The Bangko Sentral ng Pilipinas (BSP) has expanded its authority over money service businesses (MSBs) by consolidating the rules and regulations for these non-bank financial institutions.
The extensive MSB guidelines, known as BSP Circular No. 1206, was approved on Dec. 23, 2024. BSP Governor Eli M. Remolona Jr. said the consolidated rules combines all other BSP provisions “to form an integrated set of rules bespoke to MSBs”.
MSBs are non-bank businesses operating remittance transfer and money changing or foreign exchange dealing. The umbrella category includes remittance transfer companies (RTCs), money changers/foreign exchange dealers (MC/FXDs), e-money issuers (EMls), and virtual asset service providers (VASPs).
According to the circular, the constitution of the “M-Regulations” in the BSP’s Manual of Regulations for Non-bank Financial Institutions (MORNBFI) is “anchored on the expanded regulatory and supervisory authority of the Bangko Sentral over MSBs by virtue of the enactment of Republic Act (RA) No. 11211 amending RA No. 7653 (The New Central Bank Act).”
The integration of all these provisions in just one book, the M-Regulations, will provide supervised MSBs and stakeholders a compendium of existing rules and regulations, said Remolona in the circular memo. “This will make referencing easier for better clarity of standards and requirements applicable to MSBs,” he added.
The M-Regulations details the regulatory framework for the MSB supervision. “lt is designed to accommodate regulatory enhancements match-fit for a fast-moving, complex, and at times, unpredictable risk environment of the MSBs,” said Remolona.
The M-Regulations also amended certain provisions in the Manual of Regulations for Banks that refers to MSBs such as the definition of e-money, the classification of pawnshop licenses, and the disclosure requirements of audited financial reports.
The M-Regulations includes the powers of the BSP to sanction and slap monetary penalties on erring MSBs, and all other supervisory authority for the registration and licensing of MSBs.
The circular also set a minimum required capital of P50 million for large scale remittance agents with or without money changing/foreign exchange dealing operations with monthly transaction volume of at least P75 million; and less then P50 million for small-scale operators or less than P75 million of transaction volume a month.
VASps with safekeeping and administration services will also have benchmark capital of P50 million and those without safekeeping and administration services will be required to put up P10 million as minimum capital.
Large money changer/foreign exchange dealers with a monthly transaction volume of at least P50 million will be required a minimum capital of P10 million. The small-scale operators will have less than P10 million as minimum capital.
The BSP has been strengthening the surveillance of MSBs to prevent illegal operations. There are about 7,357 MSBs registered with the BSP.
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.