THE BANGKO SENTRAL ng Pilipinas (BSP) is working on regulations to tighten oversight on cryptocurrencies as part of efforts to deter crimes involving dirty money.
BSP General Counsel Roberto L. Figueroa said they plan to issue regulations that would complement the Anti-Money Laundering Act (AMLA).
“It’s been discussed several times how else we can make the law… have more teeth,” he told BusinessWorld on the sidelines of a central bank event on Friday.
“But at the same time, you know, these are new technologies,” he added. “When the AMLA was enacted into law… I mean, nobody was even thinking about cryptocurrency (back then), right? So, definitely, there are ongoing discussions about issuing regulations to cover (them).”
Last month, a former lawmaker linked to the flood control corruption scandal allegedly used cryptocurrency to move billions of pesos from the country to overseas.
Mr. Figueroa noted that authorities are struggling to trace financial crimes involving cryptocurrencies as its user data is treated with confidentiality.
“The problem with crypto is how are you going to… find it,” he said. “It’s like anonymous — you can’t tell who owns it, who sent it and who received it?”
The Anti-Money Laundering Council (AMLC) said last year that it was pushing amendments to the AMLA, including tighter monitoring of virtual asset service providers (VASP), in a move to keep the Philippines off the Financial Action Task Force’s list of countries with dirty money risks.
It also sought to align its regulations with international standards on anti-money laundering and countering the financing of terrorism.
The BSP has several regulations on virtual assets (VA), such as Circular No. 944, or the guidelines for virtual currency exchanges, and Circular No. 1108, which outlines guidelines for VASPs.
Asked if they plan to implement further regulations to address anonymity issues, Mr. Figueroa said: As we learn more about (the) technology that we can use to be able to… penetrate that anonymity, then definitely a regulation can be issued.”
However, the BSP official noted that they have yet to determine when they will roll out the regulation.
Based on the AMLC’s latest National Risk Assessment, VAs and VASPs in the country have medium to high vulnerability to money laundering risks.
“Inherent vulnerability is ‘high’ due to the anonymity and speed of VA transfers, including exposure to DeFi (decentralized finance) platforms, 24/7 availability, peer-to-peer transactions, transfers to/from unhosted wallets, and use of anonymity-enhancing features that enable rapid settlement,” according to the report.
VAs, such as cryptocurrencies, refer to a type of digital unit that can be traded, transferred, or used for payments and investments.
Meanwhile, VASPs are entities that handle the exchange of VAs for fiat currencies, as well as transferring or safeguarding them. — Katherine K. Chan
