The Philippine central bank has approved the adoption of a new compliance framework for nonstock savings and loan associations, or NSSLAs.

Bangko Sentral ng Pilipinas is requiring NSSLAs to establish a compliance risk management system that will identify and mitigate risk that may erode their franchise value, such as those arising from failure to comply with regulations, failure to manage conflict of interests, or money laundering and terrorist financing activities, according to an Oct. 5 circular.

The compliance function must also have a formal status within an NSSLA through the establishment of a charter or a formal document approved by the board of trustees.

This function should facilitate the management of compliance by advising senior management and the board of trustees on relevant rules and regulations, establish written guidance to staff on the implementation of regulations and standards, as well as conduct compliance testing, among other means.

In addition, the central bank is requiring the appointed chief compliance officers of NSSLAs to have the necessary qualifications and understanding of laws and regulations relevant to NSSLAs. Chief compliance officers must submit proof of such qualifications to the central bank and failure to do so will result in their removal.