Overseas Filipino Bank Act

Senate Office of the Secretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) First Regular Session ) 25 OCT -7 P3:51 RECEIVED BY: SENATE S.B. No. 1447 Introduced by Senator Ronald "Bato" Dela Rosa AN ACT PROVIDING FOR THE REVISED CHARTER OF THE OVERSEAS FILIPINO BANK, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES EXPLANATORY NOTE Overseas Filipinos keep our households alive and our economy resilient. Yet many of them and their families continue to pay the highest costs for being apart. Every peso lost to remittance fees is food off the table, rent unpaid, or tuition payment deferred. Delays and hidden charges push workers to informal "padala" channels where hard-earned money can be lost and families are exposed to scams. In the provinces, people still line up for hours and pay extra just to cash out. Too many OF families remain outside the formal financial system. By virtue of Executive Order No. 44 series of 2017, then President Rodrigo Duterte saw the need to establish a policy bank devoted to the welfare of overseas Filipinos. The creation of such an institution was intended to ensure the availability of financial products responsive to the distinct needs of overseas workers and their families. It was established to provide priority support for the growing financial needs of overseas Filipinos.

Following the policy direction of former President Duterte, the proposed measure seeks to institutionalize and revise the charter of the Overseas Filipino Bank (OFBank) to transform it to a fully digital bank dedicated to overseas Filipinos and their families. By expanding the Bank's powers and refining its governance structure, the measure aims to ensure that the OFBank remains a sustainable, technology- driven, and globally competitive institution that genuinely serves the financial and developmental needs of overseas Filipinos and their families. The proposed measure reaffirms the State's recognition of the sacrifices of overseas Filipinos. It further ensures that every overseas Filipino has access to affordable and efficient remittance channels as well as opportunities for investment, savings, and reintegration. In view of the foregoing, the immediate passage of this bill is earnestly sought. RONALD "BATO" DELA ROSA

Senate Difice of the Frecetary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session ) OCT -7 P3:51 SENATE RECEIVED BY: S.B. No. — 1447 Introduced by Senator Ronald "Bato" Dela Rosa AN ACT PROVIDING FOR THE REVISED CHARTER OF THE OVERSEAS FILIPINO BANK, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Overseas Filipino Bank

2 Act."

Sec. 2. Declaration of Policy. - The State recognizes the invaluable contributions

4 of Overseas Filipinos (OFs) to national growth and social development. The State shall 5 ensure their financial well-being by promoting accessible, cost-effective, fast and 6 secure financial services and remittance systems for senders and recipients. It shall 7 enhance credit and assistance programs for enterprise and personal needs. It shall reinforce the State's presence in the remittance market to foster competition and lower 9 costs. It shall provide strong reintegration and protection mechanisms for OFs and their families.

Sec. 3. Name, Nature, Place of Business, and Physical Touchpoints. - There is

hereby created the Overseas Filipino Bank (OFBank), a fully digital bank dedicated to Overseas Filipinos and their families, offering products and services processed end-to- 14 end through digital and/or electronic channels, subject to the General Banking Law,

1 Bangko Sentral ng Pilipinas (BSP) regulations, the Anti-Money Laundering Act, the 2 Data Privacy Act, and Philippine Deposit Insurance Corporation (PDIC) coverage for 3 eligible deposits. The OFBank shall maintain its principal office in the Philippines and may 5 establish domestic service points and physical touchpoints in the Philippines and 6 abroad, upon approval of the Board and, where applicable, the Monetary Board.

Sec. 4. Primary Functions. - As a government financial institution dedicated to

8 the needs of OFs, the OFBank shall: (a) Develop financial services and instruments for OFs (land-based, sea- based), Returning OFs (ROFs), dual citizens, emigrants / immigrants, students abroad, and OF families / dependents; (b) Ensure universal access of OFs to the Bank's services and instruments via remote onboarding and interoperable rails consistent with BSP rules; (c) Keep the cost of services, including remittances, at the bare minimum, with transparent fee disclosures and consumer redress; and (d) Provide reintegration support, financial literacy, and welfare/crisis assistance per Section 7.

Sec. 5. Corporate Powers and Banking Authorities. - The OFBank shall have

the powers of a GOCC and a bank, including to: (a) Prescribe and amend by-laws and operating policies; (b) Adopt a corporate seal, sue and be sued, make contracts, acquire or mortgage or dispose property; (c) Borrow, invest, and raise funds;

(d) Employ officers and personnel, with preference for qualified OFs, subject to civil service/BSP rules; (e) Establish physical touchpoints necessary to carry out its mandate; (f) Perform any or all of the following banking services, subject to the Manual of Regulations for Banks and BSP/Insurance Commission rules: (i) Grant loans, secured or unsecured; (ii) Accept savings and time deposits, including basic deposit accounts; (iii) Accept foreign currency deposits as allowed by law; (iv) Invest in marketable debt/bonds and other debt instruments; (v) Act as correspondent or collection agent; (vi) Issue electronic money products; (vii) Issue credit or debit cards; (viii) Buy and sell foreign exchange; and (ix) Present, market, sell and service microinsurance and consistent with investment/savings products, applicable regulations; and (x) Exercise such incidental powers as may be necessary, subject to BSP and other applicable laws.

Sec. 6. Authorized Capital Stock; Ownership Structure. - The authorized capital

stock of the OFBank shall be Ten Billion Pesos (P10,000,000,000.00), divided into shares of such classes and par values as the Board may determine consistent with BSP and Securities and Exchange Commission (SEC) rules, all of which shall be nominative and indivisible.

To strengthen ownership and align interests, not less than fifty percent (50%) 2 of the authorized capital stock shall be reserved for subscription by OFs and their 3 families; provided, that to preserve the Bank's public character and policy mission, the 4 National Government shall at all times retain not less than fifty-one percent (51%) of the voting control over the Bank, which may be achieved through the issuance of non- voting preferred shares or other share class structures approved by the appropriate authorities. The initial and subsequent paid-in capital may be sourced from appropriations 9 in the General Appropriations Act (GAA), equity transfers as may be approved by the 10 President upon recommendation of the Secretary of Finance and in consultation with 11 the BSP, and subscriptions by OFs and their families.

Sec. 7. Earmarking of Net Income for Overseas Filipino Welfare. - After

13 statutory reserves and dividends due under R.A. 7656, remaining net income shall be 14 used exclusively for programs benefiting OFs and their families, including: 1. Reintegration Support - livelihood, entrepreneurship, housing, and financial assistance to returning OFs; 2. Education and Welfare Assistance - scholarships, skills training, emergency aid for dependents; 3. Financial Literacy and Empowerment - responsible money management and investment; 4. Crisis and Legal Support - repatriation, legal aid, counseling for distressed OFs; and 5. Other OF-focused programs approved by the Board consistent with this Act.

Not less than fifty percent (50%) of the earmarked amount shall go to 2 Reintegration Support.

Sec. 8. Loans, Investments, and Liabilities. - The OFBank may:

(a) Grant loans/credit accommodations to agricultural, commercial, industrial and personal enterprises, subject to R.A. 8791 and BSP rules; (b) Invest in stocks and other investment instruments as allowed by law and BSP; and (c) Issue bonds and other evidence of indebtedness, subject to R.A. 8791 and BSP rules.

Sec. 9. Governance, Board Composition and Tenure. -

(a) The OFBank shall be governed by a nine (9)-member Board: 1. Secretary of Finance - Chairperson (ex officio, non-executive); 2. Secretary of Migrant Workers - Vice Chairperson (ex officio, non- executive); 3. Secretary, Commission on Filipinos Overseas (CFO) - Member (ex officio); 4. Director-General, National Economic and Development Authority (NEDA) - Member (ex officio); 5. One (1) independent director from the private sector with recognized banking/fintech/cybersecurity expertise; 6. Four (4) Overseas Filipino community directors: one from land- based OFWs, one from sea-based/seafarers, one returning OF, and one representative of OF families or overseas permanent residents.

The BSP may designate a non-voting observer to preserve regulatory independence. (b) Ex officio directors serve by virtue of office and may designate alternates at the next-in-rank level. Non-ex officio directors shall meet BSP Fit and Proper standards, be natural-born citizens, at least 35 years old, of good moral character, and with recognized expertise in banking, finance, economics, law, foreign affairs, business management, or government administration. Terms are three (3) years, staggered, with one reappointment allowed. (c) At least one-third (1/3) of the Board shall be independent directors. The Board shall maintain Audit, Risk, Governance/Nominations, and Consumer Protection Committees chaired by independent directors. (d) Directors, except ex officio, shall receive per diems consistent with industry norms and R.A. 11232.

Sec. 10. Powers and Functions of the Board. - The Board shall:

(a) Formulate policies and adopt by-laws, rules and regulations for the effective operation of the OFBank, consistent with BSP and other laws; (b) Determine the organization of the Bank and create departments/offices essential for its operation; (c) Subject to Monetary Board approval, establish overseas touchpoints; (d) Constitute an Executive Committee and such other committees as necessary; and

(e) Approve an Annual OF Impact Report detailing remittance costs per corridor, uptime and incident metrics, consumer complaints and resolution, and outcomes of Section 7 programs.

Sec. 11. Officers and Governance Structure. - The Chairperson is non-executive

5 and provides policy direction and Board leadership. The President/Chief Executive 6 Officer (CEO) heads day-to-day operations and is appointed by the President of the 7 Philippines upon recommendation of the Board, subject to BSP Fit and Proper 8 standards. The Chairperson and the President/CEO may not be the same person. The 9 Board appoints a Chief Operating Officer (COO) and such other officers as may be necessary. The Vice Chairperson (DMW) does not exercise management functions over the Bank.

Sec. 12. Roles of the Chairperson, President/CEO, and COO. -

(a) The Chairperson leads the Board and provides policy direction and governance oversight. The Chairperson presides over meetings and sets the agenda. The Chairperson ensures informed and timely decisions, oversees director performance and committee work, signs Board resolutions and approvals, represents the Bank in policy-level engagements, and safeguards the separation between Board oversight and day-to-day management, including crisis governance at the Board level. (b) The President/CEO heads day-to-day operations and implements Board- approved strategy, plans, and budgets. The President/CEO manages financial and operational performance and ensures compliance with applicable laws and BSP regulations. The President/CEO establishes internal controls and risk management, appoints and manages senior officers, executes contracts within

approved authorities, submits periodic reports to the Board, and leads the Bank's remittance-cost and service-quality programs with prompt escalation of material incidents to the Chairperson. (c) The COO oversees daily operations and service delivery, including payments and remittance processing, e-money issuance, onboarding and KYC operations, customer service, settlements, domestic and overseas touchpoints, and business continuity. The COO manages uptime, service-level standards, incident response, process improvement, cost efficiency, and vendor performance, and provides operational reports to the President/CEO and to the Board as required, without impairing the independence of Compliance, Risk, and Internal Audit.

Sec. 13. Legal and Internal Audit. - The OFBank shall maintain a Legal

Department headed by a chief counsel appointed by the Board, and an Internal Audit 14 Department headed by a certified public accountant with experience as 15 comptroller/auditor, appointed by the Board. The auditor shall have security of tenure 16 and may not suffer diminution of salary during the term, except for cause.

Sec. 14. Conduct of Business, Digital Resilience and Consumer Protection. -

18 The OFBank shall comply with BSP prudential and IT/cybersecurity standards, 19 outsourcing and third-party risk management, anti-money laundering and combating 20 the financing of terrorism (AML/CFT), and the Data Privacy Act. It shall maintain 24/7 secure operations with incident reporting, fraud controls, service level standards, and 22 accessible helpdesks in major OF corridors.

Sec. 15. Official Government Depository. - The Secretary of Finance, the

24 National Treasurer, city/municipal treasurers, and official custodians of public funds,

as well as GOCCs, are authorized to deposit government or corporate funds with the 2 OFBank, which is hereby declared an official government depository, subject to 3 existing laws and regulations.

Sec. 16. Remittance Cost Roadmap and Transparency. - Within six (6) months

5 from effectivity, the OFBank shall submit to the Department of Finance (DOF), 6 Department of Migrant Workers (DMW), and BSP a time-bound roadmap with 7 milestones to lower remittance costs, including fee transparency, corridor targets, 8 partnerships, and consumer redress. Progress shall be published annually.

Sec. 17. Alignment with Existing Instruments. - The conversion under Executive

10 Order No. 44 (2017) is affirmed. Any shareholdings by other Government Financial 11 Institutions (GFI) may, within twenty-four (24) months, be transferred or restructured 12 as approved by the President upon recommendation of the Secretary of Finance and 13 in consultation with the BSP, without impairing obligations or disrupting services. 14 Personnel shall be retained consistent with civil service laws, without diminution of 15 benefits.

Sec. 18. Appropriations. - The amount necessary for the initial paid-in capital

17 and implementation of this Act shall be charged against available appropriations. 18 Thereafter, such sums as may be necessary shall be included in the annual GAA.

Sec. 19. Implementing Rules and Regulations. - Within ninety (90) days from

20 effectivity, the DOF, in consultation with the BSP, DMW, Department of Information and Communications Technology (DICT), Department of Labor and Employment (DOLE) or Overseas Workers Welfare Administration (OWWA), Commission on 23 Filipinos Overseas (CFO), and the OFBank, shall promulgate the IRR. BSP matters shall 24 be governed by BSP regulations.

Sec. 20. Separability Clause. - If any provision of this Act is declared

2 unconstitutional or invalid, the remaining provisions shall remain in full force and 3 effect.

Sec. 21. Repealing Clause. - All laws, decrees, orders, rules, and regulations

inconsistent with this Act are repealed or modified accordingly.

Sec. 22. Effectivity. - This Act shall take effect fifteen (15) days after publication

in the Official Gazette or in a newspaper of general circulation. Approved,