Name
Global FinTech Guide
Country _ Name
Philippines
SectionTitle
RegTech and compliance management
Body
RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.

Introduction

Attitude of the country towards RegTech-services

The BSP openly supports RegTech initiatives both to provide more efficient services to consumers and regulated industries (i.e. Supervisory Regulatory Technology) and as a means for BSP supervised financial institutions to streamline compliance requirements and management IT risk (Regulatory Technology).  

On the Supervisory Regulatory Technology side, the BSP’s existing initiatives include the roll out of a chatbot on their website to facilitate the routing of consumer complaints to the proper department and an automated report submission system for BSP supervised institutions. On the Regulatory Technology side, initiatives of the regulator are mainly on improving regulations on information technology risk management, information technology outsourcing and technology-aided data gathering and KYC processes.  We do not foresee specific RegTech licensing regulations being promulgated in the near future.  We anticipate that the BSP will continue to address RegTech developments by improving existing technology-related regulations.

In line with the BSP’s policies on financial inclusion, the BSP welcomes IT initiatives in the financial sector. It is also coming up with regulatory sandbox regulations to encourage innovation in FinTech, including RegTech.

Persons or entities intending to provide services in the Philippines would generally be considered doing business in this jurisdiction and therefore, must also register and obtain a primary license from the SEC. This entails submission of documentary requirements with the SEC depending on the corporate vehicle (subsidiary or branch) intended to be established.

Legal affairs  

Obligations and requirements to provide RegTech-services

With respect to Regulatory Technology, there are no specific licensing requirements for RegTech services.  The current regime is that RegTech is subsumed in the business activities of licensed entities and subject to regulations on information technology. Where RegTech functions are outsourced to third parties, BSP supervised financial institutions are subject to the following requirements: (a) conduct a risk analysis on the impact of the outsourcing and implement measures to address the risks; (b) conduct a due diligence on third party service providers; (c) report outsourcing arrangements to regulators and (e) ensure outsourcing arrangements contain contractual provisions on cooperation and access to records in the event of a BSP audit. Depending on the activity to be outsourced and the license held by a BSP-supervised entity, certain outsourcing activities may require prior BSP approval.  

In general, unless the outsourced activity also requires a secondary license from the BSP, RegTech service providers are not required to obtain a specific RegTech service license.

Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area

This is a developing field in the Philippines, and we expect regulation to develop moving forward.  Additional and specific regulations may be enacted in the future.

Economic conditions

Market size for RegTech-services and biggest companies in this business area

We do not have information on this. In 2019, www.unawa.asia was launched claiming to be the first RegTech company in the Philippines. The platform focuses on permitting requirements to start b

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