AMLA raising cost of OFW remittances

Monday, May 22, 2006

THE very law that plucked the Philippines out of the world’s blacklist of dirty-money havens is making it more expensive for overseas Filipino workers to send their earnings to their families through banking channels, a source in the Bangko Sentral ng Pilipinas (BSP) said.

Local banks have pointed to the Antimoney Laundering Act, the Philippines’ main law against dirty-money transactions, as a reason for the high cost of remittance transfers, the source said.

This was among the issues raised during a recent meeting between the BSP and the Association of Bank Remittance Officers Inc. (Abroi).

Given this, the government plans to review domestic and foreign policies that have prevented the local banking sector from capturing more OFW remittances, the source said.

Money sent home by the millions of Filipinos working abroad has helped prop up the domestic economy, especially during trying times. OFW money has fueled consumer spending, the main driver of the country’s economic growth.

Regulators and the Abroi agreed that a review of the regulatory barriers, both in the Philippines and in host-countries, has to be undertaken, particularly those preventing local banks from opening remittance centers or establishing tie-ups with foreign institutions.

“In the meeting, we aim[ed] to discuss a working program on how to increase remittances and to think [of] measures on how to bring down the cost of remittances and to increase further remittance flows,” the BSP source said.

About 85 percent of remittances are coursed though banks, while the remaining 15 percent go through informal channels.

In an earlier survey, the BSP said remittance fees in the US ranges from a low of $7.09 to a high of $11.59 per $400 transaction last year. This was slightly down from $8.00 to $12.00 in 2000. In the United Kingdom, the fees range from $8.785 to $11.73 for every $600 transaction, also slightly lower than the $9.48 to $13.96 charge in 2000.

In contrast, door-to-door services cost from $13.96 to P23.53 per $600 transaction in the US, and from $12.09 to $14.59 in the UK.

Despite the high costs, the BSP said these fees are slowly going down due to stiffer competition, high volume of transaction and information technology. Total remittances for the first quarter this year increased to $2.8 billion from $2.5 billion in the same period last year.

The higher level of remittances was due to the enhanced services by commercial banks and continued deployment of overseas workers.

The bulk of remittances continue to come from the US, the UK, Saudi Arabia, Italy, Japan, Hong Kong, United Arab Emirates and Singapore.

--Maricel E. Burgonio

http://www.manilatimes.net/national/2006/may/22/yehey/business/20060522bus2.html