Philippines boost defenses against cyber attacks

Bloomberg

The Philippine central bank is expanding its cyber-security unit, placing banks and money changers under tighter scrutiny, and will start to regulate digital currencies to ward off laundering and technology crimes.
Bangko Sentral ng Pilipinas will tighten its oversight of foreign-exchange dealers and remittance companies in the next two to three months, Deputy Governor Nestor Espenilla told a forum in Mactan City, Cebu.
Virtual currencies like bitcoin, which are currently unregulated and are used in transactions that have increased to at least $2 million a month, will be covered by a 2005 circular that will be amended, he said. Espenilla said he estimates that the Philippines is the third-largest user of bitcoin, partly because of the volume of funds sent by Filipinos working overseas, which last year climbed to $25.8 billion.
The Philippines has been in the spotlight after one of the largest bank heists in modern history, where thieves hacked into Bangladesh Bank’s account at the US Federal Reserve in February and routed $81 million to accounts at Rizal Commercial Banking Corp.
The funds were transferred by a remittance company into gaming halls.
The central bank is bolstering defenses and imposing more stringent rules “in light of recent developments,” Espenilla said. The regulator will require financial institutions to strictly run checks on their customers at all times, Espenilla said.

Consumer Protection
“While technology helps in providing financial services, there are risks like money laundering and compromising consumer protection,” he said. “These are old risks in new hands.”
Separately, Philippine banks had suffered “ small and manageable” cyber-attacks, Espenilla said last month after Swift, the global inter-bank messaging system, said hackers had struck again.
For a quick guide on how the banking messaging system works.
“In terms of the KYC rules, the regulations are already there,” the deputy governor in charge of bank supervision said in an interview after the briefing.
“We’re tightening our oversight over banks’ fulfillment of those
policies.”
The central bank is also evaluating lenders’ proposal to allow a higher level of undocumented foreign-exchange transactions with residents from the current $120,000 cap.
That would mean less dealing on the black market and more on the formal spot market, which is easier to regulate, Espenilla said.
At the two-day forum in Cebu, central bank Governor Amando Tetangco said that while domestic liquidity remains robust and the growth in residential property prices quickened in the first quarter, there is no property bubble.
He stressed the need for regulators to keep up with fast-moving technology.
“There is a need to upgrade regulatory capability to cover new products arising from the rise of financial
technology,” Tetangco said.