THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to implement the International Transactions Reporting System (ITRS) and require all banks to submit details of all transactions between residents and nonresidents for improved monitoring.

The purpose of the ITRS is “to monitor cross-border transactions and to collect data for the compilation of the country’s balance of payments (BoP) statistics based on international standards,” the BSP said in a draft circular on its website.

It will also “serve as a platform for prudential supervision and monitoring of foreign exchange transactions by the BSP,” it added.

Stakeholders have until Aug. 11 to give feedback on the proposed circular.  

The ITRS is a data collection system that obtains information from banks on all peso and foreign currency transactions between a country’s residents and nonresidents, and transactions between residents that pass through the domestic banking system.

It will also feature a summary report that captures data on banks’ net on-balance sheet foreign exchange assets and net foreign asset position daily.

“The ITRS Report shall conform to the standards set in the BSP Memorandum No. M-2021-052 on the Submission of Prudential Reports Using Application Programming Interface (API),” the BSP said.

The central bank said the reportorial requirements of the ITRS would be incorporated under the Manual of Regulations on Foreign Exchange Transactions (FX Manual).

In the Manual of Instructions of the ITRS proposed by the BSP, the system will collect data on transactions through lenders’ correspondent accounts. These accounts include nostro and vostro accounts.

A nostro account refers to a bank account that is created by a lender in a foreign country with the currency of that county, while a vostro account is a part of correspondent banking in which a foreign bank acts as an agent providing financial services on behalf of a domestic bank.

“The data collection methodology employed by the ITRS is aligned with the BOP data compilation standards developed by the International Monetary Fund (IMF) and other internationally accepted standards, recommendations, and best practices,” the BSP said.

Banks will be required to complete weekly reports and monthly reports.

Lenders will also submit monthly consolidation of all foreign currency loans granted by banks to nonresidents and resident nonbanks. These should include all transactions made during the month and all loan accounts with outstanding balances.

The reference date for the weekly report will be on Fridays, while the reference date for the monthly report will be the last working day of the month.   

“All banks will no longer be required to submit the requirements of Circular No. 194 dated 30 March 1999, as amended (FX Form 1 for UBs/KBs), and Circular 284 dated 4 June 2001, as amended (FX Form 1A for TBs), once banks start submitting their ITRS Reports to the BSP,” the BSP said.

“The existing FX Form 1/1A Reports shall continue to be submitted weekly/monthly, following their existing deadlines and reporting rules, until otherwise advised by the BSP, to facilitate the gradual transition to the ITRS Report,” it added.

The ITRS will be reported on a solo basis, which refers to the combined financial statements of a bank’s head office and local branches in the Philippines.

The reports will go through validation checks and the BSP notify the banks if a report passed or failed. Only those deemed to have passed will be stored in the database.

“The ITRS report submitted to the BSP should be complete, accurate, consistent, reliable, and timely to comply with the BSP Reporting Standards. The report shall conform to the BSP’s relevant submission, reporting, and validation guidelines,” the central bank said.

“As such, the bank should have reviewed and validated the reports before submission to the BSP to ensure completeness and correctness. Adequate internal controls should likewise be in place to ensure adherence to the reporting standards,” it added. — Keisha B. Ta-asan

Neil Banzuelo