honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, September 11, 2003

Money transfers facing scrutiny

By Deborah Adamson
Advertiser Staff Writer

Like many bustling eateries in Kalihi, San Nicholas Chicharon & Sausage caters to the palate of hungry Filipinos with plate lunches of pork adobo and rice.

But loyal customers, family and friends also know that San Nicholas dabbles in a business that has served as a loose-knit financial structure for overseas Filipinos for decades: Money remittance, a service that allows expatriates to send cash to families in their homelands.

"We just started our business and we wanted more income," said eatery co-owner Reynie Butay. "We could use the extra money to pay taxes, bills and employees."

However, San Nicholas and the more than 100 Filipino remittance service firms in the Islands aren't regulated. There are no specific licensing or bonding requirements to meet and they are not told to report suspicious monetary activity.

But there's a movement to change all that in order to protect immigrant consumers who shy away from reporting losses and to keep an eye on a money network that could be used by terrorists to funnel cash.

States such as California, Washington and Oregon have laws covering money remittance.

"We are looking at it as well," said Nick Griffin, state Commissioner of Financial Institutions. "We haven't made a decision."

Filipino remittance providers — whether they are pure financial centers or grocery stores that dabble with remittance — contribute to the estimated $6.4 billion sent annually by overseas Filipinos to relatives in their homeland.

Each year, up to 600 million people around the world benefit from the money transfer business, according to the U.S. Treasury. That's about 10 percent of the world population.

In Hawai'i, not only would regulating the market enhance homeland security, but it would level the playing field for larger firms.

Luis David Jr., general manager of Philippine National Bank in Honolulu, said it's not easy to compete with a proliferation of businesses that do money remittances on the side since practically anyone with relatives in the Philippines who can serve as couriers can get into the act.

"Every mom-and-pop store can get into the business," David said.

Mom-and-pop shops also can offer a better exchange rate because of lower overhead costs, said Ramon Nicdao, operations officer of MB in Kalihi, an affiliate of MetroBank in the Philippines.

Remittance firms profit from assessing a fee of between $12 to $15 a transaction and benefiting from differences in exchange rates.

Because Hawai'i does not regulate the industry, there are a lot more remittance firms here than the Mainland states, said Adam Cua-Oh, general manager of the Chartered Forex Inc. in Kalihi.

If unbonded companies go bust, people have no way to get their money back, Cua-Oh said.

Earlier this year, one operation — Laoag Manila Express — went out of business. According to the Better Business Bureau, there were two unresolved complaints about the company regarding delivery of services. Laoag Manila Express' phone has been disconnected and BBB said it could not contact the company's principals.

"If the industry is regulated, the consumer will be protected," David said.

But Butay doesn't know if her business could afford to meet any new regulations and said she might need to discontinue her money remittance business.

She hopes the state doesn't regulate the industry since she said she is not breaking the law or hurting customers.

"I'm not doing anything bad, so I disagree," Butay said.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.