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Stop illegal remittance agents, BSP urged

Informal forex channels a problem in the region

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A coalition of bankers in Asia has called on central banks in the region to slap tougher penalties on illegal remittance agents, citing the consumer risks associated with an expanding black market for money transfers.

The Asian Bankers Association (ABA), which concluded on Tuesday a two-day membership meeting in Manila, said remittances passing through informal channels were 30 to 40 percent more than those facilitated by banks and other legitimate remittance centers.

In the case of the Philippines, about $20 billion in remittances were facilitated by banks and duly registered remittance centers last year. Industry players, however, suspected that a lot of foreign exchange were sent to the Philippines—the fourth biggest recipient of remittances in the world with more than 10 million Filipinos working overseas—through unregistered remittance agents.

“At the moment, the illegal channels are much bigger than the legal channels for money transmission. Regulators are called to strengthen mechanisms [against informal channels] and make it difficult for illegal money transfers to take place,” Dilshan Rodrigo, chair of the advocacy committee of ABA, said in a briefing late Tuesday.

According to the ABA, the problem with informal remittance channels was the risk they pose to customers. Because they are not registered, their operations escape the eye of regulators.

Rodrigo said the Bangko Sentral ng Pilipinas and its counterparts in other Asian countries should come up with policies imposing strict penalties against unregistered remittance agents and providing incentives to legitimate remittance channels.

He said consumers would significantly benefit from an improved regulatory environment.

For one, he said beneficiaries of remittances would be less exposed to the risk of fraud. Rodrigo added that more remittance beneficiaries would be encouraged to invest in financial products offered by the banks if they were getting their money through these financial institutions.

“If funds come through banks, that presents more opportunity for money to be used for productive purposes. For example, recipients of remittances may be encouraged to avail themselves of savings and investment products of banks or to engage in entrepreneurship,” Rodrigo said.

The significant amount of money being sent through illegal channels was partly blamed on the gap in costs. Banks charge more than unregistered remittance centers in facilitating money transfer.

Rodrigo, however, said that if banks would be able to corner more remittances, then there would be scope for them to reduce remittance facilitation fees.

In the Philippines, remittance facilitation is a good source of income for businesses because of the huge amount of money being sent by overseas Filipinos.

For this year, the BSP expects remittances to the Philippines through banks to grow by at least 5 percent to more than $21 billion.

According to the World Bank, the Philippines is the fourth biggest recipient of remittances after China, India and Mexico.


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Tags: Asia , Asian Bankers Association , Banking , black market , BSP , Business , Illegal remittance agents

  • Diablo_III

    The bank there in the Philippines should upgrade that all transactions can be seen through online. Parang metrobank lang yata yung nakita ko na may online inquiry and access… Yung ibang bank wala pang online transactions. Can somebody tell me about banks who have online access? Metrobank has online access but it’s not good enough compared to what I experienced with Chase…

  • robrano

      It
    has a simple reason. The peso is so overvalued that more and more OFWs
    at least want to save the high transfer and bank fees and at the same
    time get more pesos when they change abroad. And since their families
    get less pesos for their dollar remittances “because remittances are
    pouring in”, slowly OFWs will not semit dollars anymore and find ways to
    remit pesos to their families.It is a super idiotic manner to tell
    OFWs to remit more for to help government and families and then it just
    helps the admin and BSP to push the peso irrational high and the
    families get less for more lower dollars since the high peso has every
    day a lower local purchase power with the endless increasing prices and
    fees. The OFWs should stop remitting dollars until the rate is at a
    reliable, unmanipulated rate.   Then, investors and tourists will come
    in and the export will go up, creating jobs and income and with this
    more taxes, too.
    Unfortunately, the super economists at Malacanang are
    more super than economists. RP is the only country worldwide where the
    economy should be boosted by overvaluing the local currency, all other
    know that a cheaper currency boosts investments, tourism and exports.

  • kismaytami

    ““If funds come through banks, that presents more opportunity for money to be used for productive purposes.” Ang nagkaka-oportunidad lang naman sa perang nasa bangko ay yung mga bank officials. Pwede silang umutang nang walang tubo. Pero kapag depositor ang umutang, sky high ang interest!

    • OFW28

      angtangamo Tiglao! skyhigh ang interest bakit ilang percent naba ngayon ang mga iba’t ibang loan sa mga banks?

    • robrano

       Positive for the families is, when they get a better rate at less fees. And near everywhere you get a better rate because anyone knows that the BSP rate is blown up for to get the remittances cheap, esp. now when OFWs send for Christmas. The BSP and government just want to skim the dollar flood for their (election) purposes. How a rate of 41 can be fair and correct when the purchase power of the peso is lower than at the time of a 50 rate.

  • Paul F. Whitman

    The problem for the big banks is that the smaller operators are providing better service at lower prices than they can, and they need the government tho help the muscle in to destroy the small operators. So they will define every business which is not them, to be illegal. No bank can give me the door to door service that I get at an equivalent price. The service from the boutique operator I use cannot be faulted. When was the last time you could say that about a bank?

  • akoombulator

    Isa pa kakarampot na nga ang Interest sa depósito mo sa banko kakaltasan pa

  • akoombulator

    sino ba naman ofw gustong magpadala sa banko napakalaki ng kinukupit nila sa pinag hirapang pera ng ofw

  • joboni96

    para sila ang kumita

    another self serving
    capitalist ploy

    using again the government as
    an errand boy
    to enrich themselves

  • oh_noh

    sa laki nga naman ng kinikita ng mga agencies related to MONEY EXCHANGE, dapat lang na pag-awayan yan!!!
    sino ba ang laging talo? e di ang mga kawawang OFW!!!

    • batangpaslit

      tumpak

  • puza65

    AKO AY MAS PABOR PA RIN SA BANKO DAHIL NASUBUKAN KO NA NOON ANG PRIVATE BANK LALO AT MALAKING PERA…LAHAT NG NIREREMIT KO SA ATM KUNG MAGKANO UN NANDOON SA ATM NYA..AT KAHIT ANG BANK ACCT. KO GANUN DIN WALANG NAWAWALA KAHIT ISANG SENTIMO…AYAW KO NANG MAULIT UNG NANGYARI NOON NA NAITAKBO UNG 40K KO LAKING PAGSISISI KO….



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