https://www.pna.gov.ph/articles/1260920

MANILA – Philippine monetary authorities are studying the proposal to demonetize the PHP500 and PHP1,000 bills as a measure to prevent these from being used for illegal activities.

In a briefing Monday, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona dubbed the suggestion of former Finance chief Cesar Purisima a “tantalizing proposal.”

“It's not so simple. To me, it's like, you know the saying: cut off your nose just to spite your face? You're doing more damage than benefits,” he said.

Purisima’s suggestion was made after it was disclosed during a series of Senate hearings that around a billion worth of BSP-issued higher denomination paper bills were placed in several suitcases and allegedly delivered using numerous vans to Ako Bicol Partylist Rep. Zaldy Co in line with the ghost flood control projects under the Department of Public Works and Highways.

While other countries have done it, Remolona, who served at the New York Federal Reserve, said the proposal is not without negative consequences.

Remolona said he was with the New York Fed when a similar dilemma came, since the USD100 note was used for the illegal drugs trade.

“But when we looked closely at the issue, this USD100 is so often used by regular people. Just to slow down a little bit what drug dealers do, you're going to make it very difficult for many Americans? So hindi ganun kadali (it’s not that easy) so in the end, we decided not to do it,” he said.

For now, the BSP chief said they have required banks to report to the central bank any transaction that involves PHP500,000 or more, under the covered transaction report (CTR).

Remolona said banks also have what is dubbed as suspicious transaction report (STR), which is a detailed report about the transaction and which includes details about the fund sources and whether this is commensurate with the earnings of the people involved in the transaction.

“We're looking at that, trying to enhance it so that it's easier for us to connect the dots. Essentially, you use that to connect one bank account, many bank accounts to one, or one bank account to many,” he said.

Last Sept. 18, the BSP issued Circular No. 1218, which requires regulated institutions to ensure that transactions amounting to PHP500,000 or its equivalent to other currencies be conducted through traceable options such as checks, online fund transfers, direct credit to deposit accounts, or digital payments to limit risks of money laundering.

Remolona said banks like the policy because “they've always been suspicious of some transaction but they couldn't refuse.”

“But now they can say, BSP yan eh (that’s a BSP policy) so it makes their life easier,” he said.

The BSP chief said they are now on the lookout for a digital solution to help better equip them, noting that even the Anti-Money Laundering Council, which he chairs, has received numerous STRs but cannot determine which of these need to be looked into first. (PNA)