BSP issues tighter rules on pawnshop operations

The central bank is imposing stricter rules on the operations of pawnshops to safeguard their assets, Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said Thursday. Tetangco said the BSP has issued Circular 711 series of 2011 that amends the "Manual of Regulations for Non-Bank Financial Institutions - Pawnshops." "In order to safeguard pawnshop assets or pawned items and mitigate the risk of loss arising from malfeasance or fraudulent practices of their employees, pawnshops shall adopt new measures," Tetangco said. Under the new provisions, the central bank is requiring the "bonding" of accountable officers and employees with reputable insurance or surety companies accredited by the Insurance Commission. The new rule also noted that all pawnshop officers must be required to attend a briefing on pawnshop regulations and seminars on Anti-Money Laundering Act. Moreover, a corporate pawnshop with total resources of at least P50 million shall comply with the requirements of corporate governance of the Securities and Exchange Commission, the BSP said. The central bank said it also tightened the rules on the disqualification of directors and officers, Tetangco said. Tetangco also said that a new pawnshop applying for an acknowledgment of registration with a minimum paid up capital of P100,000 may open one branch subject to compliance with applicable branching requirements. Every branch of a pawnshop should pay a one-time processing fee of P1,000 and annual fee of P500 upon approval. The central bank also requires pawnshops to submit a capital build-up program should a crime result in deficiency in its minimum capital or prudential capital. Pawnshops with assets of at least P50 million are required to submit a copy of their audited financial statements duly received by the Bureau of Internal Revenue to the BSP not later than June 30 of each year. The BSP said pawnshops should maintain records containing all the information of the pawner and should indicate in the pawn ticket all information such as their contact number and thumbark or signature. The central bank is also requiring pawnshops to notify their pawners in writing that the pawned items would be sold or disposed of in the event that the pawner fails to redeem the item. The BSP has warned pawnshops operating as foreign exchange dealer, money changer, or remittance agent without the necessary certificate of registration with the central bank. Should pawnshop officials violate these rules, they would face warning or reprimand, suspension of registration, suspension of branching privilege, disqualification of officers, monetary penalty not exceeding P1,000 per violation per day, and revocation of registration. — JE, GMANews.TV