The Bangko Sentral ng Pilipinas (BSP) has firmed up its regulatory stance on the rules for permanently disqualifying directors and officers of banks and non-bank financial institutions (NBFIs) found guilty of dishonest or deceitful acts.
Under a new circular signed by BSP Governor Eli Remolona Jr. on July 16, released July 22, the central bank made explicit its authority to bar individuals from any role in BSP-supervised financial institutions, particularly in cases involving fraud, breach of trust, or criminal conviction.
BSP Deputy Governor Chuchi Fonacier, in a Viber message on Tuesday, said the issuance amends and clarifies earlier provisions on the disqualification of key personnel.
“It’s being made more explicit,” she said, referring to the updated guidelines. All disqualified individuals are entered into the BSP’s confidential but consequential watchlist files.
Circular No. 1216 states that permanent disqualification will apply to persons who have either been convicted with finality or who have voluntarily executed a sworn commitment to permanently cease participation—direct or indirect—in the ownership or management of any BSP-supervised entity.
The circular also empowers the BSP’s legal counsel to recommend the permanent disqualification of officers involved in offenses under Section 138(a) of the Manual of Regulations for Banks.
These include acts of dishonesty or breach of trust. Such recommendations are elevated to the Monetary Board, the BSP’s highest policy-making body, for final action.
As part of its broader governance push, the BSP continues to urge all supervised institutions to institutionalize policies for filing legal cases not only against erring directors and officers but also against rank-and-file employees.
The central bank believes that proactive legal action acts as a deterrent to misconduct and strengthens discipline across the financial system, ultimately safeguarding depositors and consumers.
In 2024, the BSP circulated a draft circular to outline the process, criteria, and protocols for initiating legal action.
Among the key considerations for decision-making are the nature and gravity of the offense, duration, amount involved, potential losses or recoveries, strength of available evidence, litigation costs, and the exposure risk to institutions and their stakeholders.
The BSP has also expanded its derogatory information database—now referred to as the watchlist file or “blackbook”—to include a growing list of banned directors, officers, and employees across the financial sector.
The file, previously known as the Derogatory Information File (DIF), is continuously updated.
From about 8,000 entries in 2022, the number of blacklisted individuals has likely grown to around 10,000 by the end of 2024, reflecting the BSP’s intensified monitoring and enforcement efforts.
