Forex, remittance companies face tighter rules

THE BANGKO Sentral ng Pilipinas (BSP) will put in place stricter rules for transactions of nonbank financial institutions to avoid a repeat of the money laundering controversy that shook the domestic financial system early this year.

BSP Deputy Governor Nestor A. Espenilla Jr. told reporters last week that monetary authorities are currently reviewing Circular Letter 471 in order to upgrade the regulations covering such firms.

Industry players were also sought for comment by the BSP on the planned tighter rules, Espenilla said.

“We are tightening the oversight over nonbank financial institutions such as remittance businesses, money changers and foreign exchange dealers” in a bid to avoid money laundering, the BSP official said.

“There will be clearer, well-defined obligations, particularly on antimoney laundering responsibilities. We want to make sure that everybody—banks and nonbanks—follows the same antimoney laundering protocol,” he said.

Espenilla earlier noted that there remain lapses in the overall antimoney laundering regulatory environment that partly led to the entry of $81 million in stolen money from Bangladesh’s central bank into the domestic financial system and casinos.

“We have to worry about nonbank financial institutions because an unintended consequence of strengthening oversight of the formal banking systems is the enlargement of the shadows or shadow banking, and this can happen in the non-bank context in real estate and payment services,” Espenilla said last April.

“We will see in the coming months a growing intensity of the BSP to focus on the shadows,” according to Espenilla, although the said the legal framework also presents limitations in what can regulators can do.

The BSP is hence more closely engaging with the Insurance Commission and the Securities and Exchange Commission under the government’s Financial Sector Forum, Espenilla had said.