BSP orders banks to protect customers from social media risks

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has directed banks and financial institutions to manage social media risks after the Philippines was tagged as one of the world’s fastest growing nations in terms of social media usage.

The BSP’s Monetary Board has approved the issuance of pioneering guidelines on social media risk management that advocate responsible use of social media by BSP Supervised Financial Institutions (BSFIs) to foster a balanced and coherent approach to innovation. 

The BSP said it recognizes that social media presents vast potential benefits and opportunities for greater economic advancement and financial inclusion.

It pointed out the guidelines would ensure the necessary safeguards, governance structure, and standards are in place to effectively manage the associated risks.

A report titled Digital in 2016 of We Are Social showed there are over 48 million active social media accounts, accounting for 47% of the entire Filipino population.

“The issuance is timely and suitable considering that the Philippines is currently one of the world’s fastest growing nations in terms of social media usage and level of engagement across various social media platforms,” the BSP said.

The regulator noted BSFIs have been aggressively leveraging on social media platforms for marketing, offering of innovative financial products and services, and engaging their customers and stakeholders. (READ: ATM card skimmers strike at upscale mall in Makati)

“At the back of this evolving and increasingly dynamic operating environment, the new regulation underscores the importance of having a well-defined social media risk management strategy aligned with BSFIs’ strategic business goals/plans,” it added.

Depending on the extent and degree of social media usage, BSFIs are required to adopt commensurate risk management mechanisms and governance structure to effectively identify, measure, manage and monitor risks arising from social media platforms.

Aside from ensuring that the pertinent legal, reputational, strategic, operational, and compliance risks are addressed, the BSP said the new guidelines highlight added dimensions to these traditional risks that BSFIs need to consider in designing their social media risk management program.

The BSP said additional risks include the growing threats on information security and fraud such as account take over, malware attacks, as well as phishing and spoofing schemes, among others.

“A BSFI’s social media risk management program should, at a minimum, be able to address potential reputational risks as well as provide guidance on acceptable use of social media by employees, whether for official or personal purposes,” the BSP said.

Furthermore, banks and financial institutions should make sure that existing rules and regulations on financial consumer protection, cyber security, outsourcing and anti-money laundering are complied with in the formulation and implementation of their social media policies. – Rappler.com