BSP seeks help in registration of money lenders, forex dealers

The Bangko Sentral ng Pilipinas (BSP) will ask local governments to help register over 50,000 money changers, remittance agents and foreign exchange dealers to complete the registry that would allow closer monitoring and surveillance by regulatory authorities.

Small-scale money-changers have been repeatedly identified by the Paris-based Financial Action Task Force (FATF) as possible channels for funds used for illicit activities, specifically terrorism.

According to BSP deputy governor Amando M. Tetangco, the BSP requires the registration of these currency operators nationwide but they would have to seek out BSP regional offices in order to do so.

"To make it easier, we want local governments to help because they are the most accessible government institution," Tetangco said.

Tetangco said the BSP had initiated talks with the Department of Interior and Local Government (DILG) to facilitate this cooperation between the government agencies.

The BSP has already given money changers, forex dealers and remittance agents another 90 days to register with the BSP. Tetangco expressed hope that if local governments would be involved, the registry would be easier to complete.

"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 money changers 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 are being used to finance criminal activities.

Once registered, the BSP said the circular will also require 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 is 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 covers 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. These include cash couriers, money transmission agents and remittance companies.

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

The BSP said although money changers are under their jurisdiction, they do not exercise the same regulatory powers over these entities 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 they 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 surveillance 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 as 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.