Category B reports be signed by

officers or their alternates;
a resolution duly approved by the institution’s Board of Directors;
Whereas, we the members of the Board of Directors of (Name of Institution)_ are
conscious that, in designating the officials who would sign said Category B reports, we are
Whereas, this Board has full faith and confidence in the institution’s authorized signatories
resolved that:
Name of Authorized Specimen Position Report
Signatory/Alternate Signature Title No.
1. Authorized
(Alternate)
2. Authorized
(Alternate)
etc.
are hereby authorized to sign the Category B reports of _______________________________.

(Name of Institution)
Done in the City of __________, Philippines, this ____ day of ____________, 20__ .
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
DIRECTOR DIRECTOR
ATTESTED BY:
CORPORATE SECRETARY

APP. N-3
08.12.31

(Appendix to Section 4104N)
institutions, and their subsidiaries and identification of the person purporting to
affiliates supervised or regulated by the act on behalf of the client.
BSP (covered institutions) shall strictly b. In case of doubt as to whether their
comply with the provisions of Section 9 purported clients or customers are acting for
of R.A. No. 9160 and the following rules themselves or for another, reasonable
and regulations on anti-money laundering. measures should be taken to obtain the true
identity of the persons on whose behalf an
1. Customer identification. Covered account is opened or a transaction
institutions shall establish and record the conducted.
true identity of its clients based on official c. The provisions of existing laws to
documents. They shall maintain a system the contrary notwithstanding, anonymous
of verifying the true identity of their accounts, accounts under fictitious names,
clients and, in case of corporate clients, and all other similar accounts shall be
require a system of verifying their legal absolutely prohibited. In case where
existence and organizational structure, as numbered accounts is allowed (i.e., peso
well as the authority and identification and foreign currency non-checking
of all persons purporting to act on their numbered accounts), covered institutions
behalf. should ensure that the client is identified in
When establishing business relations or an official or other identifying documents.
conducting transactions (particularly The BSP may conduct annual testing
opening of deposit accounts, accepting solely limited to the determination of the
deposit substitutes, entering into trust and existence and the identity of the owners of
other fiduciary transactions, renting of safety such accounts.
deposit boxes, performing remittances and Covered institutions shall phase out
other large cash transactions) covered within a period of one (1) year from 2 April
institutions should take reasonable 2001 or upon their maturity, whichever is
measures to establish and record the true earlier, anonymous accounts or accounts
identity of their clients. Said client under fictitious names as well as numbered
identification may be based on official or accounts being kept or managed by them,
other reliable documents and records. which are not expressly allowed under
a. In cases of corporate and other legal existing law.
entities, the following measures should be d. The identity of existing clients or
taken, when necessary: beneficial owners of deposits and other
(1) Verification of the legal existence funds held or being managed by the covered
and structure of the client from the institutions should be renewed/updated at
appropriate agency or from the client least every other year.
itself or both, proof of incorporation, e. All records of all transactions of
including information concerning the covered institutions shall be maintained and
customer’s name, legal form, address, safely stored for five (5) years from the dates
directors, principal officers and of transactions. With respect to closed
provisions regulating the power behind accounts, the records on customer
the entity. identification, account files and business

APP. N-3
08.12.31
correspondence, shall be preserved and 4. Required reporting of certain

safely stored for at least five (5) years from transactions. If there is reasonable ground
the dates when they were closed. to believe that the funds are proceeds of an
Such records must be sufficient to unlawful activity as defined under R.A. No.
permit reconstruction of individual 9160 and/or its IRRs, the transactions
transactions so as to provide, if necessary, involving such funds or attempts to transact
evidence for prosecution of criminal the same, should be reported to the Anti-
behaviour. Money Laundering Council (AMLC) in
f. Special attention should be given accordance with Rules 5.2 and 5.3 of the
to all complex, unusual large transactions, AMLA IRRs.
and all unusual patterns of transactions, a. Report on suspicious transactions.1
which have no apparent or visible lawful Banks shall report covered transactions and
purpose. The background and purpose suspicious transactions, as defined in Rules
of such transactions should, as far as 5.2 and 5.3 of the AMLA IRRs, to the AMLC
possible, be examined, the findings using the forms prescribed by the AMLC.
established in writing, and be available Reportable transactions shall include the
to help supervisors, auditors and law following:
enforcement agencies. (1) Outward remittances without
g. Covered institutions should not, or visible lawful purpose;
should at least avoid, transacting business (2) Inward remittances without visible
with criminals. Reasonable measures should lawful purpose or without underlying trade
be adopted to prevent the use of their transactions;
facilities for laundering of proceeds of (3) Unusual purchases of foreign
crimes and other illegal activities. exchange without visible lawful purpose;
(4) Unusual sales of foreign exchange
2. Programs against money whose sources are not satisfactorily
laundering. Programs against money established;
laundering should be developed. These (5) Complex, unusual large
programs, should include, as a minimum: transactions, and all unusual patterns of
a. The development of internal transactions, which have no apparent or
policies, procedures and controls, including visible lawful purpose;
the designation of compliance officers at (6) Funds being managed or held as
management level, and adequate screening deposit substitutes if there is reasonable
procedures to ensure high standards when ground to believe that the same are proceeds
hiring employees; of criminal and other illegal activities; and
b. An ongoing employee training (7) Suspicious transaction indicators or
program; and “red flags” as a guide in the submission to
c. An audit function to test the system. the AMLC of reports of suspicious
transactions relating to potential or actual
3. Submission of plans of action financing of terrorism.
Covered institutions shall submit a plan (a) Wire transfers between accounts,
of action on how to comply with the without visible economic or business
requirements of App. N-3 nos. 1, 2 and purpose, especially if the wire transfers are
4 within thirty (30) business days from effected through countries which are
31 July 2000 or from opening of the identified or connected with terrorist
institution. activities.
1
Amended by AMLC Resolution No. 292 dated 11.20.03 (Annex N-3-b).

APP. N-3
08.12.31
(b) Sources and/or beneficiaries of (o) Incongruities between apparent

wire transfers are citizens of countries sources and amount of funds raised or
which are identified or connected with moved by the NGO.
terrorist activities. (p) Any other transaction that is similar,
(c) Repetitive deposits or withdrawals identical or analogous to any of the
that cannot be explained or do not make foregoing.
sense. (8) All other suspicious transactions/
(d) Value of the transaction is over and activities which can be reported without
above what the client is capable of earning. violating any law.
(e) Client is conducting a transaction The report on suspicious transactions
that is out of the ordinary for his known shall provide the following minimum
business interest. information:
(f) Deposits being made by (a) Name or names of the parties
individuals who have no known involved.
connection or relation with the account (b) A brief description of the
holder. transaction or transactions.
(g) An individual receiving (c) Date or date the transaction(s)
remittances, but has no family members occurred.
working in the country from which the (d) Amount(s) involved in every
remittance is made. transaction.
(i) Client is under investigation by b. Exemption from Bank Secrecy Law.
law enforcement agencies for possible When reporting covered transactions to the
involvement in terrorist activities. AMLC, covered institutions and their officers,
(j) Transactions of individuals, employees, representatives, agents,
companies or non-governmental advisors, consultants or associates shall not
organizations (NGOs) that are affiliated or be deemed to have violated R.A. No. 1405,
related to people suspected of being as amended; R.A. No. 6426, as amended;
connected to a terrorist group or a group R.A. No. 8791 and other similar laws, but
that advocates violent overthrow of a are prohibited from communicating, directly
government. or indirectly, in any manner or by any means,
(k) Transactions of individuals, to any person the fact that a covered
companies or NGOs that are suspected transaction report was made, the contents
as being used to pay or receive funds from thereof, or any other information in relation
revolutionary taxes. thereto. In case of violation thereof, the
(l) The NGO does not appear to have concerned officer, employee, representative,
expenses normally related to relief or agent, advisor, consultant or associate of the
humanitarian effort. covered institution, shall be criminally liable.
(m) The absence of contributions from However, no administrative, criminal or civil
donors located within the country of origin proceedings, shall lie against any person for
of the NGO. having made a covered transaction report
(n) A mismatch between the pattern in the regular performance of his duties and
and size of financial transactions on the one in good faith, whether or not such reporting
hand and the stated purpose and activity results in any criminal prosecution under
of the NGO on the other. R.A. No. 9160 or any other Philippine law.

APP. N-3
08.12.31
c. Prohibition from disclosure of the agent, advisor, consultant or associate of

covered transaction report. When the covered institution, or media shall be
reporting covered transactions to the held criminally liable.
AMLC, covered institutions and their
officers, employees, representatives, 5. Certification of compliance with
agents, advisors, consultants or associates anti-money laundering regulations
are prohibited from communicating, Covered institution shall submit annually
directly or indirectly, in any manner or by to the BSP thru the appropriate supervising
any means, to any person, entity, the and examining department a certification
media, the fact that a covered transaction (Annex N-3-a) signed by the President or
report was made, the contents thereof, or officer of equivalent rank and by their
any other information in relation thereto. Compliance Officer to the effect that they
Neither may such reporting be published have monitored compliance with existing
or aired in any manner or form by the mass anti-money laundering regulations.
media, electronic mail, or other similar The certification shall be submitted in
devices. In case of violation thereof, the accordance with Appendix N-1 and shall
concerned officer, employee, representative, be considered a Category A-2 report.

APP. N-3
08.12.31
Annex N-3-a
CERTIFICATION OF COMPLIANCE WITH

CERTIFICATION
hereby certify:
1. That we have monitored (Name of NBFI)’s compliance with R.A. No. 9160 (Anti-
Money Laundering Act of 2001) as well as with BSP Circular Nos. 251, 253, 259
and 302;
2. That the NBFI is complying with the required customer identification, documentation
of all new clients, and continued monitoring of customer’s activities;
3. That the NBFI is also complying with the requirement to record all transactions and
to maintain such records including the record of customer identification for at least
five (5) years;
4. That the NBFI does not maintain anonymous or fictitious accounts; and
5. That we conduct regular anti-money laundering training sessions for all NBFI officers
and selected staff members holding sensitive positions.
_______________________________________ ___________________________
(Name of President or officer of equivalent rank) (Name of Compliance Officer)
SUBSCRIBED AND SWORN to before me, _____ this ___ day of ___________, affiant/s
exhibiting to me their Community Tax Certificate No.(s) as follows:

Page No. _________;
Book No. _________;
Series of 20___

APP. N-3
08.12.31
Annex N-3-b
AMLC Resolution No. 292

SUSPICIOUS TRANSACTION REPORTS BY COVERED INSTITUTIONS
1. All covered institutions are required transactions do not distinguish clients and
to file Suspicious Transaction Reports (STRs) their respective transaction amounts, said
on transactions involving all kinds of covered institutions shall be required to file
monetary instruments or property. CTRs on its clients whose transactions
exceed P500,000.00 and are included in
2. Banks shall file covered transaction the bulk transactions.
reports (CTRs) on transactions involving all
kinds of monetary instruments or property, 5. With respect to insurance
i.e., in cash or non-cash, whether in companies, when the total amount of the
domestic or foreign currency. premiums for the entire year, regardless
of the mode of payment (monthly,
3. Covered institutions, other than quarterly, semi-annually or annually),
banks, shall file CTRs on transactions in cash exceeds P500,000.00, such amount shall
or foreign currency or other monetary be reported as a covered transaction, even
instruments (other than checks) or if the amounts of the amortizations are less
properties. Due to the nature of the than the threshold amount. The CTR shall
transactions in the stock exchange, only the be filed upon payment of the first premium
brokers-dealers shall be required to file amount, regardless of the mode of
CTRs and STRs. The PSE, PCD, SCCP and payment. Under this rule, the insurance
transfer agents are exempt from filing company shall file the CTR only once every
CTRs. They, are however, required to file year until the policy matures or rescinded,
STRs when the transactions that pass whichever comes first.
through them are deemed to be
suspicious. 6. The submission of CTRs is deferred
until the AMLC directs otherwise.
4. Where the covered institution Submission of STRs, however, are not
engages in bulk transactions with a bank, deferred and covered institutions are
i.e., deposits of premium payments in bulk mandated to submit such STRs when the
or settlements of trade, and the bulk circumstances so require.
N Regulations Manual of Regulations for Non-Banks Financial Institutions

APP. N-4
08.12.31

RULE 1 subsidiaries and affiliates supervised and/

TITLE or regulated by the Bangko Sentral ng
Pilipinas (BSP).
Rule 1.a. Title. - These Rules shall be (a) A subsidiary means an entity more
known and cited as the “Revised Rules and than fifty percent (50%) of the outstanding
Regulations Implementing R.A. No. 9160”, voting stock of which is owned by a bank,
(the Anti-Money Laundering Act of 2001 quasi-bank, trust entity or any other
[AMLA]), as amended by R.A. No. 9194. institution supervised or regulated by the
BSP.
Rule 1.b. Purpose. - These Rules are (b) An affiliate means an entity at least
promulgated to prescribe the procedures twenty percent (20%) but not exceeding
and guidelines for the implementation of fifty percent (50%) of the voting stock of
the AMLA, as amended by R.A. No. 9194. which is owned by a bank, quasi-bank, trust
entity, or any other institution supervised
RULE 2 and/or regulated by the BSP.
DECLARATION OF POLICY
Rule 3.a.2. Insurance companies,
Rule 2. Declaration of Policy. - It is hereby insurance agents, insurance brokers,
declared the policy of the State to protect professional reinsurers, reinsurance
the integrity and confidentiality of bank brokers, holding companies, holding
accounts and to ensure that the Philippines company systems and all other persons
shall not be used as a money-laundering and entities supervised and/or regulated by
site for the proceeds of any unlawful the Insurance Commission (IC).
activity. Consistent with its foreign policy, (a) An insurance company includes
the Philippines shall extend cooperation those entities authorized to transact
in transnational investigations and insurance business in the Philippines,
prosecutions of persons involved in money whether life or non-life, and whether
laundering activities wherever committed. domestic, domestically incorporated or
branch of a foreign entity. A contract of
RULE 3 insurance is an agreement whereby one
DEFINITIONS undertakes for a consideration to indemnify
another against loss, damage or liability
Rule 3. Definitions. – For purposes of this arising from an unknown or contingent
Act, the following terms are hereby defined event. Transacting insurance business
as follows: includes making or proposing to make, as
insurer, any insurance contract, or as
Rule 3.a. Covered Institution refers to: surety, any contract of suretyship as a
vocation and not as merely incidental to
Rule 3.a.1. Banks, offshore banking any other legitimate business or activity of
units, quasi-banks, trust entities, non-stock the surety, doing any kind of business
savings and loan associations, pawnshops, specifically recognized as constituting the
and all other institutions, including their doing of an insurance business within the

APP. N-4
08.12.31
meaning of Presidential Decree (P.D.) Rule 3.a.3. (i) Securities dealers,

No. 612, as amended, including a brokers, salesmen, associated persons of
reinsurance business and doing or brokers or dealers, investment houses,
proposing to do any business in investment agents and consultants, trading
substance equivalent to any of the advisors, and other entities managing
foregoing in a manner designed to securities or rendering similar services, (ii)
evade the provisions of P.D. No. 612, mutual funds or open-end investment
as amended. companies, close-end investment
(b) An insurance agent includes any companies, common trust funds, pre-need
person who solicits or obtains insurance companies or issuers and other similar
on behalf of any insurance company or entities; (iii) foreign exchange
transmits for a person other than himself corporations, money changers, money
an application for a policy or contract of payment, remittance, and transfer
insurance to or from such company or companies and other similar entities, and
offers or assumes to act in the negotiation (iv) other entities administering or
of such insurance. otherwise dealing in currency,
(c) An insurance broker includes any commodities or financial derivatives based
person who acts or aids in any manner in thereon, valuable objects, cash substitutes
soliciting, negotiating or procuring the and other similar monetary instruments or
making of any insurance contract or in property supervised and/or regulated by
placing risk or taking out insurance, on the Securities and Exchange Commission
behalf of an insured other than himself. (SEC).
(d) A professional reinsurer includes (a) A securities broker includes a
any person, partnership, association or person engaged in the business of buying
corporation that transacts solely and and selling securities for the account of
exclusively reinsurance business in the others.
Philippines, whether domestic, (b) A securities dealer includes any
domestically incorporated or a branch of person who buys and sells securities for
a foreign entity. A contract of reinsurance his/her account in the ordinary course of
is one by which an insurer procures a third business.
person to insure him against loss or liability (c) A securities salesman includes a
by reason of such original insurance. natural person, employed as such or as an
(e) A reinsurance broker includes agent, by a dealer, issuer or broker to buy
any person who, not being a duly and sell securities.
authorized agent, employee or officer (d) An associated person of a broker
of an insurer in which any reinsurance or dealer includes an employee thereof
is effected, acts or aids in any manner who directly exercises control or
in negotiating contracts of reinsurance supervisory authority, but does not include
or placing risks of effecting reinsurance, a salesman, or an agent or a person whose
for any insurance company authorized functions are solely clerical or ministerial.
to do business in the Philippines. (e) An investment house includes an
(f) A holding company includes any enterprise which engages or purports to
person who directly or indirectly controls engage, whether regularly or on an
any authorized insurer. A holding isolated basis, in the underwriting of
company system includes a holding securities of another person or enterprise,
company together with its controlled including securities of the Government
insurers and controlled persons. and its instrumentalities.

APP. N-4
08.12.31
(f) A mutual fund or an open-end publications or writings, as to the value of

investment company includes an any security and as to the advisability of
investment company which is offering for trading in any security; or
sale or has outstanding, any redeemable (2) who for compensation and as part
security of which it is the issuer. of a regular business, issues or
(g) A closed-end investment company promulgates, analyzes reports concerning
includes an investment company other the capital market, except:
than open-end investment company. (a) any bank or trust company;
(h) A common trust fund includes a (b) any journalist, reporter, columnist,
fund maintained by an entity authorized editor, lawyer, accountant, teacher;
to perform trust functions under a written (c) the publisher of any bonafide
and formally established plan, exclusively newspaper, news, business or financial
for the collective investment and publication of general and regular
reinvestment of certain money representing circulation, including their employees;
participation in the plan received by it in its (d) any contract market;
capacity as trustee, for the purpose of (e) such other person not within the
administration, holding or management of intent of this definition, provided that the
such funds and/or properties for the use, furnishing of such service by the foregoing
benefit or advantage of the trustor or of persons is solely incidental to the conduct
others known as beneficiaries. of their business or profession.
(i) A pre-need company or issuer (3) any person who undertakes the
includes any corporation supervised and/ management of portfolio securities of
or regulated by the SEC and is authorized investment companies, including the
or licensed to sell or offer for sale pre-need arrangement of purchases, sales or
plans. Pre-need plans are contracts which exchanges of securities.
provide for the performance of future (l) A moneychanger includes any
service(s) or payment of future monetary person in the business of buying or selling
consideration at the time of actual need, foreign currency notes.
payable either in cash or installment by the (m) A money payment, remittance
planholder at prices stated in the contract with and transfer company includes any person
or without interest or insurance coverage and offering to pay, remit or transfer or
includes life, pension, education, internment transmit money on behalf of any person
and other plans, which the Commission may, to another person.
from time to time, approve. (n) “Customer” refers to any person
(j) A foreign exchange corporation or entity that keeps an account, or
includes any enterprise which engages or otherwise transacts business, with a
purports to engage, whether regularly or covered institution and any person or
on an isolated basis, in the sale and entity on whose behalf an account is
purchase of foreign currency notes and such maintained or a transaction is conducted,
other foreign-currency denominated non- as well as the beneficiary of said
bank deposit transactions as may be transactions. A customer also includes the
authorized under its articles of incorporation. beneficiary of a trust, an investment fund,
(k) Investment Advisor/Agent/ a pension fund or a company or person
Consultant shall refer to any person: whose assets are managed by an asset
(1) who for an advisory fee is engaged manager, or a grantor of a trust. It includes
in the business of advising others, either any insurance policy holder, whether
directly or through circulars, reports, actual or prospective.

APP. N-4
08.12.31
(o) “Property” includes any thing or certificates, trust certificates, custodial

item of value, real or personal, tangible or receipts or deposit substitute instruments,
intangible, or any interest therein or any trading orders, transaction tickets and
benefit, privilege, claim or right with confirmations of sale or investments and
respect thereto. money market instruments;
(4) Contracts or policies of insurance,
Rule 3.b. Covered Transaction is a life or non-life, and contracts of suretyship;
transaction in cash or other equivalent and
monetary instrument involving a total (5) Other similar instruments where
amount in excess of PhP500,000.00 within title thereto passes to another by
one (1) banking day. endorsement, assignment or delivery.
Rule 3.b.1. Suspicious transactions are Rule 3.d. Offender refers to any person
transactions, regardless of amount, where who commits a money laundering
any of the following circumstances exist: offense.
(1) There is no underlying legal or trade
obligation, purpose or economic Rule 3.e. Person refers to any natural or
justification; juridical person.
(2) The client is not properly identified;
(3) The amount involved is not Rule 3.f. Proceeds refers to an amount
commensurate with the business or derived or realized from an unlawful
financial capacity of the client; activity. It includes:
(4) Taking into account all known (1) All material results, profits, effects
circumstances, it may be perceived that the and any amount realized from any
client’s transaction is structured in order to unlawful activity;
avoid being the subject of reporting (2) All monetary, financial or
requirements under the act; economic means, devices, documents,
(5) Any circumstance relating to the papers or things used in or having any
transaction which is observed to deviate relation to any unlawful activity; and
from the profile of the client and/or the (3) All moneys, expenditures,
client’s past transactions with the covered payments, disbursements, costs, outlays,
institution; charges, accounts, refunds and other
(6) The transaction is in any way related similar items for the financing, operations,
to an unlawful activity or any money and maintenance of any unlawful activity.
laundering activity or offense under this act
that is about to be, is being or has been Rule 3.g. Supervising Authority refers to
committed; or the BSP, the SEC and the IC. Where the
(7) Any transaction that is similar, BSP, SEC or IC supervision applies only
analogous or identical to any of the to the registration of the covered
foregoing. institution, the BSP, the SEC or the IC,
within the limits of the AMLA, shall have
Rule 3.c. Monetary Instrument refers to: the authority to require and ask assistance
(1) Coins or currency of legal tender from the government agency having
of the Philippines, or of any other country; regulatory power and/or licensing authority
(2) Drafts, checks and notes; over said covered institution for the
(3) Securities or negotiable instruments, implementation and enforcement of the
bonds, commercial papers, deposit AMLA and these Rules.

APP. N-4
08.12.31
Rule 3.h. Transaction refers to any act public officer in his official capacity has to
establishing any right or obligation or intervene under the law;
giving rise to any contractual or legal (15) Directly or indirectly requesting
relationship between the parties thereto. or receiving any gift, present or other
It also includes any movement of funds by pecuniary or material benefit, for himself
any means with a covered institution. or for another, from any person for whom
the public officer, in any manner or
Rule 3.i. Unlawful activity refers to any capacity, has secured or obtained, or will
act or omission or series or combination secure or obtain, any government permit
thereof involving or having relation, to the or license, in consideration for the help
following: given or to be given, without prejudice to
Section 13 of R.A. No. 3019;
(A) Kidnapping for ransom under Article (16) Causing any undue injury to any
267 of Act No. 3815, otherwise known as party, including the government, or giving
the Revised Penal Code, as amended; any private party any unwarranted benefits,
(1) Kidnapping for ransom. advantage or preference in the discharge
of his official, administrative or judicial
(B) Sections 4, 5, 6, 8, 9, 10, 12, 13, functions through manifest partiality,
14, 15 and 16 of R.A. No. 9165, otherwise evident bad faith or gross inexcusable
known as the Comprehensive Dangerous negligence;
Drugs Act of 2002; (17) Entering, on behalf of the
(2) Importation of prohibited drugs; government, into any contract or
(3) Sale of prohibited drugs; transaction manifestly and grossly
(4) Administration of prohibited drugs; disadvantageous to the same, whether or
(5) Delivery of prohibited drugs; not the public officer profited or will profit
(6) Distribution of prohibited drugs; thereby;
(7) Transportation of prohibited drugs; (18) Directly or indirectly having
(8) Maintenance of a den, dive or financial or pecuniary interest in any
resort for prohibited users; business contract or transaction in
(9) Manufacture of prohibited drugs; connection with which he intervenes or
(10)Possession of prohibited drugs; takes part in his official capacity, or in
(11)Use of prohibited drugs; which he is prohibited by the Constitution
(12)Cultivation of plants which are or by any law from having any interest;
sources of prohibited drugs; and (19) Directly or indirectly becoming
(13)Culture of plants which are sources interested, for personal gain, or having
of prohibited drugs. material interest in any transaction or act
requiring the approval of a board, panel or
(C) Section 3 paragraphs b, c, e, g, h group of which he is a member, and which
and i of R.A. No. 3019, as amended, exercise of discretion in such approval,
otherwise known as the Anti-Graft and even if he votes against the same or he
Corrupt Practices Act; does not participate in the action of the
(14)Directly or indirectly requesting or board, committee, panel or group.
receiving any gift, present, share,
percentage or benefit for himself or for any (D) Plunder under R.A. No. 7080, as
other person in connection with any amended;
contract or transaction between the (20) Plunder through misappropriation,
Government and any party, wherein the conversion, misuse or malversation of

APP. N-4
08.12.31
public funds or raids upon the public (F) Jueteng and Masiao punished as
treasury; illegal gambling under P.D. No. 1602;
(21) Plunder by receiving, directly or (29) Jueteng;
indirectly, any commission, gift, share, (30) Masiao.
percentage, kickbacks or any other form
of pecuniary benefit from any person and/ (G) Piracy on the high seas under the
or entity in connection with any Revised Penal Code, as amended and P.D.
government contract or project or by No. 532;
reason of the office or position of the public (31) Piracy on the high seas;
officer concerned; (32) Piracy in inland Philippine waters;
(22) Plunder by the illegal or (33) Aiding and abetting pirates and
fraudulent conveyance or disposition of brigands.
assets belonging to the National Government
or any of its subdivisions, agencies, (H) Qualified theft under Article 310
instrumentalities or government-owned of the Revised Penal Code, as amended;
or-controlled corporations or their (34) Qualified theft.
subsidiaries;
(23) Plunder by obtaining, receiving or (I) Swindling under Article 315 of the
accepting, directly or indirectly, any shares Revised Penal Code, as amended;
of stock, equity or any other form of interest (35) Estafa with unfaithfulness or abuse
or participation including the promise of of confidence by altering the substance,
future employment in any business quality or quantity of anything of value
enterprise or undertaking; which the offender shall deliver by virtue
(24) Plunder by establishing agricultural, of an obligation to do so, even though such
industrial or commercial monopolies or other obligation be based on an immoral or
combinations and/or implementation of illegal consideration;
decrees and orders intended to benefit (36) Estafa with unfaithfulness or abuse
particular persons or special interests; of confidence by misappropriating or
(25) Plunder by taking undue converting, to the prejudice of another,
advantage of official position, authority, money, goods or any other personal
relationship, connection or influence to property received by the offender in trust
unjustly enrich himself or themselves at or on commission, or for administration,
the expense and to the damage and or under any other obligation involving the
prejudice of the Filipino people and the duty to make delivery or to return the
Republic of the Philippines. same, even though such obligation be
totally or partially guaranteed by a bond;
(E) Robbery and extortion under or by denying having received such
Articles 294, 295, 296, 299, 300, 301 and money, goods, or other property;
302 of the Revised Penal Code, as amended; (37) Estafa with unfaithfulness or abuse
(26) Robbery with violence or of confidence by taking undue advantage
intimidation of persons; of the signature of the offended party in
(27) Robbery with physical injuries, blank, and by writing any document above
committed in an uninhabited place and by such signature in blank, to the prejudice
a band, or with use of firearms on a street, of the offended party or any third person;
road or alley; (38) Estafa by using a fictitious name,
(28) Robbery in an uninhabited house or or falsely pretending to possess power,
public building or edifice devoted to worship. influence, qualifications, property, credit,

APP. N-4
08.12.31
agency, business or imaginary (K) Violations under R.A. No. 8792,

transactions, or by means of other similar otherwise known as the Electronic
deceits; Commerce Act of 2000;
(39) Estafa by altering the quality, K.1. Hacking or cracking, which refers
fineness or weight of anything pertaining to:
to his art or business; (55) unauthorized access into or
(40) Estafa by pretending to have interference in a computer system/server or
bribed any government employee; information and communication system; or
(41) Estafa by postdating a check, or (56) any access in order to corrupt, alter,
issuing a check in payment of an steal, or destroy using a computer or other
obligation when the offender has no funds similar information and communication
in the bank, or his funds deposited therein devices, without the knowledge and consent
were not sufficient to cover the amount of the owner of the computer or information
of the check; and communications system, including
(42) Estafa by inducing another, by (57) the introduction of computer
means of deceit, to sign any document; viruses and the like, resulting in the
(43) Estafa by resorting to some corruption, destruction, alteration, theft or
fraudulent practice to ensure success in a loss of electronic data messages or
gambling game; electronic document;
(44) Estafa by removing, concealing
or destroying, in whole or in part, any K.2. Piracy, which refers to:
court record, office files, document or any (58) the unauthorized copying,
other papers. reproduction,
(59) the unauthorized dissemination,
(J) Smuggling under R.A. Nos. 455 distribution,
and 1937; (60) the unauthorized importation,
(45) Fraudulent importation of any (61) the unauthorized use, removal,
vehicle; alteration, substitution, modification,
(46) Fraudulent exportation of any (62) the unauthorized storage,
vehicle; uploading, downloading, communication,
(47) Assisting in any fraudulent making available to the public, or
importation; (63) the unauthorized broadcasting, of
(48) Assisting in any fraudulent protected material, electronic signature or
exportation; copyrighted works including legally
(49) Receiving smuggled article after protected sound recordings or phonograms
fraudulent importation; or information material on protected works,
(50) Concealing smuggled article through the use of telecommunication
after fraudulent importation; networks, such as, but not limited to, the
(51) Buying smuggled article after internet, in a manner that infringes
fraudulent importation; intellectual property rights;
(52) Selling smuggled article after
fraudulent importation; K.3. Violations of the Consumer Act or
(53) Transportation of smuggled R.A. No. 7394 and other relevant or
article after fraudulent importation; pertinent laws through transactions
(54) Fraudulent practices against covered by or using electronic data
customs revenue. messages or electronic documents:

APP. N-4
08.12.31
(64) Sale of any consumer product that and murder, as defined under the Revised
is not in conformity with standards under Penal Code, as amended, including those
the Consumer Act; perpetrated by terrorists against non-
(65) Sale of any product that has been combatant persons and similar targets;
banned by a rule under the Consumer Act; (85) Hijacking;
(66) Sale of any adulterated or (86) Destructive arson;
mislabeled product using electronic (87) Murder;
documents; (88) Hijacking, destructive arson or
(67) Adulteration or misbranding of murder perpetrated by terrorists against
any consumer product; non-combatant persons and similar targets;
(68) Forging, counterfeiting or
simulating any mark, stamp, tag, label or (M) Fraudulent practices and other
other identification device; violations under R.A. No. 8799, otherwise
(69) Revealing trade secrets; known as the Securities Regulation Code
(70) Alteration or removal of the of 2000;
labeling of any drug or device held for sale; (89) Sale, offer or distribution of
(71) Sale of any drug or device not securities within the Philippines without a
registered in accordance with the registration statement duly filed with and
provisions of the E-Commerce Act; approved by the SEC;
(72) Sale of any drug or device by any (90) Sale or offer to the public of any
person not licensed in accordance with the pre-need plan not in accordance with the
provisions of the E-Commerce Act; rules and regulations which the SEC shall
(73) Sale of any drug or device beyond prescribe;
its expiration date; (91) Violation of reportorial
(74) Introduction into commerce of any requirements imposed upon issuers of
mislabeled or banned hazardous substance; securities;
(75) Alteration or removal of the (92) Manipulation of security prices by
labeling of a hazardous substance; creating a false or misleading appearance
(76) Deceptive sales acts and practices; of active trading in any listed security
(77) Unfair or unconscionable sales traded in an Exchange or any other trading
acts and practices; market;
(78) Fraudulent practices relative to (93) Manipulation of security prices by
weights and measures; effecting, alone or with others, a series of
(79) False representations in transactions in securities that raises their
advertisements as the existence of a prices to induce the purchase of a security,
warranty or guarantee; whether of the same or different class, of
(80) Violation of price tag requirements; the same issuer or of a controlling,
(81) Mislabeling consumer products; controlled or commonly controlled
(82) False, deceptive or misleading company by others;
advertisements; (94) Manipulation of security prices by
(83) Violation of required disclosures effecting, alone or with others, a series of
on consumer loans; transactions in securities that depresses
(84) Other violations of the provisions their price to induce the sale of a security,
of the E-Commerce Act; whether of the same or different class, of
the same issuer or of a controlling,
(L) Hijacking and other violations controlled or commonly controlled
under R.A. No. 6235; destructive arson company by others;

APP. N-4
08.12.31
(95) Manipulation of security prices connection with the purchase and sale of
by effecting, alone or with others, a series any securities;
of transactions in securities that creates (102) Obtaining money or property in
active trading to induce such a purchase connection with the purchase and sale of
or sale though manipulative devices such any security by means of any untrue
as marking the close, painting the tape, statement of a material fact or any omission
squeezing the float, hype and dump, boiler to state a material fact necessary in order
room operations and such other similar to make the statements made, in the light
devices; of the circumstances under which they
(96) Manipulation of security prices were made, not misleading;
by circulating or disseminating information (103) Engaging in any act, transaction,
that the price of any security listed in an practice or course of action in the sale and
Exchange will or is likely to rise or fall purchase of any security which operates
because of manipulative market operations or would operate as a fraud or deceit upon
of any one or more persons conducted for any person;
the purpose of raising or depressing the price (104) Insider trading;
of the security for the purpose of inducing (105) Engaging in the business of buying
the purchase or sale of such security; and selling securities in the Philippines as a
(97) Manipulation of security prices broker or dealer, or acting as a salesman, or
by making false or misleading statements an associated person of any broker or dealer
with respect to any material fact, which without any registration from the
he knew or had reasonable ground to Commission;
believe was so false and misleading, for (106) Employment by a broker or
the purpose of inducing the purchase or dealer of any salesman or associated
sale of any security listed or traded in an person or by an issuer of any salesman,
Exchange; not registered with the SEC;
(98) Manipulation of security prices (107) Effecting any transaction in any
by effecting, alone or with others, any security, or reporting such transaction, in
series of transactions for the purchase and/ an Exchange or using the facility of an
or sale of any security traded in an Exchange which is not registered with the
Exchange for the purpose of pegging, SEC;
fixing or stabilizing the price of such (108) Making use of the facility of a
security, unless otherwise allowed by the clearing agency which is not registered
Securities Regulation Code or by the rules with the SEC;
of the SEC; (109) Violations of margin
(99) Sale or purchase of any security requirements;
using any manipulative deceptive device (110) Violations on the restrictions on
or contrivance; borrowings by members, brokers and
(100) Execution of short sales or stop- dealers;
loss order in connection with the purchase (111) Aiding and Abetting in any
or sale of any security not in accordance violations of the Securities Regulation
with such rules and regulations as the SEC Code;
may prescribe as necessary and (112) Hindering, obstructing or
appropriate in the public interest or the delaying the filing of any document
protection of the investors; required under the Securities Regulation
(101) Employment of any device, Code or the rules and regulations of the
scheme or artifice to defraud in SEC;

APP. N-4
08.12.31
(113) Violations of any of the provisions RULE 5

of the implementing rules and regulations JURISDICTION OF MONEY
of the SEC; LAUNDERING CASES AND MONEY
(114) Any other violations of any of the LAUNDERING INVESTIGATION
provisions of the Securities Regulation Code. PROCEDURES
(N) Felonies or offenses of a similar Rule 5.1. Jurisdiction of Money

nature to the afore-mentioned unlawful Laundering Cases. - The Regional Trial
activities that are punishable under the Courts shall have the jurisdiction to try all
penal laws of other countries. cases on money laundering. Those
In determining whether or not a felony committed by public officers and private
or offense punishable under the penal laws persons who are in conspiracy with such
of other countries, is “of a similar nature”, public officers shall be under the
as to constitute the same as an unlawful jurisdiction of the Sandiganbayan.
activity under the AMLA, the nomenclature
of said felony or offense need not be Rule 5.2. Investigation of Money
identical to any of the predicate crimes Laundering Offenses. - The AMLC shall
listed under Rule 3.i. investigate:
(a) Suspicious transactions;
RULE 4 (b) Covered transactions deemed
MONEY LAUNDERING OFFENSE suspicious after an investigation conducted
by the AMLC;
Rule 4.1. Money Laundering Offense. - (c) Money laundering activities; and
Money laundering is a crime whereby the (d) Other violations of this act.
proceeds of an unlawful activity as herein
defined are transacted, thereby making Rule 5.3. Attempts at Transactions. -
them appear to have originated from Section 4 (a) and (b) of the AMLA provides
legitimate sources. It is committed by the that any person who attempts to transact any
following: monetary instrument or property
(a) Any person knowing that any representing, involving or relating to the
monetary instrument or property proceeds of any unlawful activity shall be
represents, involves, or relates to, the prosecuted for a money laundering offense.
proceeds of any unlawful activity, transacts Accordingly, the reports required under Rule
or attempts to transact said monetary 9.3 (a) and (b) of these Rules shall include
instrument or property. those pertaining to any attempt by any
(b) Any person knowing that any person to transact any monetary instrument
monetary instrument or property involves or property representing, involving or
the proceeds of any unlawful activity, relating to the proceeds of any unlawful
performs or fails to perform any act as a activity.
result of which he facilitates the offense of
money laundering referred to in paragraph RULE 6
(a) above. PROSECUTION OF MONEY
(c) Any person knowing that any LAUNDERING
monetary instrument or property is
required under this Act to be disclosed and Rule 6.1. Prosecution of Money Laundering
filed with the Anti-Money Laundering (a) Any person may be charged with
Council (AMLC), fails to do so. and convicted of both the offense of money

APP. N-4
08.12.31
laundering and the unlawful activity as Rule 6.6. All the elements of every money
defined under Rule 3 (i) of the AMLA. laundering offense under Section 4 of the
(b) Any proceeding relating to the AMLA must be proved by evidence
unlawful activity shall be given precedence beyond reasonable doubt, including the
over the prosecution of any offense or element of knowledge that the monetary
violation under the AMLA without prejudice instrument or property represents, involves
to the application Ex-Parte by the AMLC or relates to the proceeds of any unlawful
to the Court of Appeals for a Freeze Order activity.
with respect to the monetary instrument
or property involved therein and resort to other Rule 6.7. No element of the unlawful
remedies provided under the AMLA, the rules activity, however, including the identity of
of court and other pertinent laws and rules. the perpetrators and the details of the actual
commission of the unlawful activity need
Rule 6.2. When the AMLC finds, after be established by proof beyond reasonable
investigation, that there is probable cause doubt. The elements of the offense of
to charge any person with a money money laundering are separate and distinct
laundering offense under Section 4 of the from the elements of the felony or offense
AMLA, it shall cause a complaint to be constituting the unlawful activity.
filed, pursuant to Section 7 (4) of the AMLA,
before the Department of Justice or the RULE 7
Ombudsman, which shall then conduct CREATION OF ANTI-MONEY
the preliminary investigation of the case. LAUNDERING COUNCIL (AMLC)
Rule 6.3. After due notice and hearing in Rule 7.1.a. Composition. - The Anti-Money
the preliminary investigation proceedings Laundering Council is hereby created and
before the Department of Justice, or the shall be composed of the Governor of the
Ombudsman, as the case may be, and the BSP as Chairman, the Commissioner of the
latter should find probable cause of a Insurance Commission and the Chairman
money laundering offense, it shall file the of the SEC as members.
necessary information before the Regional
Trial Courts or the Sandiganbayan. Rule 7.1.b. Unanimous Decision. - The
AMLC shall act unanimously in discharging
Rule 6.4. Trial for the money laundering its functions as defined in the AMLA and
offense shall proceed in accordance with in these Rules. However, in the case of
the Code of Criminal Procedure or the the incapacity, absence or disability of any
Rules of Procedure of the Sandiganbayan, member to discharge his functions, the
as the case may be. officer duly designated or authorized to
discharge the functions of the Governor of
Rule 6.5. Knowledge of the offender that the BSP, the Chairman of the SEC or the
any monetary instrument or property Insurance Commissioner, as the case may
represents, involves, or relates to the be, shall act in his stead in the AMLC.
proceeds of an unlawful activity or that any
monetary instrument or property is required Rule 7.2. Functions. - The functions of the
under the AMLA to be disclosed and filed AMLC are defined hereunder:
with the AMLC, may be established by direct (1) to require and receive covered or
evidence or inferred from the attendant suspicious transaction reports from covered
circumstances. institutions;

APP. N-4
08.12.31
(2) to issue orders addressed to the (8) to receive and take action in
appropriate Supervising Authority or the respect of any request from foreign states
covered institution to determine the true for assistance in their own anti-money
identity of the owner of any monetary laundering operations as provided in the
instrument or property subject of a covered AMLA. The AMLC is authorized under
or suspicious transaction report, or request Sections 7 (8) and 13 (b) and (d) of the AMLA
for assistance from a foreign State, or to receive and take action in respect of any
believed by the Council, on the basis of request of foreign states for assistance in their
substantial evidence, to be, in whole or in own anti-money laundering operations, in
part, wherever located, representing, respect of conventions, resolutions and other
involving, or related to, directly or directives of the United Nations (UN), the
indirectly, in any manner or by any means, UN Security Council, and other international
the proceeds of an unlawful activity; organizations of which the Philippines is a
(3) to institute civil forfeiture member. However, the AMLC may refuse
proceedings and all other remedial to comply with any such request, convention,
proceedings through the Office of the resolution or directive where the action
Solicitor General; sought therein contravenes the
(4) to cause the filing of complaints provisions of the Constitution, or the
with the Department of Justice or the execution thereof is likely to prejudice
Ombudsman for the prosecution of the national interest of the Philippines.
money laundering offenses; (9) to develop educational programs
(5) to investigate suspicious on the pernicious effects of money
transactions and covered transactions laundering, the methods and techniques
deemed suspicious after an investigation used in money laundering, the viable
by the AMLC, money laundering activities means of preventing money laundering
and other violations of this Act; and the effective ways of prosecuting and
(6) to apply before the Court of punishing offenders.
Appeals, Ex-Parte, for the freezing of any (10) to enlist the assistance of any branch,
monetary instrument or property alleged department, bureau, office, agency or
to be proceeds of any unlawful activity as instrumentality of the government,
defined under Section 3(i) hereof; including government-owned and-controlled
(7) to implement such measures as corporations, in undertaking any and all anti-
may be inherent, necessary, implied, money laundering operations, which may
incidental and justified under the AMLA include the use of its personnel, facilities and
to counteract money laundering. Subject resources for the more resolute prevention,
to such limitations as provided for by law, detection and investigation of money
the AMLC is authorized under Rule 7 (7) laundering offenses and prosecution of
of the AMLA to establish an information offenders. The AMLC may require the
sharing system that will enable the AMLC intelligence units of the Armed Forces of the
to store, track and analyze money Philippines, the Philippine National Police,
laundering transactions for the resolute the Department of Finance, the Department
prevention, detection and investigation of of Justice, as well as their attached agencies,
money laundering offenses. For this and other domestic or transnational
purpose, the AMLC shall install a governmental or non-governmental
computerized system that will be used in organizations or groups to divulge to the
the creation and maintenance of an AMLC all information that may, in any way,
information database; facilitate the resolute prevention,

APP. N-4
08.12.31
investigation and prosecution of money department, bureau, office, agency or

laundering offenses and other violations of instrumentality of the government, including
the AMLA. government-owned and controlled
(11) To impose administrative corporations, in undertaking any and all anti-
sanctions for the violation of laws, rules, money laundering operations. This includes
regulations and orders and resolutions the use of any member of their personnel
issued pursuant thereto. who may be detailed or seconded to the
AMLC, subject to existing laws and Civil
Rule 7.3. Meetings. - The AMLC shall Service Rules and Regulations. Detailed
meet every first Monday of the month, or personnel shall continue to receive their
as often as may be necessary at the call of salaries, benefits and emoluments from their
the Chairman. respective mother units. Seconded personnel
shall receive, in lieu of their respective
RULE 8 compensation packages from their respective
CREATION OF A SECRETARIAT mother units, the salaries, emoluments and
all other benefits to which their AMLC
Rule 8.1. The Executive Director. - The Secretariat positions are entitled to.
Secretariat shall be headed by an
Executive Director who shall be appointed Rule 8.4. Confidentiality Provisions. - The
by the AMLC for a term of five (5) years. members of the AMLC, the Executive
He must be a member of the Philippine Bar, Director, and all the members of the
at least thirty-five (35) years of age, must have Secretariat, whether permanent, on detail
served at least five (5) years either at the BSP, or on secondment, shall not reveal, in any
the SEC or the IC and of good moral manner, any information known to them
character, unquestionable integrity and by reason of their office. This prohibition
known probity. He shall be considered a shall apply even after their separation from
regular employee of the BSP with the rank the AMLA. In case of violation of this
of Assistant Governor, and shall be entitled provision, the person shall be punished in
to such benefits and subject to such rules and accordance with the pertinent provisions
regulations, as well as prohibitions, as are of the Central Bank Act.
applicable to officers of similar rank.
RULE 9
Rule 8.2. Composition. - In organizing the PREVENTION OF MONEY
Secretariat, the AMLC may choose from LAUNDERING; CUSTOMER
those who have served, continuously or IDENTIFICATION REQUIREMENTS
cumulatively, for at least five (5) years in AND RECORD KEEPING
the BSP, the SEC or the IC. All members
of the Secretariat shall be considered Rule 9.1. Customer Identification
regular employees of the BSP and shall Requirements
be entitled to such benefits and subject to
such rules and regulations as are applicable Rule 9.1.a. Customer Identification. -
to BSP employees of similar rank. Covered institutions shall establish and
record the true identity of its clients
Rule 8.3. Detail and Secondment. - The based on official documents. They shall
AMLC is authorized under Section 7 (10) maintain a system of verifying the true
of the AMLA to enlist the assistance of the identity of their clients and, in case of
BSP, the SEC or the IC, or any other branch, corporate clients, require a system of

APP. N-4
08.12.31
verifying their legal existence and (7) Contact numbers;

organizational structure, as well as the (8) Tax identification number, Social
authority and identification of all persons Security System number or Government
purporting to act on their behalf. Covered Service and Insurance System number;
institutions shall establish appropriate systems (9) Specimen signature;
and methods based on internationally (10) Source of fund(s); and
compliant standards and adequate internal (11) Names of beneficiaries in case of
controls for verifying and recording the true insurance contracts and whenever
and full identity of their customers. applicable.
Rule 9.1.b. Trustee, Nominee and Agent Rule 9.1.d. Minimum Information/
Accounts. - When dealing with customers Documents Required for Corporate and
who are acting as trustee, nominee, Juridical Entities. - Before establishing
agent or in any capacity for and on behalf business relationships, covered
of another, covered institutions shall institutions shall endeavor to ensure that
verify and record the true and full identity the customer is a corporate or juridical
of the person(s) on whose behalf a entity which has not been or is not in
transaction is being conducted. Covered the process of being, dissolved, wound
institutions shall also establish and record up or voided, or that its business or
the true and full identity of such trustees, operations has not been or is not in the
nominees, agents and other persons and the process of being, closed, shut down,
nature of their capacity and duties. In case a phased out, or terminated. Dealings
covered institution has doubts as to whether with shell companies and corporations,
such persons are being used as dummies in being legal entities which have no
circumvention of existing laws, it shall business substance in their own right but
immediately make the necessary inquiries through which financial transactions
to verify the status of the business relationship may be conducted, should be
between the parties. undertaken with extreme caution. The
following minimum information/
Rule 9.1.c. Minimum Information/ documents shall be obtained from
Documents Required for Individual customers that are corporate or juridical
Customers. - Covered institutions shall entities, including shell companies and
require customers to produce original corporations:
documents of identity issued by an official (1) Articles of Incorporation/
authority, bearing a photograph of the Partnership;
customer. Examples of such documents are (2) By-laws;
identity cards and passports. The following (3) Official address or principal
minimum information/documents shall be business address;
obtained from individual customers: (4) List of directors/partners;
(1) Name; (5) List of principal stockholders
(2) Present address; owning at least two percent (2%) of the
(3) Permanent address; capital stock;
(4) Date and place of birth; (6) Contact numbers;
(5) Nationality; (7) Beneficial owners, if any; and
(6) Nature of work and name of (8) Verification of the authority and
employer or nature of self-employment/ identification of the person purporting to
business; act on behalf of the client.

APP. N-4
08.12.31
Rule 9.1.e. Prohibition Against Certain transactions. Said records and files shall
Accounts. Covered institutions shall contain the full and true identity of the
maintain accounts only in the true and full owners or holders of the accounts involved
name of the account owner or holder. The in the covered transactions and all other
provisions of existing laws to the contrary customer identification documents.
notwithstanding, anonymous accounts, Covered institutions shall undertake the
accounts under fictitious names, and all necessary adequate security measures to
other similar accounts shall be absolutely ensure the confidentiality of such file.
prohibited. Covered institutions shall prepare and
maintain documentation, in accordance with
Rule 9.1.f. Prohibition Against Opening the aforementioned client identification
of Accounts Without Face-to-face requirements, on their customer accounts,
Contact. - No new accounts shall be relationships and transactions such that any
opened and created without face-to-face account, relationship or transaction can be
contact and full compliance with the so reconstructed as to enable the AMLC,
requirements under Rule 9.1.c of these Rules. and/or the courts to establish an audit trail
for money laundering.
Rule 9.1.g. Numbered Accounts. - Peso
and foreign currency non-checking Rule 9.2.b. Existing and New Accounts
numbered accounts shall be allowed: and New Transactions. - All records of
Provided, That the true identity of the existing and new accounts and of new
customers of all peso and foreign currency transactions shall be maintained and safely
non-checking numbered accounts are stored for five (5) years from 17 October
satisfactorily established based on official 2001 or from the dates of the accounts or
and other reliable documents and records, transactions, whichever is later.
and that the information and documents
required under the provisions of these Rule 9.2.c. Closed Accounts. - With respect
Rules are obtained and recorded by the to closed accounts, the records on customer
covered institution. No peso and foreign identification, account files and business
currency non-checking accounts shall be correspondence shall be preserved and
allowed without the establishment of such safely stored for at least five (5) years from
identity and in the manner herein provided. the dates when they were closed.
The BSP may conduct annual testing for the
purpose of determining the existence and Rule 9.2.d. Retention of Records in Case
true identity of the owners of such accounts. a Money Laundering Case has been Filed
The SEC and the IC may conduct similar in Court. – If a money laundering case
testing more often than once a year and based on any record kept by the covered
covering such other related purposes as may institution concerned has been filed in
be allowed under their respective charters. court, said file must be retained beyond the
period stipulated in the three (3) immediately
Rule 9.2. Record Keeping Requirements preceding sub-Rules, as the case may be,
until it is confirmed that the case has been
Rule 9.2.a. Record Keeping: Kinds of finally resolved or terminated by the court.
Records and Period for Retention. – All
records of all transactions of covered Rule 9.2.e. Form of Records. – Records
institutions shall be maintained and safely shall be retained as originals in such forms
stored for five (5) years from the dates of as are admissible in court pursuant to

APP. N-4
08.12.31
existing laws and the applicable rules either via diskettes, leased lines, or
promulgated by the Supreme Court. through internet facilities, with the
corresponding hard copy for suspicious
Rule 9.3. Reporting of Covered transactions. The final flow and
Transactions. - procedures for such reporting shall be
mapped out in the manual of
Rule 9.3.a. Period of Reporting Covered operations to be issued by the AMLC.
Transactions and SuspiciousTransactions.
- Covered institutions shall report to the Rule 9.3.c. Exemption from Bank
AMLC all covered transactions and Secrecy Laws. – When reporting
suspicious transactions within five (5) covered or suspicious transactions to the
working days from occurrence thereof, AMLC, covered institutions and their
unless the supervising authority concerned officers and employees, shall not be
prescribes a longer period not exceeding deemed to have violated R.A. No. 1405,
ten (10) working days. as amended, R.A. No. 6426, as
Should a transaction be determined amended, R.A. No. 8791 and other
to be both a covered and a suspicious similar laws, but are prohibited from
transaction, the covered institution shall communicating, directly or indirectly, in
report the same as a suspicious any manner or by any means, to any
transaction. person the fact that a covered or
The reporting of covered transactions suspicious transaction report was made,
by covered institutions shall be deferred the contents thereof, or any other
for a period of sixty (60) days after the information in relation thereto. In case
effectivity of R.A. No. 9194, or as may of violation thereof, the concerned
be determined by the AMLC, in order to officer and employee of the covered
allow the covered institutions to institution, shall be criminally liable.
configure their respective computer
systems; provided that, all covered Rule 9.3.d. Confidentiality Provisions. –
transactions during said deferment When reporting covered transactions or
period shall be submitted thereafter. suspicious transactions to the AMLC,
covered institutions and their officers,
Rule 9.3.b. Covered and Suspicious employees, representatives, agents,
Transaction Report Forms. - The Covered advisors, consultants or associates are
Transaction Report (CTR) and the prohibited from communicating, directly
Suspicious Transaction Report (STR) shall or indirectly, in any manner or by any
be in the forms prescribed by the AMLC. means, to any person, entity, or the
media, the fact that a covered transaction
Rule 9.3.b.1. Covered institutions shall report was made, the contents thereof,
use the existing forms for Covered or any other information in relation
Transaction Reports and Suspicious thereto. Neither may such reporting be
Transaction Reports, until such time as published or aired in any manner or form
the AMLC has issued new sets of forms. by the mass media, electronic mail, or
other similar devices. In case of violation
Rule 9.3.b.2. Covered Transaction hereof, the concerned officer, employee,
Reports and Suspicious Transaction representative, agent, advisor, consultant
Reports shall be submitted in a secured or associate of the covered institution,
manner to the AMLC in electronic form, or media shall be held criminally liable.

APP. N-4
08.12.31
Rule 9.3.e. Safe Harbor Provisions. – No (c) The freeze order shall be effective for
administrative, criminal or civil proceedings, twenty (20) days unless extended by the
shall lie against any person for having made Court of Appeals upon application by the
a covered transaction report or a suspicious AMLC.
transaction report in the regular performance
of his duties and in good faith, whether or Rule 10.2. Definition of Probable Cause
not such reporting results in any criminal - Probable cause includes such facts and
prosecution under this Act or any other circumstances which would lead a
Philippine law. reasonably discreet, prudent or cautious man
to believe that an unlawful activity and/or a
RULE 10 money laundering offense is about to be,
APPLICATION FOR FREEZE ORDERS is being or has been committed and that
the account or any monetary instrument
Rule 10.1. When the AMLC May Apply or property subject thereof sought to be
for the Freezing of Any Monetary frozen is in any way related to said unlawful
Instrument or Property. - activity and/or money laundering offense.
(a) After an investigation conducted by
the AMLC and upon determination that Rule 10.3. Duty of Covered Institution
probable cause exists that a monetary Upon Receipt Thereof. –
instrument or property is in any way related
to any unlawful activity as defined under Rule 10.3.a. Upon receipt of the notice of
Section 3 (i), the AMLC may file an Ex-Parte the freeze order, the covered institution
application before the Court of Appeals for concerned shall immediately freeze the
the issuance of a freeze order on any monetary instrument or property and
monetary instrument or property subject related web of accounts subject thereof.
thereof prior to the institution or in the course
of, the criminal proceedings involving the Rule 10.3.b. The covered institution shall
unlawful activity to which said monetary likewise immediately furnish a copy of the
instrument or property is any way related. notice of the freeze order upon the owner
(b) Considering the intricate and or holder of the monetary instrument or
diverse web of related and interlocking property or related web of accounts subject
accounts pertaining to the monetary thereof.
instrument(s) or property(ies) that any
person may create in the different covered Rule 10.3.c. Within twenty-four (24) hours
institutions, their branches and/or other from receipt of the freeze order, the covered
units, the AMLC may apply to the Court of institution concerned shall submit to the
Appeals for the freezing, not only of the Court of Appeals and the AMLC, by personal
monetary instruments or properties in the delivery, a detailed written return on the
names of the reported owner(s)/holder(s), freeze order, specifying all the pertinent and
and monetary instruments or properties relevant information which shall include the
named in the application of the AMLC but following:
also all other related web of accounts 1. The account number(s);
pertaining to other monetary instruments 2. The name(s) of the account owner(s)
and properties, the funds and sources of or holder(s);
which originated from or are related to the 3. The amount of the monetary
monetary instrument(s) or property(ies) instrument, property or related web of
subject of the freeze order(s). accounts as of the time they were frozen;

APP. N-4
08.12.31
4. All relevant information as to the Rule 10.6. Prohibition Against Issuance

nature of the monetary instrument or of Freeze Orders Against Candidates for
property; an Electoral Office During Election
5. Any information on the related web Period. - No assets shall be frozen to the
of accounts pertaining to the monetary prejudice of a candidate for an electoral
instrument or property subject of the freeze office during an election period.
order; and
6. The time when the freeze thereon RULE 11
took effect. AUTHORITY TO INQUIRE INTO
BANK DEPOSITS
Rule 10.4. Definition of Related Web of
Accounts. - Rule 11.1. Authority to Inquire into Bank
Related Web of Accounts pertaining to Deposits with Court Order. -
the money instrument or property subject of Notwithstanding the provisions of R.A. No.
the freeze order is defined as those accounts, 1405, as amended; R.A. No. 6426, as
the funds and sources of which originated amended; R.A. No. 8791, and other laws,
from and/or are materially linked to the the AMLC may inquire into or examine
monetary instrument(s) or property(ies) any particular deposit or investment with any
subject of the freeze order(s). banking institution or non-bank financial
Upon receipt of the freeze order issued institution and their subsidiaries and affiliates
by the court of appeals and upon upon order of any competent court in cases
verification by the covered institution that of violation of this Act, when it has been
the related web of accounts originated from established that there is probable cause that
and/or are materially linked to the the deposits or investments involved are
monetary instrument or property subject related to an unlawful activity as defined in
of the freeze order, the covered institution Section 3 (i) hereof or a money laundering
shall freeze these related web of accounts offense under Section 4 hereof; except in
wherever these funds may be found. cases as provided under Rule 11.2.
The return of the covered institution as
required under rule 10.3.c shall include the Rule 11.2. Authority to Inquire into Bank
fact of such freezing and an explanation as Deposits Without Court Order. - The
to the grounds for the identification of the AMLC may inquire into or examine
related web of accounts. deposit and investments with any banking
institution or non-bank financial institution
Rule 10.5. Extension of the Freeze Order. and their subsidiaries and affiliates without
- Before the twenty (20) day period of the a Court Order where any of the following
freeze order issued by the court of appeals unlawful activities are involved:
expires, the AMLC may apply in the same (a) Kidnapping for ransom under Article
court for an extension of said period. Upon 267 of Act No. 3815, otherwise known as
the timely filing of such application and the Revised Penal Code, as amended;
pending the decision of the Court of (b) Sections 4,5,6, 8, 9, 10, 12, 13, 14,
Appeals to extend the period, said period 15 and 16 of R.A. No. 9165, otherwise
shall be deemed suspended and the freeze known as the Comprehensive Dangerous
order shall remain effective. Drugs Act of 2002;
However, the covered institution shall (c) Hijacking and other violations
not lift the effects of the freeze order without under R.A. No. 6235; destructive arson and
securing official confirmation from the AMLC. murder, as defined under the Revised

APP. N-4
08.12.31
Penal Code, as amended, including those banks and non-bank financial institutions
perpetrated by terrorists against and their subsidiaries and affiliates with the
noncombatant persons and similar targets. AMLA and these rules.
Any findings of the BSP which may
Rule 11.2.a. Procedure For Examination constitute a violation of any provision of
Without A Court Order. - Where any of this act shall be transmitted to the AMLC
the unlawful activities enumerated under for appropriate action.
the immediately preceding Rule 11.2 are
involved, and there is probable cause that RULE 12
the deposits or investments with any FORFEITURE PROVISIONS
banking or non-banking financial
institution and their subsidiaries and Rule 12.1. Authority to Institute Civil
affiliates are in anyway related to these Forfeiture Proceedings. – The AMLC is
unlawful activities the AMLC shall issue a authorized under Section 7 (3) of the AMLA
resolution authorizing the inquiry into or to institute civil forfeiture proceedings and
examination of any deposit or investment all other remedial proceedings through the
with such banking or non-banking financial Office of the Solicitor General.
institution and their subsidiaries and
affiliates concerned. Rule 12.2. When Civil Forfeiture May be
Applied. – When there is a Suspicious
Rule 11.2.b. Duty of the banking Transaction Report or a Covered
institution or non- banking institution Transaction Report deemed suspicious after
upon receipt of the AMLC Resolution. - investigation by the AMLC, and the court
The banking institution or the non-banking has, in a petition filed for the purpose,
financial institution and their subsidiaries ordered the seizure of any monetary
and affiliates shall, immediately upon receipt instrument or property, in whole or in part,
of the AMLC Resolution, allow the AMLC directly or indirectly, related to said report,
and/or its authorized representative(s) full the Revised Rules of Court on civil
access to all records pertaining to the deposit forfeiture shall apply.
or investment account.
Rule 12.3. Claim on Forfeited Assets. -
Rule 11.3. - BSP Authority to Examine Where the court has issued an order of
deposits and investments; Additional forfeiture of the monetary instrument or
Exception to the Bank Secrecy Act. - To property in a criminal prosecution for any
ensure compliance with this act, the BSP money laundering offense under Section
may inquire into or examine any particular 4 of the AMLA, the offender or any other
deposit or investment with any banking person claiming an interest therein may
institution or non-bank financial institution apply, by verified petition, for a declaration
and their subsidiaries and affiliates when that the same legitimately belongs to him,
the examination is made in the course of a and for segregation or exclusion of the
periodic or special examination, in monetary instrument or property
accordance with the rules of examination corresponding thereto. The verified petition
of the BSP. shall be filed with the court which rendered
the judgment of conviction and order of
Rule 11.3.a. BSP Rules of Examination. - forfeiture within fifteen (15) days from the
The BSP shall promulgate its rules of date of the order of forfeiture, in default of
examination for ensuring compliance by which the said order shall become final and

APP. N-4
08.12.31
executory. This provision shall apply in delaying the execution thereof. The
both civil and criminal forfeiture. principles of mutuality and reciprocity
shall, for this purpose, be at all times
Rule 12.4. Payment in Lieu of Forfeiture. recognized.
- Where the court has issued an order of
forfeiture of the monetary instrument or Rule 13.2. Powers of the AMLC to Act on
property subject of a money laundering a Request for Assistance from a Foreign
offense under Section 4 of the AMLA, and State. - The AMLC may execute a request
said order cannot be enforced because any for assistance from a foreign state by: (1)
particular monetary instrument or property tracking down, freezing, restraining and
cannot, with due diligence, be located, or seizing assets alleged to be proceeds of
it has been substantially altered, destroyed, any unlawful activity under the procedures
diminished in value or otherwise rendered laid down in the AMLA and in these Rules;
worthless by any act or omission, directly (2) giving information needed by the
or indirectly, attributable to the offender, foreign state within the procedures laid
or it has been concealed, removed, down in the AMLA and in these Rules; and
converted or otherwise transferred to (3) applying for an order of forfeiture of any
prevent the same from being found or to monetary instrument or property in the
avoid forfeiture thereof, or it is located court: Provided, That the court shall not
outside the Philippines or has been placed issue such an order unless the application
or brought outside the jurisdiction of the is accompanied by an authenticated copy
court, or it has been commingled with of the order of a court in the requesting
other monetary instruments or property state ordering the forfeiture of said
belonging to either the offender himself or monetary instrument or property of a
a third person or entity, thereby rendering person who has been convicted of a
the same difficult to identify or be money laundering offense in the
segregated for purposes of forfeiture, the requesting state, and a certification or an
court may, instead of enforcing the order affidavit of a competent officer of the
of forfeiture of the monetary instrument or requesting state stating that the conviction
property or part thereof or interest therein, and the order of forfeiture are final and that
accordingly order the convicted offender no further appeal lies in respect of either.
to pay an amount equal to the value of said
monetary instrument or property. This Rule 13.3. Obtaining Assistance from
provision shall apply in both civil and Foreign States. - The AMLC may make a
criminal forfeiture. request to any foreign state for assistance
in (1) tracking down, freezing, restraining
RULE 13 and seizing assets alleged to be proceeds
MUTUAL ASSISTANCE AMONG STATES of any unlawful activity; (2) obtaining
information that it needs relating to any
Rule 13.1. Request for Assistance from a covered transaction, money laundering
Foreign State. - Where a foreign state offense or any other matter directly or
makes a request for assistance in the indirectly related thereto; (3) to the extent
investigation or prosecution of a money allowed by the law of the foreign state,
laundering offense, the AMLC may execute applying with the proper court therein for
the request or refuse to execute the same an order to enter any premises belonging
and inform the foreign state of any valid to or in the possession or control of, any or
reason for not executing the request or for all of the persons named in said request,

APP. N-4
08.12.31
and/or search any or all such persons believed to have any information, document,
named therein and/or remove any material or object which may be of
document, material or object named in said assistance to the investigation or
request: Provided, That the documents prosecution; (5) ask from the covered
accompanying the request in support of the institution concerned any information,
application have been duly authenticated document, material or object which may
in accordance with the applicable law or be of assistance to the investigation or
regulation of the foreign state; and (4) prosecution; (6) specify the manner in
applying for an order of forfeiture of any which and to whom said information,
monetary instrument or property in the document, material or object obtained
proper court in the foreign state: Provided, pursuant to said request, is to be produced;
That the request is accompanied by an (7) give all the particulars necessary for the
authenticated copy of the order of the issuance by the court in the requested state
Regional Trial Court ordering the forfeiture of the writs, orders or processes needed
of said monetary instrument or property by the requesting state; and (8) contain
of a convicted offender and an affidavit of such other information as may assist in the
the clerk of court stating that the conviction execution of the request.
and the order of forfeiture are final and that
no further appeal lies in respect of either. Rule 13.6. Authentication of Documents
- For purposes of Section 13 (f) of the AMLA
Rule 13.4. Limitations on Requests for and Section 7 of the AMLA, a document is
Mutual Assistance. - The AMLC may authenticated if the same is signed or
refuse to comply with any request for certified by a judge, magistrate or
assistance where the action sought by the equivalent officer in or of, the requesting
request contravenes any provision of the state, and authenticated by the oath or
Constitution or the execution of a request affirmation of a witness or sealed with an
is likely to prejudice the national interest official or public seal of a minister, secretary
of the Philippines, unless there is a treaty of state, or officer in or of, the government
between the Philippines and the requesting of the requesting state, or of the person
state relating to the provision of assistance in administering the government or a
relation to money laundering offenses. department of the requesting territory,
protectorate or colony. The certificate of
Rule 13.5. Requirements for Requests for authentication may also be made by a
Mutual Assistance from Foreign States. - secretary of the embassy or legation,
A request for mutual assistance from a consul general, consul, vice consul,
foreign state must (1) confirm that an consular agent or any officer in the foreign
investigation or prosecution is being service of the Philippines stationed in the
conducted in respect of a money foreign state in which the record is kept,
launderer named therein or that he has and authenticated by the seal of his office.
been convicted of any money laundering
offense; (2) state the grounds on which Rule 13.7. Suppletory Application of the
any person is being investigated or Revised Rules of Court. –
prosecuted for money laundering or the
details of his conviction; (3) give Rule 13.7.1. For attachment of Philippine
sufficient particulars as to the identity of properties in the name of persons
said person; (4) give particulars sufficient convicted of any unlawful activity as
to identify any covered institution defined in Section 3 (i) of the AMLA,

APP. N-4
08.12.31
execution and satisfaction of final included as an extraditable offense in any

judgments of forfeiture, application for extradition treaty existing between said
examination of witnesses, procuring search state parties, and the Philippines shall
warrants, production of bank documents include money laundering as an
and other materials and all other actions extraditable offense in every extradition
not specified in the AMLA and these Rules, treaty that may be concluded between
and assistance for any of the the Philippines and any of said state
aforementioned actions, which is subject parties in the future.
of a request by a foreign state, resort may
be had to the proceedings pertinent thereto RULE 14
under the Revised Rules of Court. PENAL PROVISIONS
Rule 13.7.2. Authority to Assist the United Rule 14.1. Penalties for the Crime of
Nations and other International Money Laundering.
Organizations and Foreign States. – The
AMLC is authorized under Section 7 (8) Rule 14.1.a. Penalties under Section 4 (a)
and 13 (b) and (d) of the AMLA to receive of the AMLA. - The penalty of
and take action in respect of any request imprisonment ranging from seven (7) to
of foreign states for assistance in their own fourteen (14) years and a fine of not less
anti-money laundering operations. It is also than Php3.0 Million but not more than
authorized under Section 7 (7) of the AMLA twice the value of the monetary instrument
to cooperate with the National or property involved in the offense, shall
Government and/or take appropriate be imposed upon a person convicted
action in respect of conventions, under Section 4 (a) of the AMLA.
resolutions and other directives of the
United Nations (UN), the UN Security Rule 14.1.b. Penalties under Section 4 (b)
Council, and other international of the AMLA. - The penalty of
organizations of which the Philippines is a imprisonment from four (4) to seven (7)
member. However, the AMLC may refuse years and a fine of not less than Php1.5
to comply with any such request, Million but not more than Php3.0 Million,
convention, resolution or directive where shall be imposed upon a person convicted
the action sought therein contravenes the under Section 4 (b) of the AMLA.
provision of the Constitution or the
execution thereof is likely to prejudice the Rule 14.1.c. Penalties under Section 4 (c) of
national interest of the Philippines. the AMLA. - The penalty of imprisonment
from six (6) months to four (4) years or a fine
Rule 13.8. Extradition. – The Philippines of not less than Php100,000.00 but not more
shall negotiate for the inclusion of money than Php500,000.00, or both, shall be
laundering offenses as defined under imposed on a person convicted under
Section 4 of the AMLA among the Section 4(c) of the AMLA.
extraditable offenses in all future treaties.
With respect, however, to the state parties Rule 14.1.d. Administrative Sanctions. - (1)
that are signatories to the United Nations After due notice and hearing, the AMLC shall,
Convention Against Transnational at its discretion, impose fines upon any
Organized Crime that was ratified by the covered institution, its officers and employees,
Philippine Senate on 22 October 2001, or any person who violates any of the
money laundering is deemed to be provisions of R.A. No. 9160, as amended by

APP. N-4
08.12.31
R.A. No. 9194 and rules, regulations, orders deported without further proceedings after
and resolutions issued pursuant thereto. The serving the penalties herein prescribed. If the
fines shall be in amounts as may be offender is a public official or employee, he
determined by the council, taking into shall, in addition to the penalties prescribed
consideration all the attendant circumstances, herein, suffer perpetual or temporary
such as the nature and gravity of the violation absolute disqualification from office, as the
or irregularity, but in no case shall such fines case may be.
be less than Php100,000.00 but not to
exceed Php500,000.00. The imposition of Rule 14.5. Refusal by a Public Official or
the administrative sanctions shall be without Employee to Testify. - Any public official
prejudice to the filing of criminal charges or employee who is called upon to testify
against the persons responsible for the and refuses to do the same or purposely
violations. fails to testify shall suffer the same penalties
prescribed herein.
Rule 14.2. Penalties for Failure to Keep
Records - The penalty of imprisonment Rule 14.6. Penalties for Breach of
from six (6) months to one (1) year or a Confidentiality. – The punishment of
fine of not less than Php100,000.00 but not imprisonment ranging from three (3) to
more than Php500,000.00, or both, shall eight (8) years and a fine of not less than
be imposed on a person convicted under Php500,000.00 but not more than Php1.0
Section 9 (b) of the AMLA. Million, shall be imposed on a person
convicted for a violation under Section 9(c).
Rule 14.3. Penalties for Malicious In case of a breach of confidentiality that is
Reporting. - Any person who, with malice, published or reported by media, the
or in bad faith, reports or files a completely responsible reporter, writer, president,
unwarranted or false information relative publisher, manager and editor-in-chief shall
to money laundering transaction against be liable under this act.
any person shall be subject to a penalty of
six (6) months to four (4) years RULE 15
imprisonment and a fine of not less than PROHIBITIONS AGAINST POLITICAL
Php100,000.00 but not more than HARASSMENT
court: Provided, That the offender is not Rule 15.1. Prohibition against Political
entitled to avail the benefits of the Persecution. - The AMLA and these Rules
Probation Law. shall not be used for political persecution or
harassment or as an instrument to hamper
Rule 14.4. Where Offender is a Juridical competition in trade and commerce. No case
Person. - If the offender is a corporation, for money laundering may be filed to the
association, partnership or any juridical prejudice of a candidate for an electoral office
person, the penalty shall be imposed upon during an election period.
be, who participated in, or allowed by their Rule 15.2. Provisional Remedies
gross negligence the commission of the Application; Exception. –
crime. If the offender is a juridical person,
the court may suspend or revoke its license. Rule 15.2.a. - The AMLC may apply, in
If the offender is an alien, he shall, in addition the course of the criminal proceedings,
to the penalties herein prescribed, be for provisional remedies to prevent the

APP. N-4
08.12.31
monetary instrument or property subject own respective charters and regulatory

thereof from being removed, concealed, authority, issue their Guidelines and
converted, commingled with other property Circulars on anti-money laundering to
or otherwise to prevent its being found or effectively implement the provisions of R.A.
taken by the applicant or otherwise placed No. 9160, as amended by R.A. No. 9194.
or taken beyond the jurisdiction of the court.
However, no assets shall be attached to the Rule 17.2. Money Laundering Prevention
prejudice of a candidate for an electoral office Programs. –
during an election period.
Rule 17.2.a. Covered institutions shall
Rule 15.2.b. - Where there is conviction formulate their respective money
for money laundering under Section 4 of laundering prevention programs in
the AMLA, the court shall issue a judgment accordance with Section 9 and other
of forfeiture in favor of the Government of pertinent provisions of the AMLA and
the Philippines with respect to the monetary these Rules, including, but not limited to,
instrument or property found to be proceeds information dissemination on money
of one or more unlawful activities. laundering activities and their prevention,
However, no assets shall be forfeited to the detection and reporting, and the training
prejudice of a candidate for an electoral of responsible officers and personnel of
office during an election period. covered institutions, subject to such
guidelines as may be prescribed by their
RULE 16 respective supervising authority. Every
RESTITUTION covered institution shall submit its own
money laundering program to the
Rule 16. Restitution. - Restitution for any supervising authority concerned within the
aggrieved party shall be governed by the non-extendible period that the supervising
provisions of the New Civil Code. authority has imposed in the exercise of
its regulatory powers under its own charter.
RULE 17
IMPLEMENTING RULES AND Rule 17.2.b. Every money laundering
REGULATIONS AND MONEY program shall establish detailed procedures
LAUNDERING PREVENTION implementing a comprehensive, institution-
PROGRAMS wide “know-your-client” policy, set-up an
effective dissemination of information on
Rule 17.1. Implementing Rules and money laundering activities and their
Regulations. – prevention, detection and reporting, adopt
(a) Within thirty (30) days from the internal policies, procedures and controls,
effectivity of R.A. No. 9160, as amended designate compliance officers at
by R.A. No. 9194, the BSP, the Insurance management level, institute adequate
Commission and the Securities and screening and recruitment procedures, and
Exchange Commission shall promulgate set-up an audit function to test the system.
the Implementing Rules and Regulations
of the AMLA, which shall be submitted to Rule 17.2.c. Covered institutions shall adopt,
the Congressional Oversight Committee as part of their money laundering programs,
for approval. a system of flagging and monitoring
(b) The Supervising Authorities, the transactions that qualify as suspicious
BSP, the SEC and the IC shall, under their transactions, regardless of amount or covered

APP. N-4
08.12.31
transactions involving amounts below the from the House of Representatives shall be
threshold to facilitate the process of appointed by the Speaker also based on
aggregating them for purposes of future proportional representation of the parties or
reporting of such transactions to the AMLC coalitions therein with at least two (2)
when their aggregated amounts breach the members representing the minority.
threshold. All covered institutions, including
banks insofar as non-deposit and non- Rule 18.2. Powers of the Congressional
government bond investment transactions Oversight Committee. - The Oversight
are concerned, shall incorporate in their Committee shall have the power to
money laundering programs the provisions promulgate its own rules, to oversee the
of these Rules and such other guidelines for implementation of this Act, and to review
reporting to the AMLC of all transactions that or revise the implementing rules issued by
engender the reasonable belief that a money the Anti-Money Laundering Council within
laundering offense is about to be, is being, thirty (30) days from the promulgation of
or has been committed. the said rules.
Rule 17.3. Training of Personnel. - RULE 19

Covered institutions shall provide all their APPROPRIATIONS FOR AND
responsible officers and personnel with BUDGET OF THE AMLC
efficient and effective training and continuing
education programs to enable them to fully Rule 19.1. Budget. – The budget of Php25.0
comply with all their obligations under the million appropriated by Congress under
AMLA and these Rules. the AMLA shall be used to defray the initial
operational expenses of the AMLC.
Rule 17.4. Amendments. - These Rules or Appropriations for succeeding years shall
any portion thereof may be amended by be included in the General Appropriations
unanimous vote of the members of the Act. The BSP shall advance the funds
AMLC and submitted to the Congressional necessary to defray the capital outlay,
Oversight Committee as provided for maintenance and other operating expenses
under Section 19 of R.A. No. 9160, as and personnel services of the AMLC
amended by R.A. No. 9194. subject to reimbursement from the budget
of the AMLC as appropriated under the
RULE 18 AMLA and subsequent appropriations.
CONGRESSIONAL OVERSIGHT
COMMITTEE Rule 19.2. Costs and Expenses. - The budget
shall answer for indemnification for legal
Rule 18.1. Composition of Congressional costs and expenses reasonably incurred for
Oversight Committee. - There is hereby the services of external counsel in connection
created a Congressional Oversight with any civil, criminal or administrative
Committee composed of seven (7) members action, suit or proceedings to which
from the Senate and seven (7) members from members of the AMLC and the Executive
the House of Representatives. The members Director and other members of the Secretariat
from the Senate shall be appointed by the may be made a party by reason of the
Senate President based on the proportional performance of their functions or duties. The
representation of the parties or coalitions costs and expenses incurred in defending the
therein with at least two (2) Senators aforementioned action, suit or proceeding
representing the minority. The members may be paid by the AMLC in advance of the

APP. N-4
08.12.31
final disposition of such action, suit or are hereby repealed, amended or modified
proceeding upon receipt of an undertaking accordingly.
by or on behalf of the member to repay
the amount advanced should it be RULE 22
ultimately determined that said member EFFECTIVITY OF THE RULES
is not entitled to such indemnification.
Rule 22. Effectivity. – These Rules shall
RULE 20 take effect after its approval by the
SEPARABILITY CLAUSE Congressional Oversight Committee and
fifteen (15) days after its complete
Rule 20. Separability Clause. – If any publication in the Official Gazette or in a
provision of these Rules or the application newspaper of general circulation.
thereof to any person or circumstance is
held to be invalid, the other provisions of RULE 23
these Rules, and the application of such TRANSITORY PROVISIONS
provision or Rule to other persons or
circumstances, shall not be affected thereby. Rule 23.1. - Transitory Provisions. -
Existing freeze orders issued by the AMLC
RULE 21 shall remain in force for a period of thirty
REPEALING CLAUSE (30) days after effectivity of this act, unless
extended by the Court of Appeals.
Rule 21. Repealing Clause. – All laws,
decrees, executive orders, rules and Rule 23.2. - Effect of R.A. No. 9194 on Cases
regulations or parts thereof, including the for Extension of Freeze Orders Resolved
relevant provisions of R.A. No. 1405, as by the Court of Appeals. - All existing freeze
amended; R.A. No. 6426, as amended; R.A. orders which the Court of Appeals has
No. 8791, as amended, and other similar extended shall remain effective, unless
laws, as are inconsistent with the AMLA, otherwise dissolved by the same court.

APP. N-5
09.12.31

(Appendix to Secs. 4180N and 4190N)

a. RBs;
follows:

APP. N-5
09.12.31
and accounting principles and standards, for a. Mathematical or clerical mistakes
the purpose of expressing an opinion on in the underlying records and accounting
such statements. data;
2. Non-audit services – any b. Oversight or misinterpretation of
professional services provided to the facts; or
covered institution by an external auditor, c. Unintentional misapplication of
other than those provided to a covered accounting policies.
institution in connection with an audit or a 6. Gross negligence - wanton or
review of the financial statements of said reckless disregard of the duty of due care in
covered institution. complying with generally accepted auditing
3. Professional Standards - includes: standards.
(a) accounting principles that are 7. Material fact/information - any fact/
(1) established by the standard setting body; information that could result in a change in
and (2) relevant to audit reports for particular the market price or value of any of the
issuers, or dealt with in the quality control issuer’s securities, or would potentially affect
system of a particular registered public the investment decision of an investor.
accounting firm; and (b) auditing standards, 8. Subsidiary - a corporation or firm
standards for attestation engagements, more than fifty percent (50%) of the
quality control policies and procedures, outstanding voting stock of which is directly
ethical and competency standards, and or indirectly owned, controlled or held with
independence standards that the BSP or SEC power to vote by a bank, QB, trust entity or
determines (1) relate to the preparation or NSSLA.
issuance of audit reports for issuers; and 9. Affiliate - a corporation, not more
(2) are established or adopted by the BSP or than fifty percent (50%) but not less than
promulgated as SEC rules. ten percent (10%) of the outstanding voting
4. Fraud – an intentional act by one (1) stock of which is directly or indirectly
or more individuals among management, owned, controlled or held with power to vote
employees, or third parties that results in a by a bank, QB, trust entity or NSSLA and a
misrepresentation of financial statements, juridical person that is under common control
which will reduce the consolidated total with the bank, QB, trust entity or NSSLA.

APP. N-5
09.12.31


APP. N-5
09.12.31
engagement; and

APP. N-5
09.12.31


APP. N-5
09.12.31


APP. N-5
09.12.31
following;

APP. N-5
09.12.31

APP. N-5
09.12.31

and Appendix; or

APP. N-5
09.12.31


APP. N-5
09.12.31


APP. N-6
08.12.31
QUALIFICATION REQUIREMENTS
FOR A BANK/NON-BANK FINANCIAL INSTITUTION APPLYING FOR
ACCREDITATION TO ACT AS TRUSTEE ON ANY MORTGAGE OR BOND
ISSUED BY ANY MUNICIPALITY, GOVERNMENT-OWNED OR
CONTROLLED CORPORATION, OR ANY BODY POLITIC
A bank/NBFI applying for accreditation include among its powers or purposes,

to act as trustee on any mortgage or bond acting as trustee or administering any trust
issued by any municipality, government- or holding property in trust or on deposit
owned or controlled corporation, or any for the use, or in behalf of others;
body politic must comply with the f. The by-laws of the institution shall
following requirements: include among others, provisions on the
a. It must be a bank or NBFI under following:
BSP supervision; (1) The organization plan or structure
b. It must have a license to engage in of the department, office or unit which shall
trust and other fiduciary business; conduct the trust and other fiduciary
c. It must have complied with the business of the institution;
minimum capital accounts required (2) The creation of a trust committee,
under existing regulations, as follows: the appointment of a trust officer and
subordinate officers of the trust department;
UBs and KBs The amount required and
under existing regulations (3) A clear definition of the duties and
or such amount as may be responsibilities as well as the line and staff
required by the Monetary functional relationships of the various units,
Board in the future officers and staff within the organization.
g. The bank’s operation during the
Branches of The amount required under preceding calendar year and for the period
Foreign Banks existing regulations immediately preceding the date of
application has been profitable;
Thrift Banks P650.0 million or such h. It has not incurred net weekly
amounts as may be reserve deficiencies during the eight (8)
required by the Monetary weeks period immediately preceding the
Board in the future date of application;
i. It has generally complied with
NBFIs Adjusted capital of at least banking laws, rules and regulations, orders
P300.0 million or such or instructions of the Monetary Board and/
amount as may be required or BSP Management in the last two
by the Monetary Board in preceding examinations prior to the date
the future. of application, particularly on the following:
(1) election of at least two (2)
d. Its risk-based capital adequacy ratio independent directors;
is not lower than twelve percent (12%) at (2) attendance by every member of the
the time of filing the application; board of directors in a special seminar for
e. The articles of incorporation or board of directors conducted or accredited
governing charter of the institution shall by the BSP;

APP. N-6
08.12.31
(3) the ceilings on credit l. It has established a risk management

accommodations to DOSRI; system appropriate to its operations
(4) liquidity floor requirements for characterized by clear delineation of
government deposits; responsibility for risk management, adequate
(5) single borrower’s loan limit; and risk measurement systems, appropriately
(6) investment in bank premises and structured risk limits, effective internal
other fixed assets. controls and complete, timely and efficient
j. It maintains adequate provisions risk reporting system;
for probable losses commensurate to the m. It has a CAMELS Composite Rating of
quality of its assets portfolio but not lower at least "3" in the last regular examination with
than the required valuation reserves as management rating of not lower than "3"; and
determined by the BSP; n. It is a member of the PDIC in good
k. It does not have float items standing (for banks only).
outstanding for more than sixty (60) Compliance with the foregoing as well as
calendar days in the “Due From/To Head with other requirements under existing regulations
Office/Branches/Other Offices” accounts shall be maintained up to the time the trust license
and the “Due from Bangko Sentral” is granted. A bank that fails in this respect shall
account exceeding one percent (1%) of the be required to show compliance for another test
total resources as of date of application; period of the same duration.

APP. N-7
08.12.31
FORMAT CERTIFICATION
______________________________
Name of Bank
CERTIFICATION
Pursuant to the requirements of Subsec 4211N.12, I hereby certify that on all banking
days of the semester ended _____ that the ____________________ (NBFI) did not enter into
any repurchase agreement covering government securities, commercial papers and other
negotiable and non-negotiable securities or instruments that are not documented in
accordance with existing BSP regulations and that it has strictly complied with the pertinent
rules of the SEC and the BSP on the proper sale of securities to the public and performed the
necessary representations and disclosures on the securities particularly the following:
1. Informed and explained to the client all the basic features of the security being sold on
a without recourse basis, such as, but not limited to:
a. Issuer and its financial condition;

b. Term and maturity date;
c. Applicable interest rate and its computation;
d. Tax features (whether taxable, tax paid or tax-exempt);
e. Risk factors and investment considerations;
f. Liquidity feature of the instrument:
f.1. Procedures for selling the security in the secondary market (e.g., OTC or
exchange);
f.2. Authorized selling agents; and
f.3. Minimum selling lots.
g. Disposition of the security
g.1. Registry (address and contact numbers)

g.2. Functions of the registry
g.3. Pertinent registry rules and procedures
h. Collecting and Paying Agent of the principal and interest

i. Other pertinent terms and conditions of the security and if possible, a copy of the
prospectus or information sheet of the security.
2. Informed the client that pursuant to BSP Circular No. 392 dated 23 July 2003 –
• Securities sold under repurchase agreements shall be physically delivered, if
certificated, to a BSP-accredited custodian that is mutually acceptable to the client and the
NBFI, or by means of book-entry transfer to the appropriate securities account of the BSP-
accredited custodian in a registry for said securities, if immobilized or dematerialized, and

APP. N-7
08.12.31
• Securities sold on a without recourse basis are required to be delivered physically

to the purchaser, or to his designated custodian duly accredited by the BSP, if certificated,
or by means of book-entry transfer to the appropriate securities account of the purchaser
or his designated custodian in a registry for said securities if immobilized or dematerialized
3. Clearly stated to the client that:
a. The NBFI does not guarantee the payment of the security sold on a “without recourse
basis” and in the event of default by the issuer, the sole credit risk shall be borne by the
client; and
b. The NBFI is not performing any advisory or fiduciary function.
_______________
Name of Officer
Position
Date _____________
SUBSCRIBED AND SWORN to before me, this _____ day of _____, affiant exhibiting
his Community Tax Certificate No.(s) as indicated below:
Name Community Tax Date/Place

Cert. No. Issued
Notary Public

APP. N-7
08.12.31
Annex N-7-a
FORMAT CERTIFICATION
______________________________
Name of NBFI
CERTIFICATION
Pursuant to the requirements of Subsec. 4211N.12, I hereby certify that as of 31

January 2005, the ____________________ (name of NBFI) does not have any outstanding
repurchase agreements covering government securities, commercial papers and other
negotiable and non-negotiable securities or instruments that are not documented in
accordance with existing BSP regulations.
____________________
Name of Officer
Position
SUBSCRIBED AND SWORN to before me, this _____ day of _____, affiant
exhibiting his Community Tax Certificate as indicated below:
Name Community Tax Date/Place

Cert. No. Issued
Notary Public

APP. N-8
09.12.31
REGISTRATION AND OPERATIONS OF FOREIGN EXCHANGE DEALERS/

MONEY CHANGERS AND REMITTANCE AGENTS
A. Application for Registration
Name of Applicant
Address
Telephone No./Fax No.
Date
Bangko Sentral ng Pilipinas

A. Mabini St., Malate, Manila
Gentlemen:
We hereby apply for authority to act as (foreign exchange dealer/money changer or

remittance agent). We are currently engaged in this business since _____ (if applicable).
In support of this application, we submit the following documents:
• Incorporation papers duly authenticated by the Securities and Exchange Commission (for
corporation or partnership);
• Copy of the Certificate of Registration with the Department of Trade and Industry (for
single proprietorship);
• Copy of business license/permit from the city or municipality having territorial jurisdiction
over the place of establishment and operation;
• List of stockholders/partners/proprietor/directors/principal officers as the case maybe;
• Notarized Deed of Undertaking to strictly comply with the requirements of all relevant
laws, rules and regulations, signed by the owner, partner, president or officer of equivalent
rank.
Very truly yours,
(Signature of authorized officer over printed name)
Designation

APP. N-8
09.12.31
B. Deed of Undertaking
Name of Applicant
Address
Telephone No./Fax No.
DEED OF UNDERTAKING
I, (name and designation), of legal age and under oath, declare the following:
1. That I have been duly authorized by (name of institution) and its Board of Directors/
Partners/Owners to bind (name of institution) to strictly comply with all the requirements,
rules and regulations of the Bangko Sentral ng Pilipinas regarding the registration and operations
of foreign exchange dealers/money changers/remittance agents as well as the provisions of
the Anti-Money Laundering Act of 2001 (R.A. No. 9160, as amended by R.A. No. 9194) and
its implementing rules and regulations.
2. That I certify that (name of institution) undertakes to strictly comply with all the
requirements, rules and regulations of the Bangko Sentral ng Pilipinas regarding the licensing
and operations of foreign exchange dealers/money changers/remittance agents as well as
with all the provisions of the Anti-Money Laundering Act of 2001 (R.A. No. 9160) and its
implementing rules and regulations.
3. That I certify that (name of institution), through and with full knowledge and agreement
of its Board of Directors/Partners/Owners, understands and accepts that in case of violations
of any of the aforementioned laws, rules and regulations, (name of institution) and its Board
of Directors/Partners/Owners/Stockholders/Officers/employees responsible for such
violation/s shall be subject to the administrative sanctions prescribed under Section 36 of
R.A. No. 7653, otherwise known as the “New Central Bank Act” and other applicable
laws, rules and regulations.
(Signature over printed name)
_________________________
Designation
Subscribed and sworn to before me this _____ of __________, 20____, affiant exhibiting
to me his/her Community Tax Certificate No. ___________________ issued at
_______________ on _______.
NOTARY PUBLIC

APP. N-8
09.12.31
C. Application to Sell/Purchase Foreign Currency
___________________________________________________________
Name of Foreign Exchange Dealer/Money Changer/Remittance Agent
________________________________
Address
APPLICATION TO SELL/PURCHASE FOREIGN CURRENCY
1. Date :_________________________
2. Printed Name of Customer :_________________________
3. Signature :_________________________
4. Present Address :_________________________
5. Date and Place of Birth :_________________________
6. Telephone Number :_________________________
7. Nationality :_________________________
8. Currency Sold/Purchased : US Dollar _____ Others (specify)
9. Amount Sold/Purchased : In figures _________________

In words _________________
10. Source of Foreign Currency :_________________________
__________ OFW/Balikbayan/Returning Resident

__________ Tourist
__________ Expatriate based in the Philippines
__________ Foreign Currency Deposit Account
Holder
__________ Domestic Resident – Excess Travel
Funds
__________ Others (please specify)
11. Purpose of Purchase :__________________________

APP. N-8
09.12.31
D. Minimum Documentary Requirements for the Sale of Foreign Currencies
A. Sale of foreign exchange for non-trade current account purposes exceeding USD10,000
Purposes Documents Required

(All originals except as indicated)
1. Foreign travel funds Applicant's passport and passenger ticket
2. Educational expenses/student Photocopy of proof of enrolment with,

maintenace abroad or billing statement from, school abroad
3. Correspondence studies Photocopy of proof of enrolment with,

or billing statement from, school abroad
4. Medical Expenses Photocopy of billing statement (for services

rendered/expenses incurred abroad) or
certification issued by doctor/hospital
abroad indicating cost estimate (on the
treatment to be administered)
5. Emigrants' assets (including inheritance, a. Photocopies of:

legacies, and income from properties) i. Emigrant's visa or proof of residence
of emigrant abroad
ii. Notarized Deed of Sale covering
assets (e.g., real estate, vehicles,
machineries/equipment, etc.) and;
iii. Proof of income received from
properties in the Philippines.
b. In the absence of the emigrant, a
notarized Special Power of Attorney
(SPA) for emigrant's representative/
agent. If SPA was executed abroad,
original of SPA authenticated by
Philippine consulate abroad.
6. Salary/bonus/dividend/other benefits of a. Employment contract/Certification of

foreign expatriates (including peso employer on the amount of compensation
savings) paid to the foreign national during the
validity of the contract stating whether the
same had been paid in foreign exchange
or in pesos, and if in foreign exchange,
proof that the foreign exchange was
previously sold for pesos to AABs;
b. ACR I-Card and DOLE Alien Employment
Permit of the foreign national;

APP. N-8
09.12.31

c. Applicant's notarized certification that

the FX remitted is net of local expenses
incurred or net of previous transfers
abroad; and
d. If amount to be remitted comes from
sources other than salaries, information
regarding the sources supported by
appropriate documents should be
submitted.
7. Foreign nationals' income taxes due to a. ACR-I Card and DOLE Alien Employment
foreign governments Permit; and
b. Photocopy of income tax return covering
the income tax payment sought to be
remitted.
8. Sales proceeds of domestic assets by a. ACR I-Card; and

foreign expatriates b. Photocopy of proof of sale of asset/s.
9. Producers' share in movie revenue/TV 1. Statement of remittable share rental or

film rentals rental; and
2. Copy of contract/agreement.
10. Commissions on exports due foreign a. Billing statement from non-resident

agents agent; and
b. Photocopy of contract/agreement.
11. Freight charges on exports/imports a. Billing statement; and

12. Charters and leases of vessels/aircrafts a. Billing statement from non-resident

lessor/owner of vessel/aircraft; and
13. Port disbursements abroad for aircraft a. Billing statement; and

and vessels of Philippine registry or b. Photocopy of contract/agreement.
chartered by domestic operators and
salvage fees
14. Satellite and other telecommunication a. Billing Statement; and

services b. Photocopy of contract/agreement.
15. Other services such as advertising, a. Billing statement; and

consultancy, IT, fees for other b. Photocopy of contract/agreement.
professional services

APP. N-8
09.12.31

16. Share in head office expenses a. Audited schedules of allocation of

(including reimbursements) expenses for the periods covered;
b. Certification from the head office
that the share in head office
expenses remain unpaid and
outstanding; and
c. Audited financial statements of the
Philippine branch.
17. Insurance/Reinsurance premium due to Billings/Invoices of insurance companies/

foreign insurance companies brokers abroad.
18. Claims against domestic insurance Billings/Invoices from foreign insurer/

companies by brokers abroad reinsurer.
19. Net Peso revenues of foreign airlines/ a. Statement of Net Peso Revenues (Peso
shipping companies revenues less expenses) certified by
authorized officer of airline/shipping
company; and
20. Royalty/Copyright/Franchise/Patent/ a. Statement/Computation of the royalty/

Licensing fees copyright/franchise/patent/licensing
fee; and
21. Net peso revenues of embassies/ Statement of net peso revenues (Peso
consulates of foreign countries revenues less expenses) certified by the
Embassy's/Consulate's authorized officer.
22. FX obligations of Philippine credit card Summary billings

companies to international credit card
companies/non-resident merchants
23. Support of dependents abroad a. Consular certificate or its equivalent

documents to prove that the dependent
is permanently residing abroad not
earlier than one (1) year from FX
application date; and
b. Certified true copy of birth certificate,
marriage contract, adoption papers,
whichever is applicable.

APP. N-8
09.12.31

24. Subscriptions to foreign magazines or a. Billing statement

periodicals
25. Membership dues and registration fees a. Proof of membership; and

to associations abroad b. Billing statement
26. Mail fees a. Copy of contract or agreement; and

b. Billing statement
B. Sale of foreign exchange for payment of foreign/foreign currency loans, regardless of

amount

Foreign/foreign currency loan payments Billing statement from creditor.
Amounts that may be purchased shall

be limited to maturing amounts on
scheduled due dates. Remittance of FX
purchased shall coincide with the due
dates of the obligations to be serviced.
FX-selling entity shall stamp "FX SOLD",
date of sale and the amount/s sold on
the original billing statement.
Payments related to guarantees and similar

arrangements including risk take over
arrangements
Resulting FX liabilities arising from Copies of:

guarantees and similar arrangements a. Arrangements/contracts covered by the
including Risk Take Over Arrangements guarantee/similar arrangement;
(RTO) not involving foreign/FCDU loans b. Standby Letter of Credit (SLC) or
guarantee contract/agreement;
c. Proof/notice of original obligor's default
and creditor's call on the guarantee; and
d. Billing statement from the non-resident
or local bank guarantor
Payments related to Build-Operate-Transfer

and similar financing schemes with transfer
arrangements

APP. N-8
09.12.31

Regular Fees Copies of:

a. Covering arrangements/contracts;
and
b. Billing statement from private
sector project company/proponent
C. Sale of foreign exchange for capital repatriation/remittance of dividends/profits/earnings,

outward investments and residents' investments in foreign currency-denominated bonds/
notes issued by the Republic of the Philippines and other Philippine entities, regardless
of amount

1. Capital repatriation of:
a. Portfolio investments in:

i. PSE-listed securities Broker's sales invoice
ii. Peso government securities Confirmation of purchase for peso
government securities
iii. Money market instruments (MMI) Matured contract for MMI
iv. Peso bank deposits Proof of withdrawal of deposit or matured
certificate of deposit, as applicable
b. Foreign direct equity investments a. Photocopy of proof of sale or relevant

documents showing the amount to be
repatriated; in case of dissolution/
capital reduction, proof of distribution
of funds/assets such as statement of net
assets in liquidation;
b. Detailed computation of the amount
applied for in the attached format
(Attachment 2) prepared by the selling
stockholder's representative; and
c. Photocopy of pertinent audited
financial statements
2. Remittance of dividends/profits/earnings/ a. Photocopy of PSE-cash dividends notice

interests and Phil. Central Depository (PCD)
printout of cash dividend payment or
computation of interest earned issued
by MMI issuer or bank;

APP. N-8
09.12.31

b. Photocopy of secretary's sworn

statement on the board resolution
covering the dividend declaration;
c. Photocopy of latest audited financial
statements or interim financial statements
covering the dividend declaration period
(for direct foreign equity investments)
3. Residents' outward investment

a. Direct equity investments a. Photocopy of investment proposal/
agreement, or subscription agreement;
and
b. Photocopy of deed of sale or assignment
of the investments
b. Portfolio investments a. Photocopy of subscription agreement,

or bond/stock offering;
b. Swift payment order instruction from
the counterparty/broker/trader
indicating the name of payee and type
kind of investment authenticated by the
broker/trader; and
c. Photocopy of investor's order to broker/
trader to buy the securities
4. Residents' investments in FX-denominated a. Photocopy of subscription agreement or

bonds/notes issued by the Republic of the bond offering;
Philippines and other Philippine entities b. Swift payment order instruction from the
counterparty/broker/trader indicating
the name of payee and type/kind of
investment authenticated by the broker/
trader; and
c. Photocopy of investor's order to broker/
trader to buy the securties
D. Sale of foreign exchange for payment of importations, regardless of amount

Payment of merchandise imports a. Bill of lading or airway bill covering

the merchadise imports; and
b. Commercial invoice
(As amended by Circular No. 652 dated 05 May 2009)

APP. N-8
08.12.31
Annex N-8-a
Certificate of Registration of Foreign Exchange Dealers (FXDs)/

Money Changers (MCs) and Remittance Agents (RAs).
Banks are enjoined to require their clients FXDs/MCs and RAs to submit a copy of
their certificate of registration issued by the BSP. This requirement shall be considered as
part of “Know Your Customer” compliance procedures.
The certificates can be confirmed or verified with the BSP Supervision and Examination
Department V. The registration of FXDs/MCs and RAs with BSP is provided for under
Sec. 4511N.

APP. N-8
09.12.31
Attachment 2
COMPUTATION SHEET
Name of FX FXD/MC: Date of FX Sale:
TYPE OF INWARD FOREIGN INVESTMENT TRANSACTION
Remittance of Cash Dividends/Profits
Repatriation of Capital
Name of Investee Firm:
Name of Investor:
REMITTANCE OF CASH DIVIDENDS/PROFITS
Record Date:
Payment Date:
Amount of Dividends/Share
or Rate of Profits:
Base Shares (Php) Dividends/Profits per Share Total Amount (Php)
A. Gross Peso Amount Remittable

B. Less: Taxes/Charges
C. Net Peso Amount Remittable
D. Foreign Exchange Applied for
Remittance (C/FX rate1/)
REPATRIATION OF CAPITAL
Total Amount/ Outstanding Balance Amount/No. of Shares

No. of Shares Before This Repatriation Applied for Repatriation
A. Total No. of Shares/Amount Applied

For Repatriation
B. Selling Price/Share (if applicable)
C. Gross Peso Amount Repatriable (A x B)
D. Taxes/Charges
E. Net Peso Amount Repatriable (C - D)
F. Foreign Exchange Applied for
Repatriation (E/FX rate1/)
Prepared by:
Signature over Printed Name Company Affiliation of

of Authorized Representative Investor’s Representative
of Applicant
Date
1/
To be supplied by FX Selling Bank


Manual of Regulation For Non Bank Financial Institution Volume 2

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Manual of Regulation For Non Bank Financial Institution Volume 2

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FOREWORD

The 2009 Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) is

The updated MORNBFI incorporates regulatory policies issued to align banking

AMANDO M. TETANGCO, JR.

The 2009 Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) is

The Committee Secretariat is composed of Ms. Celedina P. Garbosa, Acting Manager,

The Bangko Sentral ng Pilipinas

To illustrate, Subsection 4143Q.1 indicates:

Main Section on “Disqualification of Directors/Trustees and Officers”

Subsection on “Persons disqualified to become officers”

Regulation addressed to quasi-banks

Part One on “Organization, Management and Administration"

Regulations addressed to NBFIs

PART ONE - ORGANIZATION, MANAGEMENT AND ADMINISTRATION

SECTION 4101S Scope of Authority of Non-Stock Savings and Loan Associations

SECTIONS 4102S - 4105S (Reserved)

SECTION 4106S Capital

SECTIONS 4107S - 4110S (Reserved)

SECTIONS 4111S - 4115S (Reserved)

D. NET WORTH-TO-RISK ASSETS RATIO

SECTION 4116S Capital-to-Risk Assets

SECTION 4117S Withdrawable Share Reserve

SECTION 4118S Surplus Reserve for Ledger Discrepancies

SECTION 4120S (Reserved)

SECTIONS 4121S - 4125S (Reserved)

F. NET INCOME DISTRIBUTION

SECTION 4126S Limitations on Distribution of Net Income

SECTIONS 4127S - 4140S (Reserved)

G. TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS

SECTION 4141S Definition; Qualifications; Responsibilities and Duties of

SECTION 4142S Definition and Qualifications of Officers

SECTION 4143S Disqualifications of Trustees and Officers

SECTION 4144S Compensation of Trustees, Officers and Employees

SECTION 4145S Bonding of Officers and Employees

SECTION 4146S Agents and Representatives

SECTION 4148S Full-Time Manager for NSSLAs

SECTIONS 4149S - 4150S (Reserved)

H. BRANCHES AND OTHER OFFICES

SECTION 4151S Establishment of Branches/Extension Offices

SECTIONS 4152S - 4155S (Reserved)

I. BUSINESS DAYS AND HOURS

SECTION 4156S Business Days and Hours

SECTIONS 4157S - 4160S (Reserved)

SECTION 4161S Records

SECTION 4162S Reports

SECTION 4163S (Reserved)

SECTION 4164S Internal Audit Function

SECTION 4171S External Auditor

SECTION 4172S Financial Audit

SECTIONS 4173S - 4179S (Reserved)

SECTION 4180S Selection, Appointment, Reporting Requirements and Delisting

SECTION 4181S Publication Requirements

SECTION 4182S Business Name

SECTION 4183S Prohibitions

SECTIONS 4184S - 4189S (Reserved)

SECTION 4190S Duties and Responsibilities of NSSLAs and their Directors/

SECTIONS 4191S (Reserved)

SECTION 4192S Prompt Corrective Action Framework

SECTION 4193S Supervision by Risks

SECTION 4194S Market Risk Management

SECTION 4195S Liquidity Risk Management

SECTIONS 4196S - 4198S (Reserved)

SECTION 4199S General Provision on Sanctions