UPDATE 2-Philippine central bank bolsters cyber security, may regulate bitcoin operators

* C.bank creates unit focusing on cyber security

* Looking to regulate virtual currencies to fight money

* May tighten regulations on remittance firms, money

(Adds quotes, details)

By Karen Lema

CEBU, Philippines, June 4 The Philippine central
bank is bolstering cyber security surveillance to help boost
banks’ defences and is looking at regulating bitcoin operators
to combat money laundering, a senior official said on Saturday.

More banks around the world have fallen victim to cyber
attacks that involved the use of fraudulent SWIFT messages, the
same technique at the heart of February’s massive theft from the
Bangladesh central bank.

The Philippine central bank has set up a separate cyber
security surveillance division to craft cyber security policies
and conduct surveillance work, monitor cyber threats and test
the ability of supervised institutions to manage cyber security
issues, Nestor Espenilla central bank deputy governor in charge
of banking supervision, said in a lecture organised by the bank.

“We have a core IT supervision group … and within that
group we created a new division that is focused on cyber
security issues to strengthen our capacity to deal with these,”
he said.

Policymakers were also looking at tightening regulations for
remittance companies and money changers, and regulating
operators of virtual currencies to boost efforts to combat money
laundering, he said.

Users of digital currency bitcoin more than doubled in the
Philippines in the first half of last year from a year earlier,
Espenilla said, while bitcoin transactions purportedly passing
through registered companies in the country range from $2
million to $3 million per month based on available estimates.

“That is what we are looking to do, whether it is now time
to impose hard regulations for virtual currency operators. Right
now, we look at them as akin to remittance companies,” Espenilla

The Philippine central bank revoked the license of Philrem
Service Corporation, a remittance company that anti-money
laundering investigators said was used to transfer some of the
$81 million hackers looted from the Bangladesh central bank.

The Anti-Money Laundering Council issued a complaint against
Philrem on April 28, accusing it of hiding the money trail via
a web of transfers and currency conversions through Philippine
bank accounts, before moving the cash through casinos in Manila
and junket operators.

Philrem has denied any wrongdoing.

(Reporting by Karen Lema; Editing by Paul Tait and Susan


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