Philippines Mandates National ID Linkage for Financial Institutions

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is proposing to require banks, digital lenders and other regulated financial institutions to connect their customer verification systems to the government’s National ID database. Under a draft memorandum, nearly all BSP-supervised institutions (BSI) would have to onboard with the Philippine Statistics Authority (PSA)’s National ID Authentication Services (NIDAS) for customer due diligence, including account opening and identity verification. The proposal is intended to expand the use of the National ID as the country’s “primary and official proof of identity,” subject to proper authentication, while strengthening know-your-customer procedures across the financial system. “NIDAS enables BSIs to adopt risk-appropriate NIDAS Online Authentication Tiers and leverage biometric and demographic verification capabilities to support secure, efficient and reliable digital customer identification and verification,” the BSP said. Under the proposed phased rollout, universal and commercial banks with retail banking services, digital banks, electronic money issuers and virtual asset service providers will be required to submit their complete NIDAS applications within three months from the memorandum’s issuance. All other universal and commercial banks, thrift banks, rural and cooperative banks, covered payment system operators and other remaining BSIs would have six months to comply. An institution will initially be considered compliant once it has submitted a complete application and all documentary or regulatory onboarding requirements to the PSA. Financial institutions registered with the BSP after the memorandum takes effect will need to comply within the corresponding three-month or six-month period, counted from their registration date. Institutions seeking to move from the first phase to the second phase will need the approval of the relevant BSP supervising sector. The BSP clarified that the requirement would not prevent financial institutions from accepting other valid identification documents or using alternative verification methods, particularly when customers do not present a National ID or when NIDAS is unavailable. Once customer due diligence is completed through NIDAS, the resulting authentication confirmation may satisfy identification submission requirements for first-time customers, removing the need to present a physical or printed National ID. Financial institutions may retain these confirmation records, subject to data privacy and information security rules. They would also have to maintain adequate governance arrangements, anti-money laundering and counterterrorism financing controls, cybersecurity safeguards, data protection measures and customer consent mechanisms. The BSP said the proposed integration would support financial inclusion and digitalization while helping protect the integrity of the financial system. The central bank will monitor institutions’ application and onboarding status through the PSA. It may impose appropriate supervisory enforcement measures against institutions that fail to comply or take corrective action within the required period. Information Source: Philstar Business