Rising costs, rules changes hit PH overseas remit units
MANILA - The overseas remittance units of Philippine banks face tough choices of either staying put or shipping out as rising operational costs and local regulatory changes make it increasingly difficult to justify continued operations.
This was learned from George Sy Inocencio, Development Bank of the Philippines vice president and head of remittance operations, who said banks would rather do tie-ups with locals than for Philippine lenders to create a locally incorporated remittance unit in the host countries.
Inocencio said a number of banks have already closed their remittance outlets in some of the countries due to rising cost and stricter regulations of the host countries.
“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,” he told the BusinessMirror. He also said US banks, for instance, are getting out of the remittance business altogether. “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 said.
Coins.ph co-founder and CEO Ron Hose said US monetary regulations are strict and should definitely have an 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 US banks restrict the use of their facilities for international money transfers. The US monetary regulation is part of their effort to curb money laundering and terrorist financing.
Inocencio said in some countries Philippine banks have shut down operations due to rising cost, declining margins and increasing risk of penalties for anti-money laundering violations.