BSP tightens rules on money services

The Bangko Sentral ng Pilipinas (BSP) has tightened rules on the operations of money service businesses (MSBs) including limiting the capability of these MSBs to transact big amounts of money in cash.

The new comprehensive framework, which aims to enhance BSP’s oversight over the operations of these MSBs, comes on the heels of last year’s money laundering scandal wherein hackers stole $81 million from the Bangladesh central bank and part of the money found its way to the Philippines after passing through remittance company Philrem and local bank Rizal Commercial Banking Corp.

MSBs include remittance and transfer companies (RTCs), money changers and foreign exchange dealers.

The BSP said the new rules are for “promoting more effective compliance with the Anti-Money Laundering Law.”

The BSP said under the new rules for MSBs, large value pay-outs of more than P500,000 or its foreign currency equivalent, in any single transaction with customers or counterparties, would only be done via check payment or direct credit to deposit accounts, the BSP said.

Also, money changers and foreign exchange dealers will 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.

Exemption or higher limits may be granted by the BSP upon application if justified by the business model of the money changer or the foreign exchange dealer.

The BSP will regulate all RTCs such as remittance agents, remittance platform providers, and e-money Issuers.

As such, RTCs and other MSBs are now required to notify the BSP when they commence operations as well as their new accreditation of remittance sub-agents (RSAs).

They also have to inform the BSP of any changes in the tie-up partners, 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,” the BSP said.

More importantly, they will also be required to submit activity level reports to the BSP.

“Finally, the new rules require MSBs to register with the Anti-Money Laundering Council Secretariat for purposes of covered and suspicious transactions reporting,” the BSP said.

The new framework also introduces different classifications of MSBs, depending on their average monthly network volume of transactions.

The BSP will impose a corresponding minimum capital requirement for each type. The registration fees and annual service fees shall also be based on the classification scheme.

MSBs are required as part of the registration process, to execute a deed of undertaking, which includes, among others, compliance with all the provisions of the Anti-Money Laundering Act of 2001 or Republic Act 9160 and the 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.

According to BSP data, as of June 2016, there are more than 18,000 BSP-registered MSBs covering 5,300 head offices and 12,700 branches, of which, 6,700 of which are also BSP-authorized pawnshops.

The MSB industry now includes, among others, the electronic money business subsidiaries of telecommunication companies, the BSP said.