THE Bangko Sentral ng Pilipinas (BSP) is aiming to strengthen regulations on online gaming payments to avert the exploitation of financial services and enhance supervision over the sector.
The central bank released a draft notice on its website that seeks to institute regulations on online gambling payment services.
The suggested provisions aim to “encourage responsible utilization of digital financial services, fortify financial consumer protection, maintain financial stability, and reduce the social and financial hazards linked to online gambling.”
“In this regard, it is crucial to guarantee that digital payment services of PSPs (payment service providers) are not misapplied for activities that are socially harmful and detrimental to financial wellness,” the BSP remarked.
The flourishing gaming sector in the Philippines is currently receiving increased oversight amidst worries regarding rising addiction and financial issues among Filipinos.
The Department of Finance has suggested a tax on online gaming, in addition to other potential measures to restrict public access to digital gambling platforms, such as imposing limits on deposit time or cash inflow.
According to the BSP’s draft notice, these regulations could encompass PSPs involved in these services and operators of a payment system (OPSs) functioning as payment acquirer or aggregator for the online gambling operator.
It seeks to establish standards and expectations for PSPs in offering online gambling payment services and set enhanced know-your-customer strategies to uphold applicable legal restrictions on access to and engagement in online gambling, it stated.
According to the proposed regulations, PSPs and OPSs that engage or plan to engage in online gambling payment services must obtain prior approval from the central bank.
They must also sustain a minimum capital of P300 million and a composite rating of no less than three based on the BSP Supervisory Assessment Framework.
PSPs and OPSs must also implement robust anti-money laundering and counter-terrorism financing (AML/CTF) risk management; an effective fraud management system, and a board-level committee for AML/CTF compliance.
NO LINKS
The central bank additionally seeks to ban payment providers from incorporating links to online gambling platforms.
“PSPs that offer or facilitate online gambling payment services shall not be permitted to provide links to online gambling websites or otherwise offer any functionalities that will redirect a user to an online gambling operator’s platform,” it noted.
For improved monitoring, the draft rules also stipulate that PSPs create a mechanism for establishing a separate online gambling transaction account (OGTA) for qualifying account holders.
The OGTA is defined as the “specific transaction account created upon the request of the qualifying account owner to participate in online gambling.”
Qualified account owners may only possess one OGTA, which should exclusively be funded through transfers from the same bank or institution.
PSPs must also ensure mandatory facial biometric verification during account creation and regular facial biometric re-verifications to reduce fraud.
The payment service providers should also vigilantly monitor the transactions to and from the OGTA, adhering to anti-money laundering risk management protocols.
For instance, transfers to the OGTA will be limited to a daily cap that cannot exceed 20% of the average daily balance of the qualifying owner’s transaction account. Fund transfers above this limit must be declined by the PSP.
“PSPs in question shall establish a transaction window during which online gambling payment services can be offered, such transaction window shall not exceed six hours per day,” it stated.
“In cases of excessive usage of the online gambling payment service, as defined by the respective PSP, a 24-hour cooling-off period will be enforced, wherein the subsequent transfer can only occur after the passage of the said period.”
When a user establishes an OGTA, all lending options on the same digital platform shall also be disabled, it added.
The BSP further mentioned that PSPs and OPSs must adopt prudent acceptance criteria and processes for onboarding and monitoring online gambling operators.
“PSPs and OPSs must engage only with online gambling operators that have a good standing and comply with government registration, permitting, and other related requisites,” it noted.
Online gambling operators are regarded as “high-risk merchants,” the BSP indicated, thus requiring enhanced due diligence from PSPs and OPSs.
In addition to performing beneficial ownership verification, PSPs and OPSs must also “understand, assess, analyze, and regularly review the overall potential risk of an online gambling operator.”
RESPONSIBLE GAMBLING
According to the proposed regulations, PSPs are also required to formulate a Responsible Online Gambling Policy to “encourage responsible gambling and empower account owners to exercise self-control and avert gambling addiction.”
Under this policy, obligatory or periodic pop-up alerts will be set for account owners depending on their usage.
“PSPs concerned must clearly display notices within their digital platforms informing users of available responsible gambling tools, OGTA restrictions, and access to support resources.”
“PSPs may additionally develop other programs and initiatives to advocate responsible gaming and help deter potential compulsive or irresponsible gambling behavior,” it added.
Under the regulations, employees of PSPs and OPSs are also forbidden from participating in gambling and any form of online gambling activities.
Breach of these regulations could result in sanctions or financial penalties. Fines shall not exceed P100,000 per calendar day for ongoing violations or a maximum penalty of P1,000,000 for each transactional violation.
Non-monetary sanctions might include the suspension of the authority to provide online gambling payment services for a first infraction. Upon a second infraction, this may lead to the revocation of authority to offer such services as well as the suspension of authority to transact through the payment and settlements system.
“The supervising department of the Bangko Sentral shall ascertain whether there exists noncompliance and shall notify the PSP of such noncompliance.”
“Upon notification of such non-compliance, the PSP shall immediately halt its online gambling payment services until full compliance has been restored by the PSP,” it concluded. — Luisa Maria Jacinta C. Jocson
