BANGKO Sentral ng Pilipinas is requiring would-be pawnshop operators and their business partners to be fully aware of anti-money laundering regulations first before they can operate, a move intended to prevent money laundering activities in the country.
In a circular , Bangko Sentral Governor Amando Tetangco Jr. said it would require pawnshop operators, partners and their personnel to attend a briefing on pawnshops regulations and a seminar on the Anti-Money Laundering Act.
Amando Tetangco Jr.
“As a prerequisite for the issuance of the authority to operate, the proprietors, partners, and directors of pawnshops are now required to attend a briefing on pawnshops regulations and a seminar on the Anti-Money Laundering Act conducted by Bangko Sentral or the Anti-Money Laundering Council, or their accredited service provider,” the circular said.
It said this formed part of the amendments of the provisions of the manual of regulations for non-bank financial institutions.
Pawnshop officers and personnel will particularly be briefed on customer identification, record keeping and reporting of covered and suspicious transactions. These officers and personnel should then relay what they learned to other employees to ensure effective compliance.
“Any violation of the provisions of these regulations shall be subject to the administrative penalties,” Bangko Sentral said.
Last November, Deputy Governor Nestor Espenilla Jr. said the regulator was eyeing to put in place 82 regulations this year to better manage risks and improve governance for its supervised financial institutions. He said the new regulations would not be all directed to the banking industry.
Apart from banks, Bangko Sentral also supervises and regulates pawnshops, lending investors, non-stock savings and loan associations, venture capital corporations, credit card companies, investment houses, finance companies, investment companies, and securities dealers/brokers.
Bangko Sentral previously said it would upgrade the regulations on non-bank financial institutions in a bid to make the industry players comply with their anti-money laundering obligations.
Espenilla said this was in line with the move to prevent the recurrence of money laundering activities in the country, the latest of which involved $81 million that was stolen by cyber thieves from the account of Bank of Bangladesh in the Federal Reserve in New York.
The dirty money entered the Philippine banking system through a branch of Rizal Commercial Banking Corp. in Makati City in February 2016.
Espenilla also said the regulator was also monitoring the activities of pawnshops and non-stock savings and loans associations. He said pawnshops, in particular, have actually evolved beyond the traditional construct of a corner establishment where anybody could bring their jewelry in exchange for cash.
He said a significant chunk of pawnshop business was actually derived from remittance activities and other kinds of cross-sold activities. He said pawnshops were the number one distributors of micro insurance more than banks, competing the traditional insurance agents.
Espenilla said the country’s pawnshop law was based on presidential decrees that were issued during the Martial Law era and implemented by Bangko Sentral.
Espenilla said shadow banking was an area of growing interest and concern because an unintended consequence of strengthening oversight over the formal banking system might result in the potential enlargement of shadow banking.
Espenilla, however, said that tightening some laws might result in diminished services, for example, in remittance business.
He said there must be a thorough study on how to recapture the business by strategically modifying the foreign exchange regulations, such that more transactions could be done in banks rather than in money changers.