Consumer protection in electronic banking (e-banking), e-commerce

Published by Atty. Fred September 20th, 2006 in Banking. 1 Comment

The Bangko Sentral ng Pilipinas (BSP) recently issued Circular No. 542, providing for
consumer protection for electronic banking. The salient features of Circular No. 542 are:
1. With the growth of e-banking and e-commerce, banks should use reliable methods of
originating new customer accounts, ensuring strict adherence to the usual KYC or
know your clients requirements.
2. The Circular spells out the minimum security measures that a bank should employ in
its automated teller machine (ATM) facilities and internet or mobile banking activities to
protect depositors and consumers from fraud, robbery and other e-banking crimes.
3. Banks should use appropriate technology to authenticate the identity of e-banking
customers, and establish sound monitoring system, including audit features that can assist
in the detection of fraud, money laundering, compromised passwords, or other
unauthorized activities.
4. Banks should establish and maintain comprehensive information security program and
ensure that they are properly implemented and enforced. Banks should ensure that their
information security measures and internal control related to electronic banking are
installed, regularly updated, monitored and are appropriate with the risks associated with
the products and services.
5. Banks are required to provide their customers with a level of comfort regarding
information disclosures, protection of customer data and business availability that they
can expect when using traditional banking services.
6. Banks may receive customer complaints either through an electronic medium or
otherwise, concerning an unauthorized transaction, loss, theft in its electronic banking
account. Banks should also establish procedures to resolve disputes arising from the use
of the electronic banking products and services.
7. The Board of Directors are expected to take an explicit, informed and documented
strategic decision as to whether and how the back is to provide e-banking services to their
customers. On the other hand, bank Compliance Officers should ensure that proper
controls are incorporated into the system.
Circular No. 542 was published in the Philippine Daily Inquirer (11 September 2006). It
takes effect 15 days after publication.