RP 'padala' systems catch FATF attention

Manila Standard Today
June 8, 2005

RP ‘padala’ systems catch FATF attention
By Eileen A. Mencias

The Philippines’ innovative remittance systems, specifically those involving the use of mobile phones such as Globe’s G-Cash and the Smart Padala, has caught the attention of the Financial Action Task Force (FATF).

The Paris-based FATF wants to know more about the system when it holds a three-day joint plenary meeting in Singapore today with the Asia-Pacific Group (APG) on Money Laundering.

Anti Money Laundering Council (AMLC) executive director Vicente Aquino said the FATF considers the remittance of money through mobile phones as hi-tech hawala.

In its October 2004 meeting, the FATF, the global watchdog on money laundering, issued its special recommendation IX, which focuses on cash couriers, and called on countries to draw up measures to detect physical cross-border transportation of currency and bearer negotiable instruments.

Hawala refers to cash couriers and is more commonly known as the padala system among Filipinos working overseas.

Aquino said experts from Globe Telecom and Smart Communications will help him in his presentation to the FATF. The telecom experts will explain the technology involved in remitting money through the mobile phone.

The Philippines is known for its heavy use of mobile phones, earning recognition as text capital of the world. The popularity of the mobile phones and its huge number of overseas workers has prompted telecommunication companies and some banks to come up with novel means of remitting money.

Aquino said the use of the mobile phone in remitting money in the Philippines complies with the rules of the AMLC because it tracks the sender and the recipients. The Philippines has over 20 million mobile phone subscribers and over five million Filipinos working abroad who send money home regularly.

“This is a cheaper, faster and more secure way of sending money,” Aquino said. “It is favorable to OFWs because of its lower transaction fees. The BSP and the AMLC closely monitor this operation to ensure that they meet the Know Your Client requirements and record keeping requirements.”

Aside from the G-Cash and Smart Padala, Aquino said the Philippines will also submit a progress report on its antimoney laundering measures and implementation.

Today marks the first time that the FATF will hold a plenary meeting with the Asia-Pacific Group on Money Laundering. The meet focuses on the national systems to quash antimoney laundering and terrorist financing, alternative remittance systems, cash couriers and the link between corruption and money laundering.

The FATF member-countries are Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, the European Commission, Finland, France, Germany, Greece, the Gulf Cooperation Council; Hong Kong, China; Iceland; Ireland; Italy; Japan; Luxembourg, Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Russian Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.