Money Services Regulatory Review Reports

Modernizing Government Regulations Program
MONEY SERVICE BUSINESSES

Regulatory Review
December 2019
LIST OF ACRONYMS
AMLA Anti-Money Laundering Act

AMLCS Anti-Money Laundering Council Secretariat
BSP Banko Sentral ng Pilipinas
EMI E-Money Issuer
FATF Financial Action Task Force
FDI Foreign Direct Investment
FXD Foreign Exchange Dealer
GDP Gross Domestic Product
GNI Gross National Income
LMIC Low- and middle-income countries
MC Money Changer
MSB Money Service Business
MVTS Money or Value Transfer Service
ODA Official Development Assistance
OFW Overseas Filipino Worker
RA Remittance Agent
RANP Remittance Agent Network Provider
RDA Remittance Direct Agent
RPP Remittance Platform Provider
RSA Remittance Sub-Agent
RTC Remittance Transfer Company
SDG Sustainable Development Goal
INTRODUCTION
Remittances are often linked to migration. Sending money to and from the home
country and across various locations within a country has continually been a
distinctive attribute of a migrant’s life. Migration is a short-term or long-term
movement of people from one location to another location with a divergent economic
performance and more integrated markets and societies, among others.1 Simply,
people migrate to areas with better and sufficient-paying employment opportunities
to increase their capacity to provide the necessities of their household.
Through remittances, internal and external labor migrants contribute financially to the
needs of their family members at home. Also, migrants induced by educational
opportunities away from home, for instance also receive allowances from their family
members at home to sustain their necessities. The spending induced by remittances
generally contribute to domestic consumption, a key component of gross domestic
product (GDP) and a measure of national economic growth. 2 Providers of remittance
transfer services play an important role in domestic and international financial
system, particularly in boosting the demand of local remittance beneficiaries.
At a macro level, remittances contribute in lifting Filipinos out of poverty through

boosting domestic consumption. Some studies suggest that a 10 increase in the
share of remittances in a country’s GDP can lead to a decrease in the proportion of
people in poverty of 1.6 to 3.5 percent. Remittances also boost entrepreneurial
activities. The 2019 Customer Expectations Survey (CES) shows that 5% of families
used remittances for investment, part of which goes to entrepreneurial activities. 3
In the Philippines, remittances from both domestic and international sources has
continued to grow at a steady pace for the past few years and this trend is expected
to last with sustained local and international migration. Money service businesses
(MSBs) are the predominant channel for transferring domestic remittances locally
and internationally4 while banks are the most preferred channel for transferring OFW
remittances (followed by MSBs).5
Because of the crucial role of money transfer service providers to the life of both in-
country and overseas migrants and its potential to be a channel for money
laundering and terrorist financing transactions, the government finds it an imperative
to closely monitor the industry. However, interventions to ensure consumer
1
International Monetary Fund, International Transactions in Remittances: Guide for Compilers and Users (Washington, D.C.: IMF
Multimedia Services Division, 2009), 5. Retrieved from https://www.imf.org/external/np/sta/bop/2008/rcg/pdf/guide.pdf
2
Banko Sentral ng Pilipinas, Consumer Expectations Survey (Fourth Quarter 2019) (2019), 6. Retrieved
from http://www.bsp.gov.ph/downloads/Publications/2019/CES_4qtr2019.pdf
3
BSP, Consumer Expectations Survey
4
PSA, Philippines National Migration Survey (2018). Retrieved from https://psa.gov.ph/content/domestic-remittances-are-just-important-
international-remittances-results-2018-national
5
PSA, Survey on Overseas Filipinos (2018). Retrieved from https://psa.gov.ph/statistics/survey/labor-and-employment/survey-overseas-
filipinos
Page 3 of 46
protection incur cost to both the regulating and regulated entities. This rationalizes
the need for the government to ensure that its intervention does not create
unnecessary burden/cost to the industry but instead will facilitate the flourishing of
the industry and in the end benefit all of society.
Definition of Money Service Businesses
MSBs are middlemen of remittance business and money changing/foreign exchange

dealing transactions. Focusing on the value chain of the remittance business
industry, such entities are non-bank financial institutions that facilitates international
and domestic transactions involved in sending and receiving funds or monetary
instruments. The Financial Action Task Force (FATF) refers to these entities as
Money or Value Transfer Service (MVTS) providers. The MVTS are ‘financial
services that involve the acceptance of cash, cheques, other monitor instruments or
other stores of value and the payment of a corresponding sum of cash or other form
to a beneficiary by means of communication, message, transfer, or through a
clearing network to which the MVTS provider belongs.”6 (See Figure 1) Such service
providers have wider networks in the sending and receiving points, have less
stringent identification requirements, and often focus on low-value, high frequency
transactions.
Figure 1. A Simple MSB Transaction and Settlement Process
Banko Sentral ng Pilipinas (BSP) Circular 942 defines MVTS in the same manner as
FATF but refers it as ‘remittance business.’ Providers of these services as
‘Remittance and Transfer Companies’ (RTCs). Under this broad category are
‘Remittance Agents’ (RAs) that operate a remittance business network that covers
any or a combination of several entities that similarly provide related-services. This
terminology can be somewhat confusing as RAs are not ‘agents’ in the legal sense
of principal-agent relationship in which the agent is an outlet for, and acts with the
6
Financial Action Task Force, Guidance for a Risk-based Approach for Money or Value Transfer Services (Paris, France: 2016). Retrieved
from: https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-RBA-money-value-transfer-services.pdf
Page 4 of 46
legal authority to bind, a principal. Rather, RAs are themselves “principals,”
contracting with customers to provide the remittance service. Any RTC may opt to
authorize any person to perform certain relevant undertakings in the remittance
business in their behalf. Agents of remittance service providers in the legal sense are
referred to in the framework as ‘Remittance Sub-Agents’ (RSAs). Figure 2 provides
the landscape of the Philippine remittance industry. In this report, the term “money
service business” will be used to refer to remittance business.
Under RAs are ‘Remittance Direct Agents’ (RDAs), ‘Remittance Agent Network
Providers’ (RANPs), and other similar entities as may be determined by the
Monetary Board. RDAs are entities covered by a direct contracted remittance
agreement or similar agreement to act in behalf of a third party engaged in
remittance business while RANs are entities that provides a network to perform
remittance business.
Apart from RAs, ‘Remittance Platform Providers’ (RPPs) and ‘E-Money Issuer’ (EMI)
authorized to facilitate remittance transactions using digital/online system are also
under the classification of RTCs. RPPs are a new category of RTC and they do not
directly transact with retail customers. Rather, they solely provide a shared or
common platform/IT infrastructure and maintains settlement accounts in order to
provide funds for remittance transactions within its network. Western Union, which
was not formerly registered as an RTC, and Transfast, which is currently registered
as an RA, are both in the process of registering as RPPs.
Figure 2. Landscape of the Philippine Remittance

Industry
There are many non-bank money transfer agencies, among them, huge multinational
firms, that are registered or authorized to operate by regulators. Figure 3 shows the
distribution of registered RTCs in the country as of December 2018. From the
perspective of regulators, such money agents are considered as informal but
authorized remittance channels. In fact, the BSP data on remittances explicitly stated
as coursed through banks (or formal channels) includes cash transfers from money
transfer agents, particularly those which maintain accounts with local banks.
Page 5 of 46
Transfers from these agents are captured in the reports by local banks to the BSP.
These channels are convenient to many remitters who may be willing to pay a
premium in exchange for a swifter and more accessible means for beneficiaries to
receive remittances.
Figure 3: Distribution of Remittance Transfer

Companies (December 2018)
2%
1%
97%
Remittance Agent Remittance Platform Provider E-Money Issuer
But again, within the context of financial intermediation, these channels, by their very
nature, do not go beyond simply facilitating money transfers. It has been pointed out
that such remittances are claimed by beneficiaries in cash and are immediately
consumed. Experts believe that this situation in general not only minimizes the ability
of formal financial institutions to re-channel these into funds for enterprise loans, but
also ―fail to increase the financial responsibility and credit worthiness of receiving
household. In any case, these channels could be viewed as increasing not only the
access of migrant remitters to authorized channels, but likewise provides them
alternative options for transferring money to their families, depending on the
exigencies of the situation.
Key Features of the MSB Industry
Typical customers of MSBs are the unbanked, the under-banked, and the OFWs.
The demand theory functions in such a way that customers will opt to transact with
an accessible middleman that can send his/her money at the cheapest cost and
fastest way possible, ceteris paribus. The following are the expectations of
customers to MSBs: (1) fast remittance both in settlement and transaction
processing; (2) convenient remittance for the sender and beneficiary; (3) real-time
cash settlement (as much as possible) between counterparties to eliminate/reduce
pre-funding; (4) accessible sending and payout locations; and, (5) affordable
remittance fees. These requirements are most often satisfied by money service
businesses (MSBs).
MSBs can be an “attractive, often lower cost option for persons that need to send
money quickly to another person as funds can be picked up by a recipient in a
relatively short timeframe, as opposed to waiting for domestic or international wire
transfers that may take several days to process in some cases” 7.The financial
service offered by MSBs is often cheaper than more conventional banking services
and is frequently used in areas with limited access to banking services.
In addition to the above-mentioned, some of the key features of MSBs8 are as

follows:
1. Typically, the MSB or sending agent accepts money transfer payments,

collects the required identification information, and enters the transaction and
sender's applicable information and the destined receiver systematically at the
point of origination.
2. The MSB transfer the payment details to the pay-out agent that will provide
the money to the beneficiary of the transfer (either directly to the agent or thru
a centralized clearing house/hub for information that connects different agents
of a provider).
3. The money transfer is made available to the ultimate recipient, in the
appropriate currency, at a receiving agent location in the paying jurisdiction.
4. The receiving agent will collect and maintain the required identification
information at the point of destination in accordance with the local applicable
law.
5. Pay-out methods vary by jurisdiction (may include cash, cheque, money
order, pay-out cards, mobile wallet, bank deposit or a combination).
BACKGROUND ON THE MODERNIZING GOVERNMENT REGULATIONS (MGR)

PROGRAM
The Modernizing Government Regulations (MGR) Program is a comprehensive

national regulatory reform program being implemented by the Development
Academy of the Philippines in partnership with the National Economic and
Development Authority.
In line with the Philippine government’s goal of pursuing good governance, the
program aims to: (1) enhance the capability of regulating agencies to develop smart
regulations through regular capacity building; (2) prevent regulatory failure through
risk-based approaches; (3) improve the effectiveness of regulations with regulatory
management system (RMS); and (4) reduce the costs of administration and
enforcement of regulations through regulatory and non-regulatory approaches.
7
lbid.
8
lbid.
The MGR Program highlights the following initiatives: Industry specific regulatory
mapping and review; national regulatory policy; training and technical assistance for
regulatory agencies on good regulatory practices (GRPs); Business regulatory
Information System website; manuals on GRPs such as Regulatory Impact Analysis,
Compliance Cost Analysis, and public consultation; RMS Standard for Management
of Regulations; Standard Cost Model for measuring regulatory costs.
OBJECTIVES OF THE INDUSTRY REGULATORY REVIEW
The Industry Regulatory Review Component of the Modernizing Government

Regulations (MGR) Program generally seeks to examine the existing regulatory
environment affecting the money service business industry. It also aims to determine
how they affect the growth and operations of businesses and identify
recommendations that would make those regulations more relevant and coherent.
Specifically, the review intents to:
1. Provide a better understanding of the policies and regulations governing the

money service business industry;
2. Determine the issues confronting the industry and the regulating entities in
terms of compliance and enforcement of regulations; and,
3. Recommend possible ways that can be adopted to address issues identified
and validated.
SCOPE OF THE STUDY
Private and government entities were included in the study. Regulations governing
management, standards, and transactional processes will be mapped. Experiences
pertinent to the remittance sector was captured to see nuances or differences in the
regulatory atmosphere in terms of regulatory burden and implementation efficiency.
Regulator and regulatee point of views were captured.
CONCEPTUAL FRAMEWORK
Figure 4. Conceptual Framework
METHODOLOGY
In order to achieve the desired outcomes for this study within the allotted time, the
following methodologies and research tools were utilized: (1). A desk review of
researches, studies and literature or materials available on Overseas Filipino
remittances to the Philippines; (2) Online Survey e.g Perception among
Regulatees/Interviews and Key Informant Discussions with relevant key
stakeholders; and 3. Industry Review Dialogue /Public Consultations/Focus Group
Discussions.
CURRENT GLOBAL SITUATION OF THE MSB INDUSTRY
Trends in Global Remittance Flows and Cost of Remittances
Recognizing the role remittance flow has in improving countries’ economic situation,
organizations around the world have been closely observing its trend along with
other related factors such as foreign direct investment (FDI), private debt and
portfolio equity, and official development assistance (ODA) (See Figure 5).
Specifically, the volume of remittances as a percentage of GDP and the magnitude
of remittance costs are remittance indicators being closely monitored.
As illustrated in Figure 5, it can be inferred that remittances are now the major
source of external financing in many low- and middle-income countries (LMICs)
excluding China, thrice larger than ODA, more stable than private capital flows, and
significantly larger than FDI flows. The World Bank forecasts the remittance flows to
LMICs grow by 4.3% in 2020 to reach a record of $574 billion.9
Figure 5. Remittance Flows to Low- and Middle-Income Countries (1990-2019)
9
World Bank,Source:
MigrationWorld Bank
and Development staff 31: estimates,
Brief Migration andWorld Development
Remittances, Indicators.and Outlooks
Recent Developments Lifted (April
from:2019), Retrieved
https://www.knomad.org/sites/default/files/2019-04/Migrationanddevelopmentbrief31.pdf
from: https://www.knomad.org/sites/default/files/2018-12/Migration%20and%20Development%20Brief%2030.pdf
Notes: FDI = foreign direct investment; ODA = official development assistance.
Because of macroeconomic forces of globalization and migration, remittances have
been continuously growing over the years. Two probable reasons as to why the
remittance market keeps on growing faster than GDP worldwide are: (1) the number
of migrants grew faster than the world population which implies the increased
likelihood of sending remittances and (2) migrants were able to earn higher income
because of diaspora to higher earning areas.
Apart from the volume of remittance flow, the cost of sending money is also an
indicator that is being closely monitored. The 2030 Sustainable Development Goal
(SDG) target for transaction costs of migrant remittances is 3.0% of the total amount
of remitted.10 Based on the Remittance Prices Worldwide Database of World Bank,
the average cost of sending remittances to LMICs remained at 7.0% in the first
quarter of 2019, which is still more than twice the SDG target percentage (See
Figure 6). As illustrated in Figure 7, the cost of sending money is lowest in South
Asia at 5% and highest in Sub-Saharan Africa at 9.3%. Specifically, remittance cost
in East Asia and Pacific declined by 0.4% in the first quarter of 2019.
Figure 6. 2011-2019 Global Average Cost of Sending $200
Source: World Bank staff estimates using Remittance Prices Worldwide Database, lifted from:
https://www.knomad.org/sites/default/files/2019-04/Migrationanddevelopmentbrief31.pdf
Figure 7. 2018 and 2019 Global Regions Comparison
10
https://www.knomad.org/sites/default/files/2018-12/Migration%20and%20Development%20Brief%2030.pdf
Dilip RathaNote:
and Sonia
EAP =Plaza, Sustainable
East Asia Development
and Pacific; Goal (SDG)
ECA = Europe No. 10.c.1:
and Central Asia;Reducing Remittance
LAC = Latin AmericaCosts, 16thCaribbean;
and the Coordination Meeting on
InternationalMENA = Middle
Migration (WorldSAR = South
East and North Africa; Bank: February Africa. 2018).
Asia; SSA = Sub-Saharan Retrieved from
https://www.un.org/en/development/desa/population/migration/events/coordination/16/documents/presentations/5f%20-
%20WB_Remittance%20Costs.pdf
THE CURRENT PERFORMANCE OF THE REMITTANCE INDUSTRY IN THE
PHILIPPINES
International Remittance
Remittance flow to East Asia and Pacific Region is projected to grow by 4.3% in
2020.11 In the Philippines, domestic and international remittances represented by
Overseas Filipino Workers (OFW) remittance inflows and internal migrant transfers
dominate the remittance market. International remittance from OFWs plays a pivotal
role, contributing to 10% of the overall GDP and 8.3% of the Gross National Income
(GNI) in 2017. The Philippines was the fourth and second top recipient of
remittances all over the world and in the East Asia and Pacific Region, respectively
in 2018 (See Figure 8). In the fourth quarter of 2018, the cost of sending money to
the Philippines is considered as among the lowest in the East Asia and Pacific
Region but still exceeds the SDG target by 0.5% on average.
Figure 8. Top Remittance Recipients (2018)
East Asia and

World
https://www.knomad.org/sites/default/files/2018-12/Migration%20and%20Development%20Brief%2030.pdf
At the micro-level, the impact of remittances depends upon their frequency, the
amount received, and the characteristics of the household (mainly its economic
activity, which determines income levels and regularity). International remittances
sent from OECD countries are usually more frequent (11 times per year on average)
as compared with those sent from developing regions ($150 per transaction on
average on an irregular basis).
11
lbid.
The total remittance sent by the recorded 2.3 million OFWs during the period April to
September 2018 was estimated at 235.9 billion pesos. Out of the total remittance,
169.4 billion pesos are the cash sent home. Table 1 shows that the majority of
OFWs sent their remittance through banks (52.8%) and through money transfer
services (45.0%).
Table 1. Total and Average Remittance of Overseas Filipino Workers by Selected

Characteristics of OFWs (2018)
Total Remittance Average Remittance
Selected Characteristics
(In million pesos) (In thousand pesos)
Total Remittance 235,851 111
Cash sent 169,401 83
Cash brought home 55,229 111
In kind 11,222 27
Total Cash Remittance 169,401 83
Mode of Remittance
Banks 89,369 110
Agency/Local office 3,344 118
Friends/Co-workers 169 32
Door-to-door 124 35
Money Transfer 76,300 64
Others 96 31
Source: Philippine Statistics Authority, 2018 Survey on Overseas Filipinos, Retrieved from
https://psa.gov.ph/statistics/survey/labor-and-employment/survey-overseas-filipinos
Note: The estimates cover overseas Filipinos whose departure occurred within the last five years and who are working or
had worked abroad during the past six months (April to September) of the survey year.
Domestic Remittance
Remittances are often associated with foreign currency inflows, or the money that
Filipinos abroad send to their families in the Philippines. However, remittances are
money transfers that can come from both domestic and foreign sources.
According to the Philippine Migration Survey (2018), 16 percent of the population

aged 15 and over received remittances and 10 percent sent remittances to other
family members in the past 12 months (July 2017-June 2018). Among those who
reported having received remittances, 48% got it from either a domestic source or a
foreign source while four percent received from both sources. On the other hand,
among those who reported having sent remittances, almost all (98%) sent it to a
domestic recipient (within the Philippines) (Table 2). Domestic remittances are
generally less frequent and of lower values (below $50).
Table 2. Percentage of population (≥15 years old) who received or sent remittances
(2017-2018)
Received Sent
Remittances Percentage Remittances Percentage
Received 16.2 Sent 9.5
Did not receive 83.8 Did not send 90.5
Total 100.0 Total 100.0
Number of persons 46,355 Number of persons 46,355
Origin of remittances Destination of
Percentage Percentage
received remittances sent
Local 47.9 Local 97.6
Foreign 48.4 Foreign 2.3
Both local and foreign 3.7 Both local and foreign 0.1
Total 100.0 Total 100.0
Number of persons 7,498 Number of persons 4,412
Ken Research (2019) narrates that majority of the overall domestic remittances is
funded by people/household members who have also received international
remittances from Filipinos abroad.12 The number of transactions was relatively more
in the domestic market and banks were the preferred channels for OFWs in order to
make remittances to their families in the Philippines, while Filipinos inside the
country preferred pawnshops and other money transfer companies to send
remittances.13 This is consistent with the result of the 2018 Philippine Migration
Survey showing that money service businesses (MSBs) was the predominant mode
for transferring remittances both domestically (90%) and internationally (72%),
followed by remittances through banks. Transfers through families and friends were
not so common (Table 2).
Table 3. Percentage distribution of remittances received from within and outside the
country by mode of transfer
Percent received from (Total = 100%)
Mode of transfer
within the country outside the country
Bank 5.3 26.4
Money transfer operations (MTO) 90.3 72.4
Family/friends 4.6 4.1
Agency/local office 0.5 0.2
Others 0.6 0.5
Number of remittance flows 4,211 4,211
Source: Philippines National Migration Survey 2018 retrieved from https://psa.gov.ph/content/domestic-remittances-are-
just-important-international-remittances-results-2018-national
GROWTH POTENTIAL OF THE INDUSTRY

To accommodate the increasing trend in remittance flows to LMICs, particularly to
the Philippines and across various regions within the country, the number of
remittance transfer service providers and agents can be foreseen to also increase,
thus increasing the level of competition in the industry. Sustained international
migration plays a crucial role in maintaining a healthy level of competition among
industry players.
12
Ken Research, Philippines Remittance and Payments Market Outlook to 2024: Growth backed by Sustained International Migration, Rise
in OFWs and Surge in BPO Sector (2019). Retrieved from https://www.kenresearch.com/banking-financial-services-and-
insurance/financial-services/philippines-remittance-payments-market/204157-93.html
13
MCORE Business Research, The Philippines Money Remittance and Bill Payment Services Market: An Outlook to 2022 (n.d.). Retrieved
from https://www.marketwatch.com/press-release/the-philippines-money-remittance-and-bill-payment-services-market-key-vendors-
trends-analysis-segmentation-forecast-to-2019-2024-2019-02-19
With the continual growth in FDI flows in the call center industry, electronics, and
energy sector, employment opportunities are expected to increase which may lead to
large scale migrations to urban cities. The continued growth in internal migration is
projected to sustain the growth of money transfers taking place in the Philippines.
In addition, rapid growth in the utilization online mobile technologies in the country
for money transfer and bill payments is a factor that may stimulate the future growth
of domestic remittance and bill payments market of the Philippines.14
International remittance market in the Philippines will continue to be driven by the

increasing deployment of Filipinos in other countries. Unskilled workers and laborers
will uphold their status as the largest deployed fraction of overseas workers and will
continue to account for the largest share of aggregate remittances.15
Through a better understanding of the population migrant workers and their families
at home, remittance flows could be leveraged to pull people out of poverty to develop
home countries’ economic infrastructure and to profit the money service business
(MSB) industry.
14
lbid.
15
lbid.
CURRENT REGULATORY FRAMEWORK
Legal Basis for Regulating and Supervising MSBs
As the country’s central monetary authority as provided in the New Central Bank Act
(Republic Act No. 7653), the BSP is responsible for providing policy directions in the
areas of money, banking and credit. It supervises operations of banks and exercises
regulatory powers over non-bank financial institutions with quasi-banking functions.
Moreover, the AMLC as the country’s Financial Intelligence Unit (FUI) is tasked to
protect the integrity and confidentiality of bank accounts and to ensure that the
Philippines shall not be used as a money laundering site for the proceeds of any
unlawful activity as provided in the Anti-Money Laundering Act (Republic Act 9160 as
amended Republic Act Nos. 9194, 10167, and 10365) and the Terrorism Financing
Prevention and Suppression Act (Republic Act No. 10168).
Since non-bank financial institutions specifically MSBs are concerned with the flow of
money from remitters to receivers, the government closely monitors them through the
BSP for the supervision aspect and AMLC for issues concerning money laundering and
terrorist financing.
Specifically:
 Section 3 of R. A. 7653, as amended – It shall likewise exercise regulatory and

examination powers over money service businesses, the monetary board is
hereby empowered to authorize entities or persons to engage in money service
businesses;
 Section 80 of R. A. 7653 – The Monetary Board may also require other persons
and entities to report to it currently all transactions or operations in gold, in any
shape or form, and in foreign exchange whether entered into or undertaken by
them directly or through agents, or to submit such data as may be required on
operations or activities giving rise to or in connection with or relating to a gold or
foreign exchange transaction;
 Section 3 of RA No. 9160, or the Anti-Money Laundering Act of 2001, as
amended, and Rule 3.e.1 of its Revised Implementing Rules and Regulations
(RIRR), states that covered persons include foreign exchange dealers, money
changers, and remittance and transfer companies under the regulation of the
BSP; and
 Section 11 of RA 9160, or the Anti-Money Laundering Act of 2001, as amended,
and Rule 11.d of the RIRR of RA No. 9160, as amended, states that the BSP
may, in the course of a periodic or special examination, check the compliance of
a covered person with the requirements of AMLA and its RIRR.
Supervision of MSBs before was only done through licensing as stated in BSP Circular
471 (2005), BSP Circular 942 (2017), and BSP Circular 1039 (2019). Considering the
passage of Republic Act 7653, the BSP is currently reviewing the regulations governing
the Money Service Businesses. Currently, MSBs are classified as part of the bigger
non-bank financial institutions (NBFI) classification and is covered by “N” regulations
(Section 4104N, 4143N, 4163N, 4196N, 4101N, 4102N, and 4660N) of BSP Manual of
Manual of Regulations on Non-Bank Financial Institutions). In the proposed circular,
MSBs will have its own set of regulations—tagged as “M” regulations. (See attachments
for the list of issuances relevant to the MSB industry).
Features of Section 4511N of Manual of Regulations
1. RTCs/MCs/FXDs shall be required to register with BSP before they can operate.
Requirements for registrations, include, among others, submission of notarized
Deeds of Undertaking
2. Duly registered RTCs may accredit their own RSAs.
3. RTCs/MCs/FXDs are required to register with the Anti-Money Laundering
Council Secretariat (AMLCS).
4. Mandatory training on AMLA, as amended.
5. Notification to BSP appropriate departments on:
a. commencement of operations;
b. newly accredited RSAs;
c. change of tie-up partner/s;
d. transfer of location; and,
e. closure of business.
6. Need for BSP approval on:
a. change of registered/business name; and,
b. change of ownership or control
Capital Requirements
An RTC is required to maintain minimum capital, based on its regulatory classification,

as set out in the following table:
Table 1. Type, Classification and Benchmark Capital for RTC
Benchmark
Type Classification
Capital
A Large-Scale Operator - Remittance Agent with or without money At least P50.00
changing/foreign exchange dealing operations with average million
monthly network volume of transactions of at least P75.00 million.
B Small-Scale Operator - Remittance Agent with or without money Less than
changing foreign exchange dealing operations with average P50.00 million
monthly network volume of transactions of less than P75.00
million
C E-Money lssuer as authorized under Subsection X780.2 of MORB P100.00 million
D Remittance Platform Provider P10.00 million
E Large-Scale Operator - Money Changer/Foreign Exchange Dealer At least P10.00
with average monthly network volume of transactions of at least million
P50.00 million
F Small-Scale Operator - Money Changer/Foreign Exchange Dealer Less than
with average monthly network volume of transactions of less than P10.00 million
P50.00 million
None of the RTCs interviewed expressed any difficulty meeting these capital
requirements. However, there was general acknowledgement that these requirements
had previously contributed to smaller players exiting the market or becoming
Remittance Sub-Agents of larger RTCs.
Remittance partners and new products RTCs are required to notify the BSP of the
addition and/or termination of RSP partners abroad, including submission of the
commercial agreement and proof that the partner is authorized to engage in the
remittance business and is subject to AML laws in the country in which it operates.
However, beyond that, the BSP does not independently investigate the sending
partners of its RTCs. The BSP also requires that it be notified of all new products. It will
generally enter a consultation process with the RTC regarding the product and provide
guidance.
Registration Process
The registration process is perceived by RSPs as straightforward and the BSP is seen
as eager to assist in the application process. Several RSPs found the 2017 re-
registration process particularly burdensome, but it was generally perceived as a
positive step for the market which rationalized and simplified the registration process,
removing some smaller players and those entities that would not or could not comply
with regulatory requirements. Many of those who could not meet the new registration
process became Remittance Sub-Agents of RAs.
Under the applicable regulations, the registration process is divided into two-stages: a
preliminary screening process to determine eligibility and, if eligibility is met, a review of
supporting documentation, including identifying tie-up partners. However, in our
interviews, the BSP framed this process slightly differently from the description in the
regulations. It characterized the first stage as an opportunity to demonstrate compliance
with AML/CFT requirements, including by presenting to the BSP in person a description
of the remittance systems. It characterized the second stage as more document-
focused and emphasizes compliance with the “fit and proper” standards applicable to
the entity’s principals and other requirements.
One difficulty noted by several market participants is the lack of coordination between
the BSP and municipal authorities with respect to registration. Municipal authorities
which issue general business licenses to those active in their municipalities often
require proof of registration of an RA’s branch or Remittance Sub-Agent before issuing
municipal approvals; yet the BSP requires proof of municipal licenses before issuing
registrations. This “chicken-and-egg” problem had previously caused bureaucratic
problems for RSPs, particularly during the 2017 “re-registration” period. This appears to
have been partially resolved by the BSP by providing a grace period for submission of
municipal documents.
Remittance Partners and New Products, Use of agents
The RTC must conduct due diligence as part of the accreditation process and provide
“effective continuing oversight” of sub-agents (RSAs). An RTC, other than those that are
EMIs, must notify the BSP of any newly accredited RSAs within 5 business days. The
ability of RTCs to accredit their own RSA is part of the recent 2017 reforms. Market
participants have noted that it puts more pressure on the RTCs to monitor and
supervise their RSAs than under the previous framework.
Regulatory Engagements and Innovation
The Monetary Board has approved an updated comprehensive framework aimed at

enhancing BSP oversight over the operations of Money Service Businesses (MSBs) [i.e.
Remittance and Transfer Companies (RTCs), Money Changers (MCs)/Foreign
Exchange Dealers (FXDs)], for the primary purpose of promoting more effective
compliance with the Anti-Money Laundering Law, as amended, and its Implementing
Rules and Regulations.
As of June 2016, there are more than 18,000 BSP-registered MSBs (5,300 head offices
and 12,700 branches), 6,700 of which are also BSP-authorized pawnshops. The MSB in
the Philippines is continuously growing and evolving to support the expanding needs of
its customers. It now includes, among others, the electronic money business
subsidiaries of telecommunication companies.
Under the new rules, the BSP will regulate all RTCs such as Remittance Agents,
Remittance Platform Providers, and E-money Issuers. RTCs and other MSBs are now
required to notify the BSP in cases of commencement of operations, new accreditation
of Remittance Sub-agents (RSAs), change of tie-up partner/s, transfer of location, and
closure of business. They shall be further required to obtain prior BSP approval in the
event of change in ownership or control. They shall also submit activity level reports to
the BSP. Finally, the new rules require MSBs to register with the Anti-Money
Laundering Council Secretariat for purposes of covered and suspicious transactions
reporting.
Since MSBs are numerous but generally interconnected, BSP will adopt a network-
based regulatory approach. Under this approach, an entity that operates an MSB
especially a remittance business shall be held responsible for monitoring the operations
of its remittance network for compliance with rules and regulations as well as for their
accreditation and training. The new framework also introduces different classifications of
MSBs depending on their average monthly network volume of transactions. There will
be corresponding minimum capital requirement for each type. Registration fees and
annual service fees shall also be based on the said classification scheme.
MSBs are required as part of the registration process, to execute a Deed of

Undertaking, which includes, among others, compliance with all the provisions
of the Anti-Money Laundering Act of 2001 (Republic Act No. 9160, as amended) and
its revised implementing rules and regulations as well as the implementing rules issued
by the BSP, and adoption of the minimum standards of consumer protection in the
areas of disclosure and transparency, protection of client information, fair treatment,
effective recourse, and financial education.
Existing MSB operators are given six (6) months from the date of the effectivity of the
new regulations to secure BSP registration. Upon the expiration of the transitory period,
all Certificates of Registration (COR) previously issued by the BSP shall be considered
automatically cancelled. Banks are prohibited from doing business with unregistered
MSBs.
The BSP is also limiting the ability of MSBs to transact in cash. Large value pay-outs of
more than P500,000 or its foreign currency equivalent, in any single transaction with
customers or counterparties, shall only be made via check payment or direct credit to
deposit accounts. Also, FXDs/MCs shall be allowed to sell foreign currencies in the
amount not exceeding USD10,000 or its equivalent and not to exceed USD50,000, or its
equivalent per month per customer. However, exemption or higher limits may be
granted by the BSP upon application if justified by the business model of the
FXDs/MCs.
Major violation/s of specific provisions of the new regulation and non-compliance with
the Deed of Undertaking may result in cancellation of the BSP COR or other sanctions
depending on the gravity.
The recently approved MSB oversight framework is part of the package of reforms
being instituted by the BSP to promote a more responsive regulatory environment for
non-bank financial institutions under the BSP’s jurisdiction.
AML/CFT and Consumer Protection
General approach Under the Anti-Money Laundering Act of 2001 and subsequent
regulations,119 Philippines’ AML/CFT requirements apply to “banks, non-banks,…
pawnshops, foreign exchange dealers, money changers, remittance and transfer
companies, electronic money issuers and other financial institutions which under special
laws are subject to [BSP] supervision and/or regulation…” The framework sets out
requirements for:
 customer due diligence, including the specific information that must be verified
for all new customers;
 record-keeping, generally subject to a requirement of retaining records for 5

years;
 reporting of covered transactions (those in excess of PHP 500,000 (~USD 9,500

per day) and suspicious transactions;
 AML training of personnel; and
 development and implementation of risk management policies and practices.

Some RSPs have suggested there is conflict between CDD requirements in Philippines
and confidentiality and data protection requirements in other jurisdictions. For example,
one RSP noted that the framework requires receiving RTCs to obtain the address of the
sender, but in some cases the legal requirements in the sending jurisdiction prevent
sharing of this information. Such requirements may go beyond what is necessary as
Financial Action Task Force (FATF) recommendations require financial institutions to
conduct customer due diligence on other financial institutions with which they do
business, but not on the individual customers of those other financial institutions.
Further harmonization with other jurisdictions was recommended.
The AML/CFT framework established an Anti-Money Laundering Council (AMLC),

whose functions include, among others:
 requiring and receiving suspicious transaction reports from covered institutions;
 issuing orders relating to determining the true identity of owners of monetary

instruments or property that is the subject of a “covered transaction” or
“suspicious transaction” report;
 instituting civil forfeiture procedures or other remedial proceedings; and
 filing complaints with the relevant entities for prosecution of money laundering
offenses.
ANALYSIS OF THE VALUE STREAM MAPS
The Value Stream Maps were analysed into two categories namely, redundant
requirements and process map/process flow. On the process flow, two relevant
variables were evaluated namely, turn-around time (TAT) and transaction costs.
Redundant Requirements
There are various transactions in the Money Service Business. Below is the table that
summarizes the transactions, the government agencies to transact with and the
corresponding documents that need to be submitted. These documents are unique
documents and the transactions. For instance, on transaction on processing of client’s
application for the issuance of Certificate of Registration (COR) for FXD/MC and RA;
there are 8 unique documents, 4 redundant documents and a total of 12 documents to
be submitted. Specifically, these include (1) Incorporations papers duly authenticated
by the Securities Exchange Commission (for corporation and partnership); (2) CDA
Registration (for Cooperative) (Activity applied for should be indicated/added in the
purpose clause); (3) Copy of certificate of Registration duly authenticated by the
Department of Trade and Industry (for single proprietorship); and (4) Copy of business
license/permit from the city or municipality having territorial jurisdiction over the place of
establishment and operation (Activity applied for should be indicated/added in the kind
of business and original copy should be presented). These four redundant documents
are already asked by the BSP which was again being required by another government
agency in different transactions.
Tally of Redundant Requirements per Transaction

Unique Redundant Total
Transaction Agency
Documents Documents Documents
Processing of client’s Bangko
application for the issuance of Sentral ng
Certificate of Registration Pilipinas
(COR) for FXD/MC and RA (BSP) 8 4 12
Registering a New Business at
LGU -
Business One-Stop Shop
Quezon City
(BOSS) - Single Proprietorship 6 1 7
Business One-Stop Shop LGU -
(BOSS) - Partnership and Quezon City
Corporation 6 1 7
(BOSS) - Partnership and Quezon City
Corporation 6 1 7
Renewing a Business Permit at
LGU -
Business One-Stop Shop
Quezon City
(BOSS) - Paying Business Tax 5 2 7
Renewing a Business Permit at
(BOSS) - Renewing Business Quezon City
Permit 5 2 7
A representative LGU was taken that is the LGU-Quezon City. It can be gleaned that for
Transaction on Registering a New Business at Business One-Stop Shop (BOSS) -
Single Proprietorship, a redundant requirement was observed that is the DTI Business
registration which was already asked by the BSP in the Transaction on Processing of
client’s application for the issuance of Certificate of Registration (COR) for FXD/MC and
RA.
Another transaction being done by the LGU Quezon City is the Renewing a Business
Permit at Business One-Stop Shop (BOSS) - Paying Business Tax. There are two
redundant requirements for this transaction namely: Current year Community Tax
certificate (CTC) issued in Quezon City (if your business has other locations, bring also
those CTC issued by the other LGUs where your business has other locations) -
required for LGU Business Permit which is a requirement for BIR Business Permit; and
BIR Certificate of Registration.
Process Maps/Process Flow
Turn Around Time (TAT)
Below is the computation for the Total Turn Around Time (TAT) for the business permit
and license registration of Foreign Exchange Dealers, Money Changers, and
Remittance Agents (FXD/MC/RA) with BSP, AMLC, SEC and the specific LGU. TAT for
the entire process is three months with the assumption that all requirements are
submitted by the applicant entity.
VSM used: Mailed application for Corporations & Partnerships

SEC Turn Around Time = 5 days
NBI Turn Around Time = 8 days
LGU Turn Around Time = 1 day
AMLC Turn Around Time =22 days
BSP Turn Around Time = 51 days
Total Turn Around Time = 87 days or approximately 3 months
The assumption is that all requirements are submitted, otherwise BSP would send back
a Letter-Advice on how to comply with incomplete documentary requirements.
Transaction Costs
The costs incurred are estimates with the lowest cheapest affordable means of
transportation, i.e. one-way jeepney fare at P9.00. or other means of transportation
were considered such as FXs, van, taxi, grab or fuel cost for company’s vehicle.
Vehicle From To Fare

Jeep (SM North) Philcoa (Home) SM North 11.00
Jeep (SM North) SM North Philcoa (Home) 11.00
Jeep (Cubao) Philcoa (Home) Ali Mall Cubao 12.00

Jeep (Cubao) Ali Mall Cubao Philcoa (Home) 12.00
Walk/Tricycle* Philcoa (Home) 7-Eleven Philcoa 9.00

*
Walk/Tricycle* 7-Eleven Philcoa Philcoa 9.00
Walk/Tricycle* Philcoa (Home) QC Hall NBI Office 9.00
Walk/Tricycle* QC Hall NBI Office QC Hall BPL Dept. 9.00
Walk/Tricycle* QC Hall BPL Dept. Philcoa (Home) 9.00
Bus Philcoa (Home) BSP Main Complex 50.00
Bus BSP Main Complex Philcoa (Home) 50.00

On Walk/Tricycle* Philcoa (Home) LBC Philcoa 9.00 the
Walk/Tricycle* LBC Philcoa Philcoa 9.00

Walking distance, but assume minimum fare
** All modes of transportation used are assumed to be the most practical for commuter
average, the registration process for an applicant MSB will incur P5,000.00. The costs
include transportation fare, AMLC seminar fee, NBI clearance application fee, DTI
registration filing fee, BSP processing fee and mailing fee. Computation of total costs for
the entire process is presented in the following tables to indicate the transaction costs
incurred by the regulated entities on various categories:
1. Mailed Corporation
Fees Associated to Process Amount

SEC SM North Transportation Fees (Day 1) 22.00
SEC Registration Filing Fee 3,370.00
7-Eleven Philcoa Transportation Fees 18.00
NBI Clearance Application Fee 170.00
QC Hall Transportation Fees 27.00
BSP Transportation Fees (Day 13) 100.00
AMLA Seminar Fee 300.00
LBC Philcoa Transportation Fees 9.00
BSP Processing Fee 1,000.00
LBC Mailing Fee 90.00
Total 5,228.00
2. Walk-in Corporation

Total 5,329.00
3. Mailed Partnership

Total 4,078.00
4. Walk-in Partnership

Total 4,179.00
5. Mailed Single Proprietor

DTI Ali Mall Cubao Transportation Fees 24.00
DTI Registration Filing Fee 3,700.00
Total 5,538.00
6. Walk-in Single Proprietor

DTI Ali Mall Cubao Transpo Fees 24.00
DTI Registration Filing Fee 3,700.00
7-Eleven Philcoa Transpo Fees 18.00
QC Hall Transpo Fees 27.00
BSP Transpo Fees (Day 13) 100.00
TOTAL 5,639.00
KEY ISSUES AND CONCLUSION
Coordination and communication between the industry and the regulators
The industry expressed that their opinions were not always taken into account in the
development of regulations. Necessary consultations and collaborations with key
stakeholders that will mainly be affected by the regulation are sometimes observed.
Since regulatory assessments are not done in a regular basis, regulatory agencies may
lack information on the most binding constraints impeding the development of the
industry. This lack of information may result to the unclear justification of the regulation
being crafted. There are instances when the reasons for the necessity of particular
regulations to their industry are not clearly communicated to them. Furthermore, the
requirements of certain regulations are not clearly relayed to them. This may result to
problems in complying with the exigencies of such regulations. Lastly, alterations in
components of particular regulations are seldom announced to them before
implementation. This may result to unnecessary regulatory burden to stakeholder
institutions that can negatively affect their compliance process.
Information about regulations
Given the many regulations and the policy changes that may occur from time to time in
the remittance industry, it is a challenge for any business to be aware of all their legal
responsibilities. Due to this vast number of government regulations for compliance, it
can be easy for business owners to find themselves in violation. This means leaving the
companies open to penalties for non-compliance. This implies that despite the
mentioned challenge, stakeholder institutions make sure that they are acquainted with
the regulations being in force in their industry. Further improvements in the level of
accessibility or quality of information available to the regulated industry stakeholders be
done.
Compliance with regulations
Eight categories of regulations were categorized as economic, customs,

infrastructure/facilities, technological/ technical, health and safety, employment,
environmental, and administrative regulations. Aside from administrative regulations,
the impact of these categories of regulations are business as usual. Despite declaring
the business as usual impact of majority of regulations on their business operations, the
industry opined that majority of the participants reported that they find it difficult to
comply with the exigencies of economic, customs, infrastructure/facilities and
administrative regulations. This difficulty implies a need to diagnose the sources of the
uneasiness when it comes to regulation compliance and to identify the recommended
policy changes that may be done to address this.
The Industry expressed difficulty to comply with administrative and

infrastructure/facilities regulatory requirements such as business permits, mayor’s
permits, building permits, and locational clearance. For instance, foreign companies find
it very difficult to transact with government agencies to comply business permit
requirement of regulations mainly because of the long transaction time (more than a
month).
Furthermore, it is difficult and expensive to comply with some BSP regulations. With
this, the Banko Sentral ng Pilipinas (BSP) must review the Notification Fees of newly
accredited remittance sub-agents (RSAs) as tie-up of another Non-bank Remittance
and Transfer Company (RTC) that are already registered to BSP as RTC. Since
industry stakeholders have already submitted their own duly accomplished Data Entry
Templates (DET), the elimination of RTC’s tedious task of reporting of RSA’s stores was
also recommended. According to them, RSA/ Tie-up Notification with company name
must be sufficient already to avoid redundant recording of information at BSP’s end.
They posed a willingness to share certain information to BSP like the BSP Registration
number per store of their RTC Tie-up as proof of registration or payment.
Apart from BSP regulations, they find it difficult to comply with the regulations of the
Anti-Money Laundering Council (AMLC). The amendments in the Anti-Money
Laundering Act (Republic Act No. 9160, as amended by Republic Act Nos. 9194, 10167
and 10365) posed a challenge in their compliance process. The timely submission of
suspensive reports (when conditions occur) such as covered and suspicious transaction
reports to AMLC is one of their specific challenges.
The difficulty in conforming to regulations requiring information dissemination and

proper understanding of the impacts of regulatory changes (that requires
compliance/implementation from industry players) to the existing requirements in
transaction processing of industry costumers. The latter is largely left to or is devolved
to the industry players themselves. Difficulty in complying with regulatory provisions
lacking transparency or those that are too broad or have a lot of gray areas is also
reported. The specific regulations the industry find difficulty in compliance is
summarized in the table below:
Regulations difficult to comply according to the industry

Regulations Rank
Administrative/Infrastructure Regulations 1
 Business permits, mayor’s permit, locational clearance, building permit
BSP Regulations 2
 RSA Notification Fees, Circular 1039
AMLC Regulations 3
 Timely submission of STRs and CTRs
Regulations requiring information dissemination and proper understanding of the
purpose of the change in regulation. Information awareness is devolved to industry 4
players
Others
 Regulations with provisions lacking transparency or those that are too
broad or have a lot of gray areas.
 Regulations requiring large investments in technology infrastructure and
reasonable time for training or walk through's (learning curve) of people in 5
the institution/industry players
 Insurance Commission Regulations
 The Data Privacy Act (R.A. 10173)
 Economic regulations (e.g. business taxes)
 Transaction in customs to many layers of bureaucracies in creating a
business.
 Digitization of customer records
Given the reported difficulties in complying with the regulatory requirements in the
industry, the mentioned regulations are not appropriately enforced. This is due to the
inconsistency of the enforcement of the regulation across business. In addition, the
unclear communication of the compliance requirements is a source of inappropriate
enforcement. Other stated reasons were the insufficient number of inspections or
audits. and difficulty in access to regulatory agencies. The inappropriate enforcement of
such regulations can be attributed to the differing and changing interpretation of
regulatory provisions which is true to regulations that are too broad or have a lot of gray
areas.
Nonetheless, despite the concerns with regards to the quality of regulations affecting
their industry, the industry still think that these regulations are up-to-date and still
relevant. Those that responded the contrast justified that the regulatory body already
made several amendments in their regulations which led to confusion. They
recommended that the regulatory must issue a completely revised and latest
implemented agreement. Another justification is the imbalance of the tendency of
regulations to derail business and to guide control.
Information submitted to regulatory agencies
The Industry were required to provide the same information and/or documents to
different regulatory agencies. Department of Trade and Industry/Securities and
Exchange Commission (DTI/SEC) registration, articles of incorporation and by-laws,
audited financial statement, and business permit are the most common compliance
requirements that are repeatedly submitted to agencies concerned. BIR Certificate of
Registration, barangay clearance, contract of lease, and fees are other requirements
required. This may imply the need to simplify procedures by removing redundant
documentary requirements and to develop an information-sharing database/system that
may be used by all regulatory agencies concerned.
Mode of submission of requirements
Since industry players are required to provide information to regulatory agencies in at

times, unfixed time intervals, they need an accessible mode of transmission of
information. Most of the MSBs expressed that they were personally required to go to
regulatory agencies to submit necessary requirements. Other modes of submission
were through courier and online. Moreover, there are instances when regulatory
agencies still require industry players to personally submit information in their offices
even after submitting online.
From the point of view of the regulated industry stakeholders, all of them prefer to
submit documentary requirements online to ease/reduce the transaction costs.
Furthermore, one participant recommended that modes of submission should vary
depending upon the requirement the stakeholder institution is required to submit. There
are requirements that are best for online submission; there are those best for courier
and face-to-face. Thus, the participant recommended that regulatory agencies should
permit a combination of modes and give freedom on the part of the regulated industry
institutions to choose therefrom to whatever is practical and efficient to the given
context.
Cost of complying with regulations
To adhere to industry regulations, institutions incur compliance costs. Compliance costs

include compensation of people hired to aid the compliance process and the time and
money spent in complying with regulations, among others. This accumulated cost
typically increase as the number of regulations governing the industry increase. The
industry expressed that regulatory agencies be transparent enough to provide them
breakdown of fees they are required to pay. The fees are reported to be inconsistent
with the information reflected in the Citizen’s Charter.
Costs of imposition of the policy on the processing fee of branch transfer

location
Section 901-N of the Manual of Regulations for Non-Bank Financial Institution requires
Money Service Businesses (MSBs) to inform the supervising department of the Bangko
Sentral ng Pilipinas in the event of MSB’s transfer of location and change of tie-up
partner/s, among others. This requires the MSB to submit notification forms together
with other documentary requirements and pay processing fee amounting to P1,000.00.
Said fee is intended to defray the cost incurred by the BSP in supervising and
overseeing the MSBs, specifically in maintaining updated, reliable and accurate registry
of MSB. Nonetheless with the passage of Republic Act (R.A.) No. 11211, granting BSP
express regulatory and examination powers over MSB, as well as the continuous
innovation of MSB operations, the Financial Supervision Department IX initiated various
regulatory reforms. In relation thereto, a Technical Working Group (TWG) has been
created which is currently in the advance stage of drafting the proposed enhanced
regulations on MSB which include the review of all fees being imposed on MSB. Once
the draft regulations were cleared by the BSP higher Management, it will be exposed to
MSB industry for comments. All comments received shall be carefully evaluated and
accordingly considered in the approval of the said enhanced MSB regulations.
In the light of this, government intervention is necessary because the imposition of the
said fee will discourage remittance companies from partnering which is beneficial to the
customers since it makes encashment of remittances convenient. If remittance
companies will be required to pay, it will demotivate them to partner up. This will force
the remittance companies to limit the location of its partners, regardless if this will
deprive consumers of options, thus, will be a de-service to consumers. Apart from a de-
service to customers, remitters may also suffer from the increase in remittance service
fees as a certain magnitude of the increase in business expansion costs will be passed
on to them. In addition, since the imposing entity did not provide any rationalization of
the fee being charged, regulated entities may be hesitant and/or unwilling to pay for it.
Thus, they may be tagged as non-compliant.
The industry views the imposition of the P1,000. Fee as an added cost to them if they
relocate their branch. The Table below specifies the expenses incurred if an MSB aims
to relocate its branch, totaling to an amount of P9,774.00 will shouldered.
Fees associated with the relocation of branches
Processing
Expenses Amount Remarks Total
Days
Daily wage of 537.00 1 537.00
messenger/OIC in
processing documents
Barangay 500.00 1 500.00
Clearance/Permit
Certified True Copy of 100.00 1 100.00
required documents
Business Permit (LGU 2,500.00 1 2,500.00
Permits)
Notary fee 300.00 1 300.00
Transportation 1,000.00 LGU, BSP and 1 1,000.00
return to office
Retirement cost 3,837.00 1 3,837.00
incidental to closure of
existing branch
BSP transfer of location 1,000.00 1 1,000.00
fee
Total 9,774.00
The one-day processing is a conservative estimate, however there might be instances

wherein the processing days are longer depending on the process of transaction with
the LGUs. In this case, daily wages and transportation will increase.
On a per annual computation of costs of relocation, the table below presents the
relocation costs incurred by the three sample MSBs. Palawan Pawnshop incurs the
highest annual relocation cost of P469,152 with 48 as the annual average number of
relocations, followed by LBC incurring a total amount of P351,864 and Cebuana
incurring a total cost of 195,480.
Annual estimated relocation costs

Average Number of Estimated Average
Total Estimated
MSB Relocations Annual Relocation
Cost per Relocation
Annually Cost
Cebuana 9,774.00 20 195,480.00
LBC 9,774.00 36 351,864.00
Palawan 9,774.00 48 469,152.00
Given costs of relocation, a consequent foregone income is experienced by the MSBs.

The Table highlights that annually, Palawan Pawnshop loses an estimated annual
income of P48,000, LBC foregoes an income of P36,000 while Cebuana loses an
income of P20,000.00
Estimated foregone income due to relocation fee
Average Number of Estimated Foregone
Relocation Fee per
MSB Relocations Annual Income due
Branch
Annually to Relocation Fee
Cebuana 1000 20 20,000.00
LBC 1000 36 36,000.00
Palawan 1000 48 48,000.00
Payment Facilities
From the perspective of regulated stakeholder institutions, majority of the survey

participants preferred online and bank channels when paying regulatory fees. Payments
through these channels usually may be done electronically in cellular phones or
computers. With this, a lesser in transaction costs can be incurred which is why this is
preferred by regulated bodies. Moreover, recommended that it is better to provide all
options and allow the regulated body to choose therefrom in every occurrence.
Impact of regulations
Rating the industry’s regulatory atmosphere, it can be gleaned that the MSB industry is
overly regulated. This means that majority of them affirm the presence of unnecessary
burdens that impede the development of the industry. The benefits of regulations do not
outweigh the costs to comply with such regulations. However, this is not true to all
regulations. There are those that outweigh the costs of compliance. There are those
that are reasonable. There are those that suffer overregulation or over-implementation.
A regulation which is not clearly established and communicated or the impact to the
business in its/their manner of implementation results to business restriction or limitation
that is not commensurate to the result or purpose sought to be achieved or the spirit
behind the regulation. For instance, information collection for the purpose of
convenience to the collecting agency is nice and convenient to have so they can be
easily available when needed or so the agency does not have to do it by themselves.
There are different reasons for saying that the cost of compliance outweighs the
benefits of regulations Summarized in the table below cited that certain regulations
provide uneven playing field and is burdensome to industry players but do not result to
work value addition. Secondly, certain regulations are not industry-specific which poses
implementation problems. Thirdly, it is reported that regulatory fees and
filling/notification and annual fees are increasing over time resulting to high cost of
compliance. Penalty for erroneous and non-compliance also increased. It is also
mentioned that there are agencies (e.g. LGUs) that collect much causing an increased
regulatory burden to regulated entities. Those that specified a fair regulation in the
industry, however, justified that this is evident in the level of confidence other business
entities have in dealing with highly regulated and highly compliant MSBs.
Reasons why benefits of regulations do not outweigh costs
Reasons
Regulations provide for uneven playing field and burdensome but no value-add work
Increase in expenses on regulatory, filing/notification, and annual fees.
Some regulations are not specific to the industry.
We got the lowest paid employees per salary report but the ease of doing business in the
Philippine is far worse than of other countries in the region. Vietnam, Malaysia, Thailand,
Indonesia have overtaken the Philippine already.
Other business entities have confidence in dealing with highly regulated and highly
compliant money service businesses.
Penalty for erroneous and non-compliance are high.
There are agencies that collect much (LGUs).
Under ideal conditions, the competitive markets result in a Pareto efficient resource
allocation. However, when the conditions required for this are not satisfied, a
dissatisfaction with markets (market failure) occurs. Market failures provide a rationale
for government intervention. Since market failures are inevitable in any industry, the
supervisory and regulatory role of the government is identified as crucial when it comes
to directing ways to improve or make a business efficient. With this, it affirms that
government intervention has been a crucial factor that influenced their decision to grow
and expand their business. Table below shows the reasons for saying so. Moreover, it
is important to evaluate interventions by taking into account not only their objectives but
also how they are implemented.
Reasons why government regulations have been a crucial factor in decisions

to grow and expand business
Reasons
Government regulations can provide directions to improve business
Companies will have to be considerate to ensure that government regulations are compiled
especially on Notification Fees if we have new remittance Tie-ups.
We need licenses to operate certain types of activities - we need to weigh the cost of
compliance
We must comply and do business in accordance with government regulations
Regulatory landscape
The recent re-registration of money-service businesses (Circular 942) imposed
capitalization requirements on entities who will offer pawning, money exchange and
remittance services.
As an accredited Remittance Agent if and when with Foreign Exchange license cannot use
said authority or license by accredited Remittance Sub-Agents.
Penalties impact business while the cost of putting the required procedure, be they
manpower or technology or knowledge or requirement to substantial number of
people/employees is also high;
Regulatory requirements expand requirements to process or complete customer
transactions; in the same manner that prohibitions and warnings affect ease of customer in
availing the services yet the drive and force of government agencies at exacting compliance
to the industry/institution is far beyond compare to the force or resources they employ or
allocate to information dissemination to the affected/benefited public or educational drive of
those who are to ultimately comply or be ultimately restricted/limited/affected.
License among others is at stake for noncompliance to regulations
Lastly, it is reported that government regulations helped in the development of their

industry. Table below summarizes the justification of answers. Firstly, it was specified
that regulations helped in the development product and services in compliance of these
government regulations. Secondly, due to these regulations, the international
community generally has a greater confidence to the banking and money service
industry in the Philippines. As a result of this confidence, more foreign investors are
encouraged to invest in the industry, knowing that the compliance culture and standards
have improved in recent years. Among others, other reason stated is the opinion that to
some extent, industry needs guidance and discipline through regulations to achieve
order and sound (as opposed to unfair) competition.
Reasons why government regulations helped/didn’t help in the development

of the industry
Reasons
It helped particularly in developing product and services in compliance of the government
regulators.
Regulators have strict deadlines that we must meet while they are not so responsive to our
concerns.
Took out the fly by night
At least for the MSB industry, it tempered the regulations to adapt to specific business
model
Too many unnecessary controls slowing progress
The international community generally has a better perception of the banking and money
service industry in the Philippines and that our institutions do not serve as conduits for
money laundering and terrorist financing activities. As a result of this confidence, more
foreign investors are encouraged to invest in the Philippines, knowing that the compliance
culture and standards have improved in recent years.
The government regulations provided standards to comply at the minimum.
To some extent, industry needs guidance and discipline. Regulations are necessary to
achieve order and sound (as opposed to unfair) competition.
BSP and AMLC as regulatory/supervisory agencies have been helpful to the industry. They
promote partnership with financial institutions to ensure achieving its mutual goals.
RECOMMENDATIONS
Harmonize Local and National Regulations on MSBs

The repeated submission of documentary requirements to government agencies (e.g.
Mayor’s Permit and BSP Certificate of Registration (COR) and the difficulty in the
transition of some revised regulations where the LGUs ask for a different set of
requirements (i.e. with the new business model, BSP does not issue COR to their
branches but LGUs still require) pose a challenge for the BSP and LGUs to harmonize
its policies on the MSBs
Some LGUs require different requirements, some of which are unnecessary (e.g.
separate copies of business permits as remittance and as business for those that are
not purely MSB). The LGUs need to a have standardized format/template for permits.
Given these problematic situations, there is an on-going BSP initiative on the adoption
of a standardized business permit with the DILG. DILG and DICT are the agencies that
need to be coordinated with regards to this issue. Moreover, the burdensome process of
the renewal of permits every year, it is being recommended that LGUs to increase the
validity of permits from one (1) year to three (3) years.
Further, LGUs do not have a list of MSBs and their services, which creates problem on
monitoring. Given this, LGUs can have a standard classification code assigned on each
type of MSBs depending on the services they provide. BSP already coordinated with the
Philippine Statistics Authority (PSA) regarding the matter
Given all of these challenges being faced by the MSBs, BSP already have an updated
joint memorandum of understanding (JMU) with DILG with regards to the guidelines in
the issuance of business permit/license for head offices and branches of pawnshops
and MSB, and on information sharing with BSP (Updated Version of the 2009 JMC).
BSP admitted that is a challenge for them to ensure that LGUs request requirements
that is aligned with the new BSP regulation.
BSP and LGUs should enhance the interface between them through communication/
coordination particularly in the requirements for Mayor͛s Permit and Certificate of
Registration (LGUs). Thus, MSBs to report issues to BSP so they could communicate
with the concerned LGUs.
Harmonization of local and national regulations recognizes that sub-national political
entities, whether states, provinces, regional governments or municipalities, have an
important function in fostering a sound business climate. The consequences of
ineffective, excessive or, in some instances, inappropriate regulation generally have
adverse effects on investment and economic development. Fostering a vibrant business
climate is a development prerogative, intended to contribute to private sector
development and positive economic outcomes. The benefits which may accrue from
such a business climate include increased investment, productivity, and employment as
well as reduced corruption.
Among other critical features, enhancing the investment climate requires removing
obstacles to “doing business,” and providing efficient and effective legal and regulatory
frameworks that promote competition and growth. The emphasis in this is on sub-
national regulation generally and municipal regulations specifically, since most
interaction between “government” and “business” occurs at the local or regional level.
National regulatory policies may influence or affect investment decisions, but post-
investment operations are influenced by other levels of government having legal
authority over such operational activities -- principally those at the municipal level.
The municipality and the private sector both have critical roles in a simplification
initiative. Meaningful and on-going consultations with these two groups of stakeholders
will serve to ensure that the process design will reflect the needs of users. To that end,
consultation and communication processes form a significant component of any
simplification initiative.
Simplification involves not only a business process change but also cultural change in
how municipalities view those whom they regulate, and how those who are regulated
perceive the value and effectiveness of the regulatory processes. Simplification does
not mean compromising core standards with respect to health, safety, the environment
or labor. Simplification, as a basic concept, is the act of reducing or eliminating
elements of a process in order to reduce complexity and inefficiency. It also involves
limiting the potential of any reintroduction of cumbersome or unnecessary requirements
or steps.
Regulatory reform, through simplification, is a means by which municipalities can create
positive, long-term economic benefits within their jurisdictions. Indeed, microenterprises
and small businesses often cite regulatory issues as a prime constraint to growth. The
simplification process is a relatively low-risk activity for the municipality to engage in
which results in a vital change to the way microenterprises and small businesses take
part in the formal business sector.
A municipality’s decision to engage in regulatory reform increases the benefits that
clients attain from formalizing their business process. Simplification does not absolutely
require that a municipality make radical changes to its processes; rather, it can be
achieved through a more gradual and incremental approach.
Simplification makes business processes more efficient. The implication for municipal
employees is that as business processes become streamlined, especially combined
with service delivery initiatives such as One-Stop Shops, client satisfaction increases.
Increases in Client satisfaction contributes to a more positive work environment for
municipal employees.
Essential components to a simplification initiative include: • Strong political commitment
and visible support from senior official(s); • A coherent strategic approach that organizes
and prioritizes specific goals, roles and responsibilities, resources and associated tasks.
A strategic plan for a simplification initiative must manage three principal aspects: (a)
the regulatory process design itself; (b) the policy framework surrounding and
supporting the regulatory process; and (c) the considerations associated with changing
a process in a political environment. Municipalities seeking to make changes to the
regulatory process should also consider incorporating the following concepts:
knowledge management, employee empowerment, adoption of new information
technologies, and a shared vision.
Craft a regulation that is specific to the MSB industry and a special audit
checklist to determine what is applicable to MSBs only.
The industry expressed the issue on the general conduct of audit/examination of the
auditors, i.e the BSP auditors/examiners tend to require additional or requirements not
directly stated in the audit manual. Also, there is the issue on how the existing
regulation is being interpreted specific on MSBs.
It is, therefore, recommended that a specific regulation and special audit checklist that is
applicable specifically to the MSB industry be crafted. In response, BSP already has a
regulation specific to the MSB industry and is currently in the process of revising this
regulation to consider the principles of proportionality and consumer protection, among
others. Likewise, there is a need to conduct sessions with auditors from BSP and
AMLC. Presently, key personnel of AMLC is already conducting quarterly
meetings/discussions with banks and non-bank financial institutions
The BSP, as the lead regulator of MSBs, recognizes the critical role of external auditors
in promoting good governance in the financial industry as they contribute to upholding
fairness, accuracy and transparency in financial reporting. Thus, they have been
embarking on initiatives aimed at promoting adherence to quality standards in external
audit. Among the initiatives is the streamlining of the guidelines governing the selection,
appointment and delisting of external auditors of BSP-supervised financial institutions
(BSFIs). This also promotes the ease of doing business as it centralizes the
accreditation/selection of external auditors in the financial system.
Implement non-regulatory initiatives such as programs on financial

education/literacy.
Financial education/literacy should be incorporated in the implementation of digital
finance. This study found out that there is some hesitation to use digital services by the
older/less tech savvy segment of the population, who are considerably a sizeable
section of the population. Apart from education, a review of the complexity of digital
platforms can be done.
Weak infrastructure, notably in rural areas, highly discourages potential users to learn
the technology. Reliable internet connection also contributes in building trust among
users and financial service providers. Internet connectivity has been a problem in the
country for many years. The government, together with the private sector/providers,
should thoughtfully consider soon how to improve the digital infrastructure.
The private sector in the Philippines are very active and innovative in terms of bringing
about change in the financial landscape despite the existing constraints (e.g. weak
infrastructure). Recognizing the size of the remaining underserved market and
inevitable move toward digitalization, these companies should continue to find ways to
extend more affordable, suitable, and convenient services to Filipinos especially those
situated in hard-to-penetrate areas.
The BSP remains committed in its goal to achieve financial inclusion. Necessary
regulations have been put in place and complementary programs are currently ongoing.
Today, their thrust is more on ensuring the adoption of the regulations among MSBs
and in strengthening its financial literacy efforts among all Filipinos nationwide.
Nonetheless, there seems to be a need for greater collaborative efforts among other
national government agencies in expanding the market of MSBs. The government,
through BSP, in collaboration with the private sector should continue to support and test
competitive business models by companies that introduce innovations in. Having a
financial market and business environment that is dynamic will be conducive to the
growth and progress of MSBs.
REFERENCES
Banko Sentral ng Pilipinas, Consumer Expectations Survey (Fourth Quarter 2019)

(2019), 6. Retrieved
from http://www.bsp.gov.ph/downloads/Publications/2019/CES_4qtr2019.pdf
Compass. Chartwell Compliance (May 2019). Retrieved from
https://www.chartwellcompliance.com/wp-content/uploads/2018/08/Q2-
ChartwellCompass_eEdition_May2018_v2.pdf
Dilip Ratha and Sonia Plaza, Sustainable Development Goal (SDG) No. 10.c.1:
Reducing Remittance Costs, 16th Coordination Meeting on International Migration
(World Bank: February 2018). Retrieved from
https://www.un.org/en/development/desa/population/migration/events/coordination/16/d
ocuments/presentations/5f%20-%20WB_Remittance%20Costs.pdf
Fadem, M. (2019). Regulatory sandboxes provide “safe spaces” for fintech payment
services innovation. American Express. Retrieved from
https://www.americanexpress.com/us/foreign-exchange/articles/regulatory-sandboxes-
for-innovative-payment-solutions/
Financial Action Task Force, Guidance for a Risk-based Approach for Money or Value
Transfer Services (Paris, France: 2016). Retrieved from: https://www.fatf-
gafi.org/media/fatf/documents/reports/Guidance-RBA-money-value-transfer-services.pdf
Greengard, S. (2019). States move to streamline licensing process for online money
transfer. American Express. Retrieved from
https://www.americanexpress.com/us/foreign-exchange/articles/streamline-licensing-
process-online-money-transfers/
International Monetary Fund, International Transactions in Remittances: Guide for
Compilers and Users (Washington, D.C.: IMF Multimedia Services Division, 2009), 5.
Retrieved from https://www.imf.org/external/np/sta/bop/2008/rcg/pdf/guide.pdf
Ken Research, Philippines Remittance and Payments Market Outlook to 2024: Growth
backed by Sustained International Migration, Rise in OFWs and Surge in BPO Sector
(2019). Retrieved from https://www.kenresearch.com/banking-financial-services-and-
insurance/financial-services/philippines-remittance-payments-market/204157-93.html
MCORE Business Research, The Philippines Money Remittance and Bill Payment
Services Market: An Outlook to 2022 (n.d.). Retrieved from
https://www.marketwatch.com/press-release/the-philippines-money-remittance-and-bill-
payment-services-market-key-vendors-trends-analysis-segmentation-forecast-to-2019-
2024-2019-02-19
Merkt, H. (2009). International standards on auditing and their adoption in the EU: Legal
aspects and unsettled questions. 10.1017/CBO9780511770456.015.
Orozco, M. (October 2003). Worker remittances: Issues and best practices. Retrieved
from https://pdfs.semanticscholar.org/e780/6063375444171fe26a9da107841d9417e475
Philippine Statistics Authority, Philippines National Migration Survey (2018). Retrieved
from https://psa.gov.ph/content/domestic-remittances-are-just-important-international-
remittances-results-2018-national
PSA, Survey on Overseas Filipinos (2018). Retrieved from
https://psa.gov.ph/statistics/survey/labor-and-employment/survey-overseas-filipinos
United States Government Accountability Office. (March 2018). Additional steps by
regulators could better protect consumers and aid regulatory oversight. Retrieved from
https://www.gao.gov/products/gao-18-254
World Bank, Migration and Development Brief 31: Migration and Remittances, Recent
Developments and Outlooks (April 2019), Retrieved from:
https://www.knomad.org/sites/default/files/2018-
12/Migration%20and%20Development%20Brief%2030.pdf
ATTACHMENTS
International Best Practices in Money Service Industry
United States
 Plan for Modernization of the State Regulatory System. Seven U.S. States entered into
a multi-state agreement to standardize/simplify/streamline key elements of the licensing
process for online money transfer businesses.
 Periodic testing of the Bank Secrecy Act/Anti-money Laundering Compliance

Program by a qualified independent party. The BSA/AML Independent Review is an
evaluation of the overall adequacy and effectiveness of the BSA/AML Compliance Program
including policies, procedures, and processes.
 Innovation Offices. U.S. established interaction building initiatives to help firms identify
applicable regulatory requirements.
 Strategic alliances between banks and money transfer operators/businesses. This

initiative is one way to reduce costs, bring a larger number if customers into the formal
financial system, and bank individuals.
Latin America
 Strategic alliances between banks and money transfer operators/businesses. This
initiative is one way to reduce costs, bring a larger number if customers into the formal
financial system, and bank individuals.
United Kingdom
 Innovation Hub. The U.K.’s Financial Conduct Authority offers informal regulatory
guidance to individual firms directly through posted publications; operates its regulatory
sandbox; and engages with industry participants through various events.
 Regulatory Sandbox. The regulatory sandboxes allow start-ups or established companies

to test new technology-based financial services in a live environment for a limited time
without having to undergo a full authorization and licensing process.
Australia
 Regulatory Sandbox. The Australian Securities & Investments Commission (ASIC) issued
an industry-wide waiver allowing eligible fintechs to test certain services without a license,
as long as they meet specified conditions and inform ASIC.
European Commission
 Adoption of International Standards in Auditing. The European Commission has
specified in its Eighth Company Law Directive that international standards on auditing (ISA)
will be used for all audits in all Member States and has indicated that it is considering the
endorsement of ISAs as those international standards.
Singapore
 Looking Glass Program. The Monetary Authority of Singapore offers fintech firms training
and consultation on regulation and provides a space for fintech firms to give product
demonstrations to regulators and banks.
Hongkong
 Fintech Contact Point. The Fintech Contact Point maintains a dedicated webpage, e-mail
address, and staff and initiates Fintech events and issues publications.
Significant Regulations affecting the Industry
Regulatory agency
Issuances Formal title
concerned
Republic Act 7653 The New Central Bank Act BSP
(10 June 1993)
Republic Act 11211 An Act Amending Republic Act Number BSP
(14 February 2019) 7653, Otherwise Known As "The New
Central Bank Act", And for the Purposes
Republic Act 9160 The Anti-Money Laundering Act of 2001 BSP, AMLC
(29 September 2001)
Republic Act 9194 An act amending Republic Act No. 9160, BSP, AMLC
(7 March 2003) otherwise known as the "Anti-Money
Laundering Act of 2001"
Republic Act 9194 IRR Implementing Rules and Regulations of R.A. BSP, AMLC
(6 August 2003) 9194
Republic Act 10167 An Act to Further Strengthen the Anti-Money BSP, AMLC
(18 June 2012) Laundering Law, amending for the Purpose
Sections 10 and 11 of Republic Act No. 9160,
Otherwise Known as the "Anti-Money
Laundering Act of 2001", as Amended, and
for Other Purposes
2016 Revised IRR of 2016 Revised Implementing Rules and AMLC
AMLA Regulations of the Anti-Money Laundering
Act
-- Anti-Money Laundering Council Registration AMLC
and Reporting Guidelines
Republic Act 10168 The Terrorism Financing Prevention and BSP, AMLC
(18 June 2012) Suppression Act of 2012 or An Act Defining
the Crime of Financing of Terrorism,
Providing Penalties Therefor and for Other
Purposes
Republic Act 9238 An Act amending certain sections of the BSP, BIR
(5 February 2004) National Internal Revenue Code of 1997, as
amended, by excluding several services from
the coverage of the value-added tax and re-
imposing the gross receipts tax on banks and
non-bank financial intermediaries performing
quasi-banking functions and other non-bank
financial intermediaries beginning January
01, 2004
-- BSP Manual of Regulations for Non-Bank BSP
Financial Intermediaries
BSP Circular No. 942 Amendments to the Section 4511N of the BSP
series of 2017 Manual of Regulations for Non-Bank
Financial Institutions (MORNBFI)
BSP Circular No. 1039 Amendments to the N and P Regulations of BSP, LGUs
series of 2019 the Manual of Regulations for Non-Bank
Financial Institutions
BSP Memorandum No, Guidelines on the Submission of Application BSP, LGUs
Regulatory agency
Issuances Formal title
concerned
M-2019-018 for Registration and Activities Requiring Prior
BSP Approval or Notification
BSP Memorandum No. Guidelines on the Electronic Submission of BSP
M-2018-030 Report on Remittance, Money
Changing/Foreign Exchange, and/or Virtual
Currency Exchange Transactions to BSP-
Supervisory Data Center (SDC)
BSP-DILG Joint Guidelines on the Issuance of Business BSP, All Provincial
Memorandum Circular License/Permit for Head Offices and Governors, City and
No. 01, Series of 2019 Branches of Pawnshops (PSs) and Money Municipal Mayors,
(15 November 2019) Service Businesses (MSBs), and on DILG Regional
Information Sharing with BSP Directors, DILG Field
Officers and others
concerned
DILG Memorandum Observance of Procedure in the Issuance of DILG, LGUs
Circular No. 2009-70 Business License/Permit and Registration of
Pawnshops and their Branches, Foreign
Exchange Dealers, Money Changers and
Remittance Agents and on Information
Sharing with the BSP pursuant to the
Memoranda of Agreement entered into by
and between BSP and DILG
DILG-DTI-DICT Joint Revised Standards in Processing Business DILG, DICT, DTI,
Memorandum Circular Permits and Licenses in all Cities and LGUs
No. 1 series of 2016 Municipalities
Republic Act No. 3883 Business Name Law DTI
DTI Administrative Order Revised Implementing Rules and DTI
10-01 Regulations of R.A. 3883
DTI Administrative Order Revised Implementing Rules and DTI

10-03 Regulations of R.A. 3883
DTI Administrative Order Further Amending the Revised Implementing DTI
10-08 Rules and Regulations of R.A. 3883
10-10 Rules and Regulations of R.A. 3883,
prescribing for New Registration Fees
13-01 Rules and Regulations of R.A. 3883
Republic Act 8799 Securities Regulations Code SEC
Republic Act 11232 Corporation Code of the Philippines SEC
2015 IRR of R.A. 8799 Implementing Rules and Regulations of the SEC
Securities Regulations code

Money Services Regulatory Review Reports

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Money Services Regulatory Review Reports

Uploaded by

Copyright:

Available Formats

Modernizing Government Regulations Program

MONEY SERVICE BUSINESSES

AMLA Anti-Money Laundering Act

At a macro level, remittances contribute in lifting Filipinos out of poverty through

Definition of Money Service Businesses

MSBs are middlemen of remittance business and money changing/foreign exchange

Figure 2. Landscape of the Philippine Remittance

Figure 3: Distribution of Remittance Transfer

Remittance Agent Remittance Platform Provider E-Money Issuer

Key Features of the MSB Industry

In addition to the above-mentioned, some of the key features of MSBs8 are as

1. Typically, the MSB or sending agent accepts money transfer payments,

BACKGROUND ON THE MODERNIZING GOVERNMENT REGULATIONS (MGR)

The Modernizing Government Regulations (MGR) Program is a comprehensive

OBJECTIVES OF THE INDUSTRY REGULATORY REVIEW

The Industry Regulatory Review Component of the Modernizing Government

1. Provide a better understanding of the policies and regulations governing the

SCOPE OF THE STUDY

CURRENT GLOBAL SITUATION OF THE MSB INDUSTRY

Trends in Global Remittance Flows and Cost of Remittances

Figure 7. 2018 and 2019 Global Regions Comparison

East Asia and

Table 1. Total and Average Remittance of Overseas Filipino Workers by Selected

According to the Philippine Migration Survey (2018), 16 percent of the population

GROWTH POTENTIAL OF THE INDUSTRY

International remittance market in the Philippines will continue to be driven by the

Legal Basis for Regulating and Supervising MSBs

 Section 3 of R. A. 7653, as amended – It shall likewise exercise regulatory and

Features of Section 4511N of Manual of Regulations

An RTC is required to maintain minimum capital, based on its regulatory classification,

Remittance Partners and New Products, Use of agents

Regulatory Engagements and Innovation

The Monetary Board has approved an updated comprehensive framework aimed at

MSBs are required as part of the registration process, to execute a Deed of

AML/CFT and Consumer Protection

 record-keeping, generally subject to a requirement of retaining records for 5

 reporting of covered transactions (those in excess of PHP 500,000 (~USD 9,500

 AML training of personnel; and

 development and implementation of risk management policies and practices.

The AML/CFT framework established an Anti-Money Laundering Council (AMLC),

 requiring and receiving suspicious transaction reports from covered institutions;

 issuing orders relating to determining the true identity of owners of monetary

 instituting civil forfeiture procedures or other remedial proceedings; and

ANALYSIS OF THE VALUE STREAM MAPS

Tally of Redundant Requirements per Transaction

Process Maps/Process Flow

Turn Around Time (TAT)

VSM used: Mailed application for Corporations & Partnerships

Vehicle From To Fare

Jeep (SM North) SM North Philcoa (Home) 11.00

Jeep (Cubao) Philcoa (Home) Ali Mall Cubao 12.00

Walk/Tricycle* Philcoa (Home) 7-Eleven Philcoa 9.00

Walk/Tricycle* Philcoa (Home) QC Hall NBI Office 9.00

Walk/Tricycle* QC Hall NBI Office QC Hall BPL Dept. 9.00

Walk/Tricycle* QC Hall BPL Dept. Philcoa (Home) 9.00

Bus Philcoa (Home) BSP Main Complex 50.00

Bus BSP Main Complex Philcoa (Home) 50.00

Walk/Tricycle* LBC Philcoa Philcoa 9.00

Fees Associated to Process Amount

Fees Associated to Process Amount

Fees Associated to Process Amount

Fees Associated to Process Amount

5. Mailed Single Proprietor