CIRCULAR 1125 sets a maximum P1-million penalty for each transactional violation committed by a bank. — BW FILE PHOTO
THE CENTRAL BANK has released its rules on fines for transactional violations of lenders as part of its supervisory authority and to instill accountability among lenders and their officials.
Circular 1125 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno sets a maximum P1-million penalty for each transactional violation committed by a bank.
The cap was based on the provisions of Republic Act 11211, which amended the New Central Bank Act. Prior to this, the corresponding penalty was set at P30,000 per day for each violation.
The circular also gives a 15-day period for filing an appeal after a penalty decision from the Monetary Board.
Transactional violations include doing an act or an omission, which is considered a violation of a law or any order by the BSP. Under the New Central Bank Act, violations include willful delay in submitting required reports and publications, refusal to permit examination regarding the affairs of the financial institution, making false or misleading statement to the BSP, and refusal to comply with regulations set by the central bank.
Under licensing-related activities, a transactional violation happens when a financial institution engages in an activity prior to obtaining qualified assessment and approval from the BSP for such engagement.
“The BSP recognizes the need to impose penalties as one of the possible administrative sanctions to hold BSP-supervised financial institutions accountable for their conduct, deter future commission of violations, and achieve the overarching supervisory objectives of changed behavior and mitigated risks,” the circular said.
“To ensure fairness, consistency and reasonableness in the imposition of monetary penalties, the BSP takes into consideration the attendant circumstances of each case, such as the nature and gravity of the violation or irregularity and the size of the financial institution, including other aggravating and mitigating factors,” the BSP said.
Meanwhile, banks will be fined P100,000 per calendar day as penalties for continuing violations. Under licensing-related activities, these are acts that financial institutions continue to engage in even when they were assessed to be not qualified under BSP criteria to perform such activities.
BSP departments concerned with the respective violations will inform banks about their violations and a directive allowing them to file an appeal within 15 banking days on why they should not be subjected for the fines.
Despite this room to file for an appeal, financial institutions are expected to settle payments for the penalties within 15 days from the last day to file an appeal for the original penalty imposed by the Monetary Board. This amount, if unpaid within the window period, will automatically be debited from the demand deposit account kept by financial institutions with the BSP. — Luz Wendy T. Noble