Metrobank tries to sever ties with large FX firms, is stopped by court
AMID a clampdown by banks on ties with money changers and remittance firms, a group representing local foreign exchange dealers is pushing back and challenging what it describes as a unilateral action of local banks to end its business relationships.
Last week, two members of the Philippine Association of Foreign Exchange Dealers, Money Changers and Remittance Agents Inc. (PAFEDMCRAI), namely MG Forex Corp. and GAP Forex Corp., obtained a 20-day temporary restraining order from the Makati Regional Trial Court that stopped Metropolitan Bank and Trust Co. from closing their bank accounts with the latter.
The halt order was sought by MG Forex and GAP Forex after they, along with other PAFEDMCRAI member firms, received letters earlier this month from Metrobank informing them their accounts would be closed upon the recommendation of the anti-money laundering department of the financial giant controlled by tycoon George Ty.
Metrobank’s decision to close their bank accounts came despite the forex firms’ having complied with the bank’s order last April for them to submit enhanced procedures to prevent money laundering and terrorist funding being coursed through these money changers.
“Despite such compliance and without any warning, [MG Forex and GAP Forex] received from Metrobank Alfaro Branch, a uniform letter signed by the branch head, informing that the said branch was ‘constrained to initiate Account Closing procedures on your account based on the recommendation of our Anti-Money Laundering Division (AMLD),’” their petition read. The two said Metrobank did not specify the reasons for closing their accounts, apart from a vague pronouncement that “the bank conducted enhanced due diligence.”
MG Forex, owned by businessman Michael Guy, is one of the largest non-bank foreign exchange firms in the country. As much as one-fifth of its daily foreign exchange transactions with remittance clients—worth up to P25 million per day—are coursed through its accounts with Metrobank, which it has maintained in good standing since 2001.
Meanwhile, GAP Forex, headed by Rolando Medestomas, has been dealing with Metrobank since early this year, and its peso transactions with the bank range between P50 million and P100 million per day, while dollar transactions reach as high as $1.5 million a month.
In granting the 20-day TRO, the Makati RTC said allowing Metrobank to close the money changers’ accounts in this manner would cause a loss of a “large amount of income essential for [their] continued business operations and would thereby suffer grave and irreparable injury, despite the efforts of the plaintiff to stop closure.”
Bankers interviewed by the Inquirer said banks can unilaterally decide to close clients’ bank accounts, but only for clear reasons, such as failure to comply with anti-money laundering regulations like know-your-customer requirements.
“There is a major move versus foreign exchange money dealers, even against the legit ones,” one banker said. “Rolly [Medestomas] and MG Forex are very, very legit and they follow the rules.”
“But this is the legacy of Philrem,” he added, referring to money changer Philrem Service Corp., which has been implicated in the controversy involving the laundering of $81-million in funds stolen from the Bangladeshi central bank last February.
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