The Money Service Business (MSB) essentially covers the business of those engaged in remittances, money transfers and foreign exchange dealership involving currency and monetary instruments, including virtual assets. There are several types of entities involved in these operations and it may really be difficult for ordinary consumers to distinguish one from another. This is the reason for their simplified descriptions below.

The first group would be the Remittance and Transfer Companies (RTCs) or those entities that provide Money or Value Transfer Services (MVTS ). They accept monetary instruments for payment to a beneficiary by means of communication or message through a clearing network. Under this group would be the Remittance Direct Agents (RDAs) or those which remit in behalf of a party engaged in the remittance business, and the Remittance Sub-Agents (RSAs) or those authorized by the RDAs to do any part of the remittance business. Under this group would also be the E-Money issuers or those entities authorized to provide money transfer or remittance services using electronic money stored value system or E-Money.

An allied entity of this group would be the Remittance Agent Network Provider (RANP) which is a separate entity providing the network for the remittance or transfer transactions. Another allied entity would be the Remittance Platform Provider (RPP), which provides a shared or common platform and maintains settlement accounts in order to provide funds for remittance transactions. Both the RANP and the RPP are required to secure licenses from the Bangko Sentral Ng Pilipinas. If the RPP is a foreign entity, it can be allowed to do business in the Philippines through a locally incorporated subsidiary.

The next group of entities under the MSB would be the money changers or foreign exchange dealers or those engaging in the buying or selling of one type of currency in exchange for another type of currency. They are the classic money changers and would include forex corporations which are organized as subsidiaries of banks. They have limited functions and if they would want to engage also in the remittance business, they have to apply for an additional license from the BSP and comply with the relevant requirements like minimum capital.

The third group would be the latest variant, the Virtual Assets Service Providers (VASPs) or those dealing with virtual assets and cryptocurrency like the Bitcoin. In its policy statement, the BSP says that it recognizes that such services can revolutionize the delivery of financial services but that there are also attendant risks arising from the high degree of anonymity, velocity of transactions, and volatility of prices. Thus, in the regulation of the VASPs and in the grant of their licenses, the BSP is applying leading standards on risk management, consumer protection and customer due diligence. VASPs are also required to maintain unencumbered liquid assets to ensure redemptions are serviced. An allied entity of the VASP would be the VA Custodian or that entity which in engaged for the safekeeping and/or administration of virtual assets. A VA Custodian also has to be licensed by the BSP. In addition, it shall maintain adequate reserves for the virtual assets held in custody. Lastly, a VASP customer need not have any remittance instruction. He may just decide to hold on to virtual assets for investment purposes, expecting gains from the appreciation of their value. The caveat here is that valuation could also go in the reverse direction.

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          The above comments are the personal views of the writer. His email address is dezunigajuan@gmail.com


Source: Manila Bulletin (https://mb.com.ph/2021/04/29/money-service-business-msb-second-of-2-parts/?utm_source=rss&utm_medium=rss&utm_campaign=money-service-business-msb-second-of-2-parts)