BSP toughens stand on e-money service providers

The Bangko Sentral ng Pilipinas (BSP) said Tuesday it wants electronic money issuers or EMIs like Globe’s G-Cash and Smart’s Smart Money to do due diligence on electronic money network service providers before signing an outsourcing contract. "The BSP recognizes that efficient and effective delivery of financial services may necessitate EMIs to develop business models that utilize outsourcing arrangements," BSP Gov. Amando Tetangco Jr. said. Now more Filipino consumers are into e-money transactions continue to grow that the central bank has issued Circular No. 704 or the implementing guidelines for e-money transactions to protect consumers from risks especially if the EMI is outsourcing the service. G-Cash and Smart Money allow consumers to use e-money for commercial transactions and convert cash into e-money. The circular tells EMIs to notify the BSP about the identity of outsourcing companies and that the system and infrastructure for delivering e-money services must be accessible to the central bank. "This is so the central bank may conduct investigation of the efficiency of the system when deemed necessary," Tetangco said. Employees handling outsourced e-money transactions must be trained on anti-money laundering rules to help prevent money-laundering activities using the service, Tetangco stressed. The BSP earlier reminded banks to address such risks as system downgrade, breach of consumer information confidentiality, and unclear fees and charges as ATM (automated teller machines) and POS (point-of-sales) transactions reached P11.3 billion as of end-March 2010. The BSP has monitored 7.4 million e-money transactions worth P11.3 billion using ATM and POS channels in the same period. An earlier BSP circular — No. 649 — set the regulatory framework for e-money and e-money issuers, which prompted innovations in fund transfer mechanisms and paved the way for competitive growth in the industry. Circular 649 authorized e-money issuers to build a network of “cash in or cash out agents" as gateway for the previously unbanked to access financial services. — VS, GMANews.TV