Governor Amando Tetangco announced that the Monetary Board, in its meeting held on June 30, 2005, approved the creation of a Core Information Technology Supervision Unit (CITSU) within the Supervision and Examination Sector (SES) of the BSP. The move to form this unit is in response to the accelerated adoption of information technology-based products and services and e-commerce in the Philippines by banks and non-bank institutions.
The unit will provide a baseline of minimum standards through the issuance of IT Risk policies that include the management of IT risk which is an operational risk under Basel II. Its aim is to align IT policies with the international best practices.
The CITSU will also be responsible for conducting IT supervision and examination of these financial institutions and other payment entities. The unit will examine the institution’s technology-related risk management process including the plan for the use of technology, how the technology will be implemented and the measurement and monitoring of the risk-taking activities of the financial institutions. The supervision will be carried out in collaboration with the general examination functions of the SES and will be focused on areas that have material impact on bank’s risk profile.
Likewise, the CITSU will review requests from financial institutions to offer products and services that involve the use of electronic channels via the Internet. These include activities like overseas or domestic wire transfers of funds, payment of bills and other on-line transactions offered to retail and wholesale customers. The unit will assess the adequacy of controls adopted relative to these activities to forestall operational problems such as collapse of the computer system resulting in the disruption of banking services and fraud in internal and external transactions.
The pool of IT examiners will consist of examiners with certifications from ISACA, the internationally recognized organization of certified information systems auditors (CISA). Members of the task force should also have strong examination and bank supervision experience.
The conceptualization of the CITSU was made possible through a technical assistance grant from the World Bank – ASEM Asian Financial Crisis Response Fund. The grant enabled the engagement of foreign consultants to further strengthen and enhance BSP’s capacity to supervise the banking sector on the area of operations risk.