No plan to revise bank-secrecy rules ank secrecy rules to stay as is–BSP

Riza Lozada

The Philippines does not plan to revise soon its existing rules on bank deposit secrecy, according to the Bangko Sentral Ng Pilipinas (BSP).

This assurance was given after the BSP issued revised guidelines on internal audit for financial institutions, which among others, will allow financial institutions to outsource internal audit.

The Monetary Board (MB) approved the revised guidelines on internal control and internal audit for financial institutions (FIs). The rules seek to strengthen governance by raising this to the level of international standards and best practices.

The guidelines effectively broaden internal control from previously being limited only to the implementation of basic internal control activities to promoting shared accountability of the board and personnel at all levels in the control process, the BSP said.

The revised guidelines feature fundamental elements of internal control namely management oversight and control culture, risk recognition and assessment, control activities, information and communications, and monitoring activities and correcting deficiencies.

The MB stated that “no one size fits all” internal control framework and consistent with the principle of proportionality, the board said that “FIs are expected to adopt internal control frameworks that are suited to their size, risk profile and complexity of operations.”

The internal audit is expected to assess and complement operational management, risk management, compliance and other control functions according to the BSP guidelines.

FIs are generally allowed to outsource the internal audit function to have access to certain areas of expertise or address resource constraints provided that the scope of audit will not include areas that are covered by existing statutes on deposit secrecy.

The guidelines however, clarified that arrangements where FIs that are part of group structures will opt to establish an internal audit function centrally in the parent bank will not fall under the outsourcing framework provided under existing regulations.

Finally, the qualifications of the head of the internal audit function were expanded so as to consider professionals from disciplines outside of the accountancy profession.

Certified public accountants (CPAs) or certified internal auditors (CIAs) are required for the head of the internal audit function of a universal and commercial bank.

On the other hand, the head of the internal audit function of thrift, rural, and cooperative banks may be a graduate of any accounting, business, finance, or economics course but should have the technical proficiency on the conduct of internal audit.

Regardless of academic background, heads of the internal audit function of all supervised FIs should meet the prescribed number of years of experience.