Bangko Sentral tightens rules on pawnshops

MANILA, Philippines—Bangko Sentral ng Pilipinas (BSP) has directed pawnshops to strictly implement identification requirements for customers to help ensure that items being pawned are not stolen goods or illicit covers for money laundering.

The BSP said it has received reports that a substantial number of pawnshops do not comply with the “know-your-pawner” policy, which requires people who pawn items to show proper identification cards and provide relevant personal information such as their address, tax account number and existing pension fund and insurance information, among others.

Lax implementation of this policy makes pawnshops susceptible to becoming facilitators of money laundering activities, the BSP said.

The BSP issued a memorandum to pawnshops reminding them of the policy in line with efforts to strengthen its campaign against money laundering.

“It has come to our attention that there are pawnshops that are not adhering to existing regulations on acceptance of pawn items and the  ‘Know-Your-Pawner’ policy,” the BSP said in Memorandum 20-2013 signed by Deputy Governor Nestor Espenilla Jr.

“In this connection, all pawnshops are hereby reminded to strictly comply with and implement in all transactions the provisions of the Manual of Regulations for Non-Bank Financial Institutions,” the BSP also said in the memo.

Identification requirements include presentation of an identification card that bears the photograph of the pawner. It also includes the provision of the following information, as stated under the revised implementing guidelines of the Anti-Money Laundering Act: Name, present and permanent addresses, date and place of birth, nationality, nature of work, contact numbers, tax identification number, social security system (SSS) or Government Service Insurance System (GSIS) number, source of funds, and, if applicable, names of insurance beneficiaries.

The Financial Action Task Force (FATF), the international body against money laundering, earlier this year kept the Philippines on its “grey list,” a list of countries whose regulatory environments are still weak but have shown significant progress in strengthening its mechanisms to help deter money laundering.

FATF cited the passage of a stricter law against money laundering in the Philippines, among other measures.

Nonetheless, FATF said the Philippines has to achieve much more in order to get out of the grey list and be declared as a country that is fully cooperative in the global fight against money laundering.

Besides stricter implementation of existing laws versus the illegal activity, FATF wants the Philippines to expand the list of entities that are required to report “suspicious” transactions to authorities.

In particular, FATF said casinos, some professionals, real estate companies, pre-need firms, dealers of jewelry and precious metals should also be made to report such transactions.