The main role of BSP in the Philippine financial system
Some of the current players in the Philippines’ financial services market include remittance agents, remittance platforms, digital wallet service providers, virtual asset service providers, and payments service firms (payment system operators). Fintech firms have increasingly increased their engagement in microfinance operations through mobile applications and internet platforms.
Fintech sector participants active in financial services are regulated in line with regulations applicable to non-fintech enterprises engaged in the same or equivalent activities, depending on the service or product provided by the participant.
The BSP defines “money transfer services” as organizations that collect cash, cheques, other monetary instruments, or other stores of value and pay a matching amount in cash or other forms of finance to a recipient through a communication, messaging transfer or clearing network. The BSP also oversees remittance companies. Remittance agents, remittance platform providers, e-money issuers, and virtual asset service providers are all examples of RTCs.
Fintech players that wish to offer money or value transfer services or undertake money business operations must register with the BSP and get prior authorization.
Remittance agents may be thought of as firms that handle the remittance business network on behalf of others. The BSP defines the above mentioned business as “any financial institution’s transfer of cash or permitting the movement of money from the sender or originator to a recipient or beneficiary locally and/or internationally.”
About BSP
The Bank of the Philippines (BSP) serves as the country’s central bank. In 2003, it was established. The BSP maintains a market-determined currency exchange rate. – As a part of its mandate, it is responsible for ensuring that the market operates fairly and transparently.
Reforms to the market that try to stabilize prices in order to increase competitiveness and growth are what drive exchange rates. Investors and dealers from all over the globe are drawn to this market because it is free and fair. It is also worth noting that for BSP regulated brokers the regulatory body has a rigorous set of restrictions. From who may trade and how much they can deal with the circumstances under which foreign currency trading can take place, these restrictions encompass everything.
Some of these ideas may be difficult to grasp since they don’t relate to Forex brokers at all. However, the BSP’s standards are designed to keep track of all FX (foreign exchange) activities, including those carried out by Forex brokers. As with many other online activities, the basic principles are moved to a new environment in an attempt to check that all of the rules are being followed. All foreign currency transactions are subject to KYC requirements by the BSP. KYC stands for knowing your client (Know Your Customer). There is a mandatory identification requirement for all Forex traders. This is being done because money laundering is a problem in many smaller nations. You should expect to be asked for verification of your identification before you can trade or withdraw money from a BSP registered Forex broker. Ensure that you have the time to go through the KYC process before depositing money with a Philippines Forex broker.
Whatever BSP does, there will always be people who flout the rules. Countries with a low degree of rule and law enforcement are more likely to have this problem. On the other hand, BSP-licensed brokers must submit regular reports to the regulator, which provides an added layer of protection for traders who use them. The Forex market lacks a complete safety net, but a regulator who is willing to put in the time and effort to do so is a huge assistance in this regard.
Providers of the remittance platforms offer a common platform or infrastructure, and a settlement account to distribute remittance monies inside their networks. Foreign corporations that want to offer remittance platforms in the Philippines must do so via a locally established subsidiary that is registered with the BSP.
An electronic money issuer may fall into any one of three categories: banks, BSP-controlled financial institutions, and non-bank entities recognized as money transfer agents by the BSP.
Virtual assets and remittances are regulated by the BSP, which is based in Manila. a “virtual asset” is defined as any digital unit that may be traded or exchanged digitally and utilized for payment or investment purposes, according to the BSP standards.
Businesses and organizations that supply or participate in activities related to virtual asset services and exchange facilities are subject to BSP laws. The Bureau of Securities and Exchanges requires virtual asset providers to get a certificate of authorization and register with the bureau in order to operate (BSP). A virtual asset supplier’s ability to offer safekeeping and administrative services will affect the minimal capital needs.
All payment system operators must adhere to the BSP’s rules and recommendations (OPS). The BSP requires all OPS to register. BSP approval is required for every registered OPS that intends to use a particular payment method. It is essential that the BSP identify any payment systems that constitute a potential danger to the stability of the national payment system, or that might have a significant economic effect or erode public confidence in the national payment system.
