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Philippines: Regulator tightens watch on pawnshops
Publicado el Feb 03, 2011

Philippine Daily Inquirer.- Citing the proliferation of pawnshops across the country, the Bangko Sentral ng Pilipinas has issued a circular amending and tightening existing regulations governing small lenders.

The central bank issued Circular 711, an amendment of a previous measure, stressing the need for officers and employees of pawnshops to undergo training on the BSP’s regulations and anti-money laundering efforts.

Because the number of pawnshops has been growing by leaps and bounds, money launderers may exploit these channels to transmit and legitimize illegal cash under the noses of authorities, the regulator said.

Through money laundering, criminals can make it appear that their dirty money come from legitimate sources.

Since many pawnshops are now into the business of facilitating remittances, regulators said they should also be required to report to authorities suspicious transactions, such as sending and receiving cash from dubious sources.

Circular 711 likewise states that assets of pawnshops and items turned over by borrowers as collateral for loans must be insured by companies accredited by the Insurance Commission.

This is to protect the public against loss of pawned items resulting from theft and fire.

All pawned items, “except those which are kept inside the vault or safe, must be insured against fire,” the BSP said.

In the circular, the BSP has also identified people who should not be designated as directors or officers of pawnshops.

These include individuals convicted of offenses like estafa, embezzlement, extortion, forgery, swindling, theft, robbery, and violators of graft and corrupt practices.

The BSP also prohibits persons found to have violated banking laws or other regulations enforced by other regulatory agencies from being directors of pawnshops.

The pawnshop industry in the country has grown and developed over the years. Apart from lending, most shops now offer other services such as bills payment and facilitation of remittances.

These services have proved to be lucrative for pawnshop operators.

The BSP said enhanced monitoring of pawnshops would be necessary given the phenomenal growth of the industry.

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