BSP gives money changers more time to register

The Bangko Sentral ng Pilipinas (BSP) is giving money changers, remittance agents and foreign exchange dealers more time to register, extending its deadline for another 90 days until August this year.

Under pressure from the Financial Action Task Force (FATF), the BSP had begun requiring the country’s over 50,000 money-changers, remittance agents and foreign exchange dealers to register and report their transactions beginning this year.

According to BSP Deputy Governor Amando M. Tetangco, the BSP has also begun discussions with local government units to expedite the registration of these companies and to facilitate their regular reporting once they have registered.

"There are structures already in place in local governments that we can utilize to make it easier for these operations to register," Tetangco said. "Right now, they have to go to BSP offices to register. We want to make it easier."

Despite its initial reluctance to take on over 50,000 moneychangers and remittance agents, the BSP had decided it had no choice but to require their registration in an attempt to calm FATF’s fears that these channels were being used to finance criminal and terrorist activities.

Once registered, the BSP said the circular also required these agents and dealers to comply with the provisions of the Anti-Money Laundering Act and report all transactions that were specified by the law, including suspicious transactions that could indicate money-laundering.

Tetangco said the BSP was requiring the registration for the first time to enable its examiners to monitor these activities.

Covered in the registration requirement are money-changers or foreign exchange dealers regularly engaged in the business of buying or selling foreign currencies.

The circular also covered remittance agents referring to persons or entities engaged in remittance, transfer or transmission of money on behalf of any person to another person or entity.

Reyes said these include cash couriers, money transmission agents, remittance companies and the like.

Under the BSP’s circular, agents and dealers that already operate before the issuance of this circular could still operate but they are required to apply for registration within 90 days.

The BSP said that although money-changers were under the BSP, they did not exercise the same regulatory powers over them as they do over banks and other non-bank financial institutions.

"We don’t even have any idea how big this industry is or how many there are and how big their transactions are," Tetangco said. "This is one of the baseline studies that we have to conduct."

Unlike banks whose transactions create a paper trail that are relatively easy for the BSP to follow and examine, money changers are more informal and, until now, were not required to report to the BSP.

The BSP wanted to include money changers in the AMLA net to ensure that the tightening of bank reportorial requirements would not result in the exploitation of these unregulated operations.

The Philippines has been struggling to comply with the requirements of the FATF but developed countries have expressed growing concern over other non-bank channels for fund such as money changers, door-to-door courier services and the so-called "hawala" system.

The Anti Money Laundering Council (AMLC) has also started considering the possibility of legalizing the so-called "hawala" system of dollar remittance, a cheap and unregulated but unsecured system often preferred by overseas Filipino workers.

Informal dollar remittance methods have been under the watch of the According to the AMLC, the recent meeting of the FATF’s Asia Pacific Group (APG) had singled out the "hawala" system to look for ways to curb the flow of money through its unmonitored channels.