Foreign banks tightening OFW remittance rules

Foreign banks are beginning to get tougher on remittances from overseas Filipino workers (OFWs) as a result of Manila's lax implementation of the law against money laundering, noted Central Bank of the Philippines (BSP) Gover-nor Rafael Buenaventura.

"Right now we are beginning to feel some tightening in OFW remittances," Buenaventura said. He stated that based on observations from OFWs, some offshore banks are beginning to ask more questions from Filipino migrant workers concerning where the remittances will go.

"Now banks ask a lot more questions when you remit money to the Philippines, inquiring about beneficiaries, relationship, and other information," he said.

The BSP chief said the tightened measures imposed by foreign banks on OFW remittances is a form of pressure exerted by the Paris-based Financial Action Task Force (FATF) to compel the Philippines to take more drastic actions to clamp down on money laundering.

Apart from this, OFW remittances have become suspect as a possible channel for dirty money flowing throughout the global terrorist network and funding various terrorist activities worldwide, he noted.

Early this year, the FATF warned of a boycott by international banks on dealing with Philippine financial institutions if the country is unable to pass a law against money laundering.

The warning prompted Philippine legislators to hastily pass a measure against money laundering. Buenaventura said that had the boycott pushed through, it would have had catastrophic consequences for the Philippine economy.

Every year, about $6 billion is remitted to the country by 7 million OFWs, mostly working in the Middle East, East Asia, south-east Asia, Europe and North America.

This year, remittances are estimated to hit a record $8 billion as the number of OFWs increased by 4.5 per cent.

The sheer bulk of these remittances, about 90 per cent of which pass through the banking system instead of door-to-door courier services, have repeatedly saved the Philippines from recession.

Despite the passage by the legislature of a law against money laundering in June, the FATF said the country still needs to institute critical reforms in its banking system, including measures that will allow authorities to fully monitor banking transactions.

Buenaventura said that the FATF has become more agitated about the country's failure to meet its demand, saying that OFW remittances will be the primary target for sanctions should the government fail to comply.