The Bangko Sentral ng Pilipinas (BSP) is strengthening the surveillance and increasing the critical monitoring of money service providers (MSBs) such as money changers and remittance centers to prevent illegal operations.
The BSP in a report said that with the proliferation of MSBs operating without BSP registration and “with the inherent vulnerability of MSBs to money laundering and terrorist financing activities” -- it has strengthened its surveillance arm and other “coordination efforts to cover illegally operating MSBs” in the country.
The BSP said the prudential regulations governing non-bank financial institutions or NBFIs will also be strengthened. An MSB is an NBFI.
The BSP is currently developing an MSB and pawnshop strengthening or MaPS program to improve the capability of pawnshops and MSBs “to manage their attendant risks by raising the regulatory standards on capitalization and form of organization.”
“This will be accompanied by outreach programs to increase the understanding of regulatory expectations and improve compliance with the prudential requirements of pawnshops and MSBs,” the BSP said.
It further noted that the proliferation of MSBs operating without BSP registration and the inherent vulnerability of MSBs to money laundering and terrorist financing activities, has prompted them to “strengthened its surveillance and coordination efforts to cover illegally operating MSBs in the Philippines.”
MSBs are non-bank entities engaged in remittance, money changing and FX dealing. Pawnshops are also referred to as MSBs by the BSP.
The BSP has cancelled the registration of three MSBs as of end-June this year. In 2023, the BSP cancelled 10 MSB registration. These MSBs operate as a remittance and transfer company (RTC) with money changing/foreign exchange dealing (MC/FXD) activities.
The BSP monitors other forms of MSBs such as electronic money or e-money businesses and also regulate all RTCs including remittance platform providers and e-money issuers. Money transfers and foreign exchange dealership also includes virtual assets.
Based on an October 2023 BSP report, pawnshops and MSBs are still the main financial service access points for borrowers in need of immediate liquidity. They offer not only remittance and money-changing services, but also cash-in and cash-out agents in the countryside.
Last March, the BSP released a draft circular where it is proposing new guidelines on the MSB reporting governance framework such as changes to risk monitoring, disclosure of crimes and losses, as well as adjustments to penalties for non-compliance.
The draft circular covers financial records, reports and audited financial statements of MSBs. It also addresses the BSP’s obligation to strengthen the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) measures.
The BSP said the amendments should “enhance regulatory and supervisory activities over MSBs to ensure that attendant risks remain manageable as the industry continually evolves and business models become increasingly complex amidst emergence of new players in remittance and breakthrough financial technology.”
As of end-December 2023, there are 7,357 MSBs registered with the BSP.