Friday, February 4, 2011  

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The Bangko Sentral has tightened the rules governing pawnshops in the country, following the spate of robberies that hit several pawnshops in Metro Manila recently and following reports that jewelry and other luxury items are now being used as a tool for money laundering.

Bangko Sentral Gov. Amando Tetangco Jr. issued last January 28 Circular No. 711, Series of 2011, which carried amendments to Manual of Regulations for Non-Bank Financial Institutions - Pawnshops issued as Circular No. 656 on June 2, 2009.

The circular prescribes a new set of rules that will govern the more than 15,000 pawnshops operating throughout the country. It requires pawnshops to insure their premises against fire, install steel vaults and formulate measures to prevent money laundering, among others.

In that circular, the Bangko Sentral set a minimum paid-in capital of P100,000 for a pawnshop planning to establish a branch. The pawnshop also has to submit a capital build-up program, to protect itself from losses.

Every pawnshop head office is required to pay a one-time processing fee of P1,000 for the initial registration and P500 in annual fee, made not later than March 31 of every year.

A corporate pawnshop with total resources of at least P50 million is required to comply with the Securities and Exchange Commission requirements on corporate governance.

Pawnshops are now required to insure their premises against fire and install steel vaults that cannot be opened by drill. Several pawnshops have been recently targetted by robbers that drilled their way to the vault from underground.

Every pawnshop is also required to formulate an anti-money laundering prevention program following reports that jewelry and other items have become a tool for money laundering in the country.

Partners, directors and officers of pawnshops are required to secure clearance from the National Bureau of Investigation and attend a briefing on pawnshop regulations conducted by Bangko Sentral or any of its accredited service provider.

Individuals who have been convicted of offenses such as estafa, embezzlement, extortion, forgery, malversation, swindling, theft, robbery, falsification, bribery and corruption are not allowed to becomed directors, trustees, officers and employees of a pawnshop.

A pawnshop should open its records, ledgers, registers, books or documents for examination by an authorized Bangko Sentral officer or examiner.

Vital records for the current year must be kept inside the safe or vault when not in use. These records include pawn ticket duplicates, loan paid and loan extended registers or loan paid and extended vouchers.

Other pawnshop records/documents may be placed in filing cabinets/shelves outside the vault or safe but within the pawnshop premises.

At the same time, all pawnshops are required to insure their premises, furniture, and fixtures against fire.

Bangko Sentral also ruled that “no pawnshop shall collect interest on loans in advance for a period longer than the original term agreed upon as indicated in the pawn ticket.”

Pawnshops are also required to notify a pawner in writing that the pawn shall be sold or disposed of, in case the pawner fails to redeem the pawn within the 90-day grace period.