BSP Circular 1206: Consolidated Rules for Money Service Businesses

BSP Circular No. 1206, Series of 2024, approved by the Monetary Board on 28 November 2024, consolidates the rules governing money service businesses (MSBs) into a single book: the "M-Regulations" of the Manual of Regulations for Non-bank Financial Institutions (MORNBFI). The circular deletes and supersedes Sections 901-N (Money Service Business Operations) and 902-N (Virtual Asset Service Providers) of the MORNBFI, together with their related appendices, and replaces them with an integrated set of rules bespoke to MSBs. The consolidation rests on the expanded regulatory and supervisory authority of the Bangko Sentral ng Pilipinas over MSBs under Republic Act No. 11211, which amended RA No. 7653 (The New Central Bank Act).

What is a money service business under the circular?

An MSB refers to non-bank entities engaged in remittance, money changing, and/or foreign exchange dealing. The rules cover remittance transfer companies (RTCs), money changers and foreign exchange dealers (MCs/FXDs), e-money issuers (EMIs), and virtual asset service providers (VASPs).

The circular defines key terms. A remittance and transfer company is any entity providing money or value transfer services. An e-money issuer is any entity authorized by the Bangko Sentral that provides money transfer or remittance services using electronic stored money value. A VASP is any entity offering services or engaging in activities that facilitate the transfer or exchange of virtual assets, including exchange between virtual assets and fiat currencies, transfer of virtual assets, and safekeeping or administration of virtual assets.

A remittance sub-agent (RSA) is any person authorized by an RTC to perform certain undertakings in the remittance business. An RSA is no longer required to register with the Bangko Sentral, but the RTC must comply with the notification requirements under Sections 103-M and 104-M.

Registration and authority to operate

RTCs, MCs, and FXDs must register with the Bangko Sentral before they can operate. Applicants submit an Application for Registration and a Notarized Deed of Undertaking (Appendix M-2) to the appropriate supervising department, following the procedures in Appendix M-3.

The circular classifies registrants into types A to F, plus VASPs with or without safekeeping services. Classification depends on the average monthly network volume of transactions and the nature of operations. For example, a large-scale remittance agent has an average monthly network volume of at least P75.00 million, while a small-scale operator has less than P75.00 million. A large-scale MC/FXD has at least P50.00 million in average monthly volume.

Upon fulfilling the registration requirements, the applicant receives a Certificate of Registration (COR). Within three (3) months from issuance, the registered RTC/MC/FXD must commence operations; otherwise, the COR is cancelled. A metal plate bearing the unique registration number is issued to each head office.

Registration fees range from P20,000 to P100,000 depending on type, with a supplemental fee of P1,000 for each office other than the head office (except EMIs). Annual service fees are likewise imposed, payable not later than March of every year.

Minimum capital requirements

The circular sets benchmark capital for each type. Large-scale remittance agents must have at least P50.00 million, while small-scale operators require less than P50.00 million. Remittance platform providers need P10.00 million. Large-scale MCs/FXDs require at least P10.00 million, and small-scale MCs/FXDs less than P10.00 million. VA custodians must have P50.00 million, and VASPs without safekeeping services P10.00 million. For e-money issuers, the circular refers to the capitalization prescribed under the MORB provision on the issuance and operations of electronic money.

Notification and conduct of operations

RTCs, MCs, and FXDs must notify the appropriate supervising department of several events within five (5) business days, including commencement of operations, transfer of location, closure of office, and new or terminated tie-up partners. RTCs must also submit a monthly list of new branches and accredited RSAs.

Large value pay-outs of more than P500,000, or its foreign currency equivalent, in any single transaction must be made only via check payment or direct credit to deposit accounts.

Any change of ownership or control requires prior approval from the Bangko Sentral. Control refers to a transaction involving voting shares that results in ownership or control of at least twenty percent (20%) of voting shares, or that enables a person to elect or be elected as a director. Failure to seek prior approval may result in cancellation of registration.

Reporting obligations

RTCs, MCs, and FXDs must maintain records and submit required reports to the Bangko Sentral, including a semestral report of operating and closed offices within ten (10) business days from the end of the reference semester, and audited financial statements within 120 calendar days after the close of the reference fiscal year. Quarterly reports on money changing and remittance transaction values are due within ten (10) business days from the end of the reference quarter.

Type "F" small-scale operators are not required to submit audited financial statements, though these must be made readily available during examination. A Report on Crimes/Losses must be electronically submitted within ten (10) calendar days from knowledge of the incident, covering crimes involving P20,000 or more, and crimes involving MSB personnel regardless of amount.

Penalties for violations

Under Section 37 of RA No. 7653, as amended, MSBs and their directors, officers, or employees may be imposed a maximum monetary penalty of P1 million for each transactional violation, or P100,000 per calendar day for violations of a continuing nature. Where profit is gained or loss avoided, a fine of no more than three times the profit gained or loss avoided may also be imposed. Erroneous, delayed, or unsubmitted reports carry a monetary penalty of P60 for each occurrence or each day, as applicable.

Frequently asked questions

Does an RSA need to register with the Bangko Sentral? No. An RSA is no longer required to register with the Bangko Sentral. However, the accrediting RTC must comply with the notification requirements under Sections 103-M and 104-M.

How much is the registration fee for a money changer? A large-scale MC/FXD (type E) pays P100,000, while a small-scale MC/FXD (type F) pays P20,000. A supplemental fee of P1,000 applies for each office other than the head office, except for EMIs.

When must an MSB start operations after getting its COR? Within three (3) months from the date of issuance of the COR. Failure to commence operations within that period results in cancellation of the COR.

Practical takeaways

• BSP Circular No. 1206 consolidates MSB rules into the M-Regulations of the MORNBFI, superseding Sections 901-N and 902-N.
• RTCs, MCs, and FXDs must register with the Bangko Sentral before operating and must commence operations within three months of COR issuance.
• Minimum capital and registration fees vary by classification type, ranging from P20,000 to P100,000 in registration fees.
• Large value pay-outs exceeding P500,000 must be made via check or direct credit to deposit accounts.
• Monetary penalties can reach P1 million per transactional violation or P100,000 per calendar day for continuing violations.

Primary sources

The rules discussed above are drawn from the following issuances, embedded here in full for your reference.

Consolidated Rules for Money Service Businesses (MSBs) under the New "Manual of Regulations for Non-bank Financial Institutions (MORNBFI)-M"Open in Law LibraryDownload PDF

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.