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As the government continues to find new solutions to address money laundering in the Philippines, it also called on the growing fintech community to be responsible and remain compliant with the Bangko Sentral ng Pilipinas (BSP). With hundreds of thousands of transactions going through digital payment platforms, it becomes increasingly important to make sure that these platforms are regulated.

In a webinar hosted by the regtech company, Tookitaki, and legal experts from Divina Law, the panelists break down the biggest issue that fintech companies encounter when they apply for the Electronic Money Issuer (EMI) license in the Philippines.

Believe it or not, the issue was technology.

To be a registered fintech in the Philippines, a company needs to successfully obtain an EMI license from the BSP. A compliance attorney from Divina Law shared that most fintechs fail to comply with the BSP regulations because of one issue – the companies fail to explain monitoring of transactions coming from their platforms to another or vice versa. With most of the technologies now outsourced, fintechs must be more diligent about these issues.

The attorney urged fintechs to strengthen their compliance efforts to cover the three types of compliances for business: compliance with the Philippine law, the local and foreign regulations, and the internal rules or manual for proper auditing. This is where technology plays a huge role – digitizing transaction monitoring for more accurate reporting.

The discussion also covered the two-year moratorium by the BSP on EMI licensing and how fintechs with a strong value proposition can claim an exemption under the new Regulatory Sandbox Framework.

A recent case was shared wherein an organization had a financial services company distribute aid for indigents. However, upon checking the reports, it showed that the funds did not reach the intended recipients, revealing a fundamental flaw within the interconnections with other digital platforms. There could have been a window for a money mule in the incident.

As modes of payment continue to evolve with the emergence of digital payment platforms, so do fraudulent activities. With multiple transactions going in and out of digital payment platforms, manual fraud detection becomes unscalable, and money laundering across online platforms has become harder to detect.

Per Tookitaki, technology is seen as the driving force behind an effective anti-money laundering (AML) framework that can keep up with emerging risks.

“In an AML framework, the most important pillar is the ongoing monitoring of customers’ transactional and non-transactional behaviors, and that could be best approached with technology to ensure effective compliance with regulatory requirements,” shared Tookitaki’s AML expert Akshara Karanjekar.

Today, fintechs have access to end-to-end AML solutions to automate their compliance programs. But the regtech company recognizes new scenarios will continue to surface. Unfortunately, leads to these new scenarios are siloed among organizations, slowing down the detection.

Tookitaki’s vision is to fight financial crime through a shared community-driven framework rather than siloed current approaches. This is enabled via the AML Ecosystem, the Hub, and the Anti-Money Laundering Suite or AMLS, the Spoke deployed at the customer side.

The AML Ecosystem includes a network of AML experts and the typology repository. The repository is a library of typologies and a no-code tool aids in creating new typologies.

The Anti-Money Laundering Suite comprises four modules – Transaction Monitoring, Smart Screening, Customer Risk Scoring, and the Case Manager. AMLS can be deployed in multiple environments, including the public cloud, private cloud, and data center.

“In clear signs of the country’s effort to move out of the FATF grey list, both public and private sectors in the Philippines are seen to have progressed through proactive work towards stronger AML measures,” shared Abhishek Chatterjee, Founder and CEO at Tookitaki. “Tookitaki is committed to helping more fintechs be compliant with the relevant regulations set by the BSP to improve the integrity of the country’s financial market for better opportunities and security for Filipino organizations and consumers.”

Published September 19, 2022, 1:31 PM by Jonathan Castillo