New SEC rules simplify onboarding of low-risk accounts

new sec rules simplify onboarding of low risk accounts - New SEC rules simplify onboarding of low-risk accounts

Securities and Exchange Commission (SEC) Chairman Emilio B. Aquino has issued a memorandum circular that seeks to simplify the onboarding of accounts to financial intermediaries if they have a deposit of not more than P50,000.

“For purposes of this circular, an account opened and maintained by an individual investor with an initial and subsequent deposit, investment or re-investment amounting to an aggregate of not more than P50,000 shall be deemed to be a ‘low-risk account’,” the Aug. 11 SEC Memorandum Circular No. 21 said.

The commission said the simplified onboarding procedures for low-risk customers of financial intermediaries are necessary in order to achieve “financial inclusion.”

The new rules cover regulated entities authorized by SEC to intermediate and effect securities transactions for and on behalf of customers and are required to conduct customer due diligence.

The memorandum circular allows a low-risk investor to invest in excess of the prescribed limit “only for the purpose of exercising his right as a holder of securities.”

SEC said it may allow regulated financial intermediaries to require a different threshold amount in determining an account as being low risk.

The commission said only Filipinos are allowed to open low-risk accounts.

The opening of accounts should follow the regular requisites and procedures required by the concerned regulated financial intermediaries in accordance with the relevant rules and regulations, including their internal procedures.

The minimum information needed for low-risk accounts are complete name of customer, birthdate, e-mail address, residential or business address, mobile and/or landline number, and source of income.

A copy of a verifiable identification card or document and a signature card are also required. The SEC said regulated financial intermediaries “may prescribe other criteria and measures for account opening in addition to the minimum information required.”

Regulated financial intermediaries will have to take the necessary steps to establish the true identity and existence of a customer not later than 15 days from the date the account is opened.

As for the conversion of an account from low risk to normal or high risk, regulated financial intermediaries are required to adopt the necessary policies and processes. — Arjay L. Balinbin

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