OFW REMITTANCES SEEN SHIFTING FROM BANKS TO INFORMAL CHANNELS
MANILA, August 16 , 2004 (STAR) By Des Ferriols - The Bangko Sentral ng Pilipinas (BSP) expects dollar remittances from overseas Filipino workers (OFW) to shift from banks to informal remittance channels as international institutions clamp down on the global flow of terrorist funds.
Over the last three months, the BSP has been reporting the initial impact of new and tighter bank regulations on OFW remittances, noting a decline in funds coming out of the Middle East.
According to the BSP, Middle East countries particularly the Kingdom of Saudi Arabia, have begun implementing Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations.
"Banks in Saudi Arabia now require complete documentation and examination prior to remittance by overseas workers," the BSP said. Remittance centers in most countries, according to the BSP, have been implementing strict screening procedures of clients to implement their "know your client" policy.
"This would provide incentives for OFWs to remit their earnings through non-bank channels which are not captured by official statistics," the BSP said.
Over time, the BSP said it expects some of these informal remittances to show up in the banking system but only to the extent that they are exchanged for pesos or deposited in dollar accounts.
The BSP said the ongoing crisis in the Middle East also restrains OFWs from going out of their place of employment to transact with remittance centers.
However, the BSP report said it expects increased fund transfers from Hong Kong, US, and Italy to continue softening the impact of the recent decline in remittances from the traditional labor host countries such as Japan, U.K., and Saudi Arabia.
The US, United Arab Emirates, Saudi Arabia, Italy, Hong Kong and Japan remains the major sources of OFW remittances.
"We maintain our projection of a higher increase of OFW remittances at six percent since we expect higher deployment of Filipino workers and higher average income given the increasingly more skillful and more professional profile of OFWs," the BSP said.
After declining in May, remittances from overseas Filipino workers recovered dramatically in June, surging by 19.4 percent but the BSP said this was due to the increase in the number of deployed workers.
The BSP said OFW remittances reached $706 million in June alone, bringing up the six-month total to $4 billion, about 2.6 percent higher than last year’s first semester total.
According to the BSP, the surge was also helped along by the expansion in the remittance operations of Philippine banks, including the on-line remittance facilities that allowed inward transfers.
The BSP said there was a notable expansion in tie-ups between Philippine institutions and financial institutions in countries where there were significant numbers of deployed OFWs.
Quoting the Philippine Overseas Employment Administration, the BSP said the total number of deployed OFWs grew by 9.2 percent to 501,713 during the first semester of this year compared to last year. This number, however, was a slowdown from the 11 percent growth in May.
Reported by: Sol Jose Vanzi
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