Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. on Monday defended the P500,000 limit on cash withdrawals as a “very effective” measure to curb money laundering, citing its alignment with transaction reporting thresholds.
The new cap, which took effect on Oct. 7, was imposed as the BSP tightens measures against illicit financial flows following a recent controversy involving a major flood control project.
“I think it’s very effective so far. As best we can tell, it’s a very effective measure. There are complaints and we’re listening to those complaints, but for now, it’s a good measure,” Remolona told reporters in a press chat.
He said the withdrawal limit matches the covered transaction report (CTR) threshold, which requires banks to report any transaction of P500,000 or more.
Banks also retain the authority to file a suspicious transactions report (STR) for any activity that warrants a closer look at fund sources and whether they commensurate with the individual’s declared earnings.
The BSP chief said banks have openly welcomed the new regulation. “They love it. They’ve always been suspicious of some transactions, but they couldn’t refuse [them before]. But now they can say ‘BSP ‘yan eh,’ it makes their life easier,” he said.
The reporting is intended to help the BSP “connect the dots” between multiple bank accounts.
Remolona said, however, demonetizing high-value banknotes, such as the P500 and P1,000 bill, while a “tantalizing” proposal to curb corrupt practices, could make life harder for ordinary Filipinos, as the thousand-peso bill is a heavily used currency in the country.
“It’s not so simple. To me, it’s like the saying, you cut off your nose just to spite your face. You’re doing more damage than [it’s worth],” he said.
He recalled similar measures being decided against during his time at the New York Federal Reserve due to the severe inconvenience it would cause for most Americans, simply to slightly slow down illegal activities.
“For a small inconvenience for contractors, you’re going to make life hard for many people. But we’re still looking, we haven’t decided yet,” Remolona said.
“But if you think about it, it’s not going to stop these guys,” he said.
