MANILA – Escalating operational costs and local regulatory changes have presented a conundrum for Philippine banks with regard to remittance outlets for overseas remittance units. Banks are now faced with the decision of maintaining operations of said outlets, or to close these down, as it has steadily become difficult to justify continued operations.
In an interview with Business Mirror, George Sy Inocencio, Development Bank of the Philippines vice president and head of remittance operations, said that several banks have already shut down their remittance outlets in some of the countries as a result of rising cost and stricter regulations of the host countries. He added that banks would rather tie-up with locally licensed companies, due to lower risks and costs.
Inocencio said: “It’s cost-effective and less risky to tie-up with locally licensed companies. Risks are higher for Philippine banks because of strict antimoney laundering rules in North America and worldwide. All the US banks are shying away from remittance. They do not allow deposits of remittance companies and so the cost of sending money [home] might go up.”
he pointed out, as well, that in some countries, Philippine banks have ceased operations due to factors such as rising costs, declining margins and stiff risk and penalties meted upon violations of anti-money laundering policies.
In similar manner, Coins.ph co-founder and CEO Ron Hose said that the strict US monetary regulations would definitely bear impact on the remittance industry.
“It’s not good for OFWs [overseas Filipino workers] and for foreign workers as it will make it harder and more expensive for them to send money back home,” Hose said.
He said in line with their strict measures, governing money laundering US banks restrict the use of their facilities for international money transfers.
US anti-money laundering policies have progressively been made more restrictive in order to curb money laundering activities and the financing of terrorist-related movements.