BSP tightens watch on money service companies

Firms involved in money remittance and transfer must now register with the Bangko Sentral ng Pilipinas and will be regulated by monetary authorities in a bid to stem money-laundering through such channels.

In a statement Friday, the BSP said its policy-making Monetary Board recently approved an an updated comprehensive framework that enhanced the central bank’s oversight over money service businesses, which included foreign exchange dealers, money changers as well as remittance and transfer companies.

The BSP said this move would primarily promote “more effective compliance” with the Anti-Money Laundering Act under RA No. 9160.

Remittance company Philrem Service Corp. got embroiled as one channel through which $81 million stolen by cybercriminals from the Bangladeshi central bank last year made its way into the domestic financial and gaming sectors.

“Under the new rules, the BSP will regulate all remittance and transfer companies such as remittance agents, remittance platform providers, and e-money issuers. Remittance and transfer companies and other money service businesses are now required to notify the BSP in cases of: Commencement of operations, new accreditation of remittance sub-agents, change of tie-up partner/s, transfer of location and closure of business. They shall be further required to obtain prior BSP approval in the event of change in ownership or control. They shall also submit activity level reports to the BSP,” the central bank said.

Also, the new regulations require money service businesses to “register with the Anti-Money Laundering Council Secretariat for purposes of covered and suspicious transactions reporting.”

Specifically, money service businesses must register by executing a deed of undertaking that includes compliance with the anti-money laundering law as well as “adoption of the minimum standards of consumer protection in the areas of disclosure and transparency, protection of client information, fair treatment, effective recourse and financial education,” the BSP said.

Existing money service business operators are given six months from the date of the effectivity of the new regulations to secure BSP registration. Upon the expiration of the transitory period, all certificates of registration previously issued by the BSP would be considered automatically canceled and banks would be prohibited from doing business with unregistered money service businesses, it added.

The BSP likewise placed a limit on money service businesses’ cash transactions. “Large value payouts of more than P500,000 or its foreign currency equivalent, in any single transaction with customers or counterparties, shall only be made via check payment or direct credit to deposit accounts. Also, foreign exchange dealers/money changers shall be allowed to sell foreign currencies in the amount not exceeding $10,000 or its equivalent and not to exceed $50,000, or its equivalent per month per customer,” it said.

But the BSP nonetheless said that “exemption or higher limits may be granted upon application if justified by the business model of the foreign exchange dealers/money changers.”

The BSP warned that major violations of specific provisions of the new regulation and non-compliance with the deed of undertaking could result in cancellation of the BSP certificate of registration or other sanctions depending on the gravity.

Noting that money service businesses were “numerous but generally interconnected,” the BSP’s regulatory approach will be network-based. “Under this approach, an entity that operates a money service business, especially a remittance business, shall be held responsible for monitoring the operations of its remittance network for compliance with rules and regulations as well as for their accreditation and training,” the BSP explained.

The new framework also introduced different classifications of money service businesses depending on their average monthly network volume of transactions. There will be corresponding minimum capital requirement for each type. Registration fees and annual service fees shall also be based on the said classification scheme, the BSP added.