Central bank sets new guidelines on bank outsourcing

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has released new guidelines that determine that services that can be outsourced by banks and other financial institutions. According to Circular 889 that the BSP recently issued, banks can only outsource internal functions given appropriate processes, procedures, and information systems that can adequately identify, monitor, and mitigate operational risks arising from the outsourced activities. The new guidelines state that key risk areas related to outsourcing such as strategic; reputation /legal; operational, compliance, country and concentration risks should be evaluated before entering into and while managing outsourcing contracts. The BSP said it will continue to allow banks and non-bank financial institutions to outsource certain services or activities.