MANILA — President Rodrigo Duterte has signed a law providing for the regulation and supervision of payment systems in the country.
Duterte signed Republic Act No. 11127, or ‘The National Payment Systems Act’ on October 30.
According to the new law, payment system is defined as the set of payment instruments, processes, procedures and participants that ensure the transfer of funds.
The law provides that the government, through the Bangko Sentral ng Pilipinas (BSP), promotes “the safe, secured, efficient and reliable operation of payment systems in order to control systemic risk and provide an environment conducive to the sustainable growth of the economy.”
“The state recognizes that payment systems are crucial parts of the financial infrastructure of the country and it is essential that they function safely and efficiently for the stability and effectiveness of the monetary and financial systems,” the law reads.
A systemic risk will happen if the failure of one participant in a payment system, or in financial markets, to meet its required obligations will cause the other participants or financial institutions unable to meet their obligations.
Under the new law, the BSP shall require operators of the designated payment system to secure prior authority from the central bank.
The BSP shall also accredit a payment system management body organized by operators, or participants for the purpose of self-regulation.
The operator is defined as any person who provides clearing or settlement services in a payment system, or defines, prescribes, designs, controls or maintains, the operational framework for the system.
The rules and regulations shall also be issued by the BSP to govern the designated payment system’s standard operation and adequacy of resources; qualifications of directors or officers; measures that ensure confidentiality and compliance; and mechanism which protects rights of the end-users.
The law gives BSP the authority to own and operate payment systems “as may be deemed necessary by the Monetary Board”.
The central bank shall also coordinate with other regulators and other concerned government agencies, particularly the Securities and Exchange Commission (SEC) “to facilitate the orderly discharge of payment obligations”.
“The BSP shall likewise coordinate with the overseers of payment system of other countries to facilitate safe, efficient and reliable cross-border payment transactions,” the new law said.
The operators of the designated payment system shall be responsible for the maintenance and operation of a safe, efficient and reliable system in accordance with rules and regulations.
The operators or participants of payment systems are required to submit reports on their operations, and pay annual fees.
The law carries heavy fines ranging from PHP200,000 to PHP2 million, and penalty of up to 10 years imprisonment. PNA-northboundasia.com