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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Republic Act (RA) No. 11127 or the National Payment Systems Act of 2020 was enacted in view of the State’s objectives to promote, through the Bangko Sentral ng Pilipinas (BSP), 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. According to the BSP, RA No. 11127, or the National Payment Systems Act (NPSA), provides a comprehensive legal and regulatory framework which supports the aforesaid objectives of the State.
Safe, secured, efficient and reliable operation of payment systems
According to the BSP, a safe, secured, efficient and reliable payment system will reduce the cost of exchanging goods, as well as ensure the effective enforcement of monetary policy, and streamline money and capital markets.
Definition of Payment System
In the said law, “Payment System” was defined as the set of payment instruments, processes, procedures and participants that ensures the circulation of money or movement of funds;
Role of the BSP
Section 5 of Republic Act (RA) No. 11127 vests the BSP with authority to oversee the payment systems in the Philippines and exercise supervisory and regulatory powers for the purpose of ensuring the stability and effectiveness of the monetary and financial system.
Powers of the BSP
Section 6, RA No. 11127 enumerates the powers of the BSP under the said law, as follows:
Section 6. Powers of the Bangko Sentral. – In the performance of its mandate under this Act, the Bangko Sentral shall have, in addition to its powers under existing laws, the following powers:
(a) Designate a payment system if it determines the payment system as posing or having the potential to pose a systemic risk or the designation is necessary to protect the public interest.
(1) Any such determination by the Bangko Sentral shall be conclusive. The designation of a payment system by the Bangko Sentral shall be effective until revoked. The Bangko Sentral may revoke such designation if it finds that the designated payment system no longer poses any systemic risk or it is no longer in the public interest that the system be designated.
(2) Should the Bangko Sentral designate a payment system, it shall require the participants of the designated payment system to comply, within a reasonable period, with the provisions of this Act and its implementing rules and regulations. The Bangko Sentral shall give due consideration to the orderly transition of the operations of the newly designated payment system to ensure that it operates in a safe, efficient and reliable manner.
(b) Require operators of the designated payment system to secure prior authority from the Bangko Sentral.
(1) In granting the authority, the Bangko Sentral shall take into consideration the capability of an operator in terms of its financial resources, technical expertise, and reputation. The licensing process shall include, but not be limited to, an assessment of the ownership structure, governance, key personnel, business model, risk management and financial resources.
(2) No person or entity shall be allowed to act as an operator of a designated payment system without prior authority from the Bangko Sentral. The determination of whether a person or entity is acting as an operator of a designated payment system without Bangko Sentral authority shall be made by the Monetary Board. To resolve such issue, the Monetary Board may, through the appropriate department of the Bangko Sentral, examine, inspect or investigate the books and records of such person or entity.
(c) Accredit or require, when deemed necessary, a payment system management body organized by participants of the designated payment system for the purpose of self-regulation.
(1) The accredited payment system management body may issue and enforce its rules and regulations and impose appropriate sanctions among participants of the designated payment system: Provided, That, such rules and regulations shall be with prior Bangko Sentral approval and subject to its review.
(d) Issue, through the Monetary Board, rules and regulations governing the following:
(1) The standard of operation of payment systems and the conduct of examination of the participants of the designated payment systems, in such frequency as may be prescribed by the Monetary Board, to determine compliance with laws and regulations;
(2) The adequacy of resources of operators of the designated payment systems to ensure that the designated payment systems have a high degree of security and operational reliability and have contingency requirements for timely completion of daily processing commitments;
(3) The qualifications and disqualifications of individuals elected or appointed as directors or officers of operators of the designated payment systems with particular regard to their integrity, experience, education, training and competence. The Monetary Board may suspend, disqualify or remove any director or officer found unfit for the position;
(4) The appropriate measures to ensure the confidentiality of payment information which, under the provisions of this Act and other existing laws, is considered confidential;
(5) The necessary measures to ensure the compliance of designated payment systems with Republic Act No. 9160, as amended, otherwise known as the “Anti-Money Laundering Act of 2001”, and other related laws;
(6) The mechanism for the protection of the rights of the end-users and participants to the designated payment systems;
(7) Principles on setting prices or pricing mechanisms in payment systems;
8) Guidelines applicable to payment system management bodies, including the grant and revocation of accreditation; and
(9) Other pertinent matters as may be determined by the Monetary Board.
(e) Issue, through the Monetary Board, directives and orders to any participant of a payment system whenever the Monetary Board has determined that it is necessary to ensure the safety, efficiency or reliability of a payment system or it is in the interest of the public to do so.
(f) Require participants of payment systems to submit reports on their operations and provide information for statistical, policy development, supervisory and regulatory purposes.
(g) Assess and collect from the participants of the designated payment systems an annual fee in such amount, as may be necessary to cover expenses related to or incidental to the conduct of supervisory functions over such entities, subject to the rules prescribed by the Monetary Board.
(h) Such other powers as may be reasonably necessary to meet the objectives of this Act.
Administrative Sanctions, Other Penalties and Sanctions
Therefore, administrative sanctions are placed within the said law to ensure strict implementation of a secured and reliable operation of payment systems in the Philippines.
The Monetary Board may, at its discretion, impose such administrative sanctions upon any participant of a designated payment system, its directors and officers, including any person or entity determined by the Monetary Board to be acting as an operator without the requisite authority from the Bangko Sentral, for violations of this Act or rules and regulations issued by the Monetary Board or any order or instruction of the Governor of the BSP.
The Monetary Board may also suspend, disqualify, or remove any of the directors or officers of a designated payment system for willful violation of the charter or by-laws of the operator of the designated payment system; or willful delay in the submission of reports of publications thereof as required by the rules and regulations to be issued by the Monetary Board pursuant to this Act, among others.
These are only some of the administrative sanctions that may be imposed by the Monetary Board and BSP under Section 19 of RA No. 11127. Aside from administrative sanctions, the law also provides for other penalties and sanctions under Section 20 of the said law. Section 20 provides that whenever any person or entity willfully violates this Act, rule or regulation, directives or orders duly promulgated by the Monetary Board pursuant hereto, the person or persons responsible for such violation shall be punished by a fine of not less than Two hundred thousand pesos (P200,000.00) or more than Two million pesos (P2,000,000.00) or by imprisonment of not less than two (2) years nor more than ten (10) years, or both, at the discretion of the court.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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