‘Painful’ fines added to central bank arsenal
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Sun, 24 Feb 2019 16:18:36 +0000
“Painful” fines under the Bangko Sentral ng Pilipinas’ (BSP) newly-amended charter are expected to discourage financial institutions from violating banking rules and regulations, a senior central bank official said.
Republic Act 11211, which amended RA 7653 or the New Central Bank Act of 1993 and was signed into law earlier this month by President Rodrigo Duterte, aims to provide the BSP with an enhanced legal and regulatory framework to support its mandate of supervising the country’s financial system.
In particular, Section 37 of the New Central Bank Act was revised to allow the BSP’s policymaking Monetary Board to impose fines of as much as P1 million pesos per violation or P100,000 per day for violations of a continuing nature.
If the violation results the avoidance of a loss or a profit gain, monetary authorities can also impose a fine “no more than three times the profit gained or loss avoided”.
Prior to the amendment, violators were fined not more than P30,000 per day for each violation.
“This is to make it painful on the part of the banks to violate our rules and regulations because it will be expensive on their part,” BSP Senior Assistant Governor and General Counsel Elmore Capule told reporters on Friday.
“Fines are already very cheap. Sometimes, it is better for the banks to violate and pay the fine rather than discontinue their practice,” he noted.
The revised administrative sanctions apply to the following:
• willful violation of the charter or bylaws;
• willful delay in the submission of reports or publications as required by law, rules and regulations;
• refusal to permit examination of the institution’s affairs;
• willful issuance of false or misleading statements to the board or the appropriate supervising and examining department or its examiners;
• willful failure or refusal to comply with, or violation of, any banking laws or any order issued by monetary authorities or the BSP governor; or
• the commission of irregularities, and/or conduct of business in an unsafe or unsound manner.
In addition to fines, the Monetary Board can also impose the following sanctions against erring institutions:
• suspension of rediscounting privileges or access to BSP credit facilities;
• suspension of lending or foreign exchange operations or authority to accept new deposits or make new investments;
• suspension of interbank clearing privileges; and/or
• suspension or revocation of quasi-banking or other special licenses.
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