BSP’s P500,000 cash withdrawal limit ‘not foolproof’ — analysts

THE BANGKO SENTRAL ng Pilipinas' (BSP) new P500,000 cap on daily cash withdrawal may make money laundering more difficult but unlikely to completely deter it, analysts said.

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At the same time, BSP Governor Eli M. Remolona, Jr. on Thursday defended the new policy amid complaints from the public about the smaller daily cash withdrawal limit.

"We want to make it more difficult for the contractors, for the guys involved in the flood control mess, to be able to take money out of the banks. We just realized that all these transactions are done in cash," he said in an exclusive interview on Thought Leaders with Cathy Yang on One News on Thursday.

The BSP issued a circular which imposes a P500,000 daily limit on cash withdrawals amid an ongoing investigation into anomalous flood control projects involving government employees, contractors and other individuals.

Under the circular, a maximum of P500,000 or its equivalent in foreign currency may be withdrawn at once or via multiple transactions within one banking day.

However, clients may still withdraw cash beyond the limit if they provide evidence of a legitimate business purpose. Such transactions may be approved after the BSP-supervised financial institution (BSFI) conducts enhanced due diligence and files a suspicious transaction report.

Mr. Remolona acknowledged this would be "a bit of a hassle" but hoped that this would prompt a switch to digital transfers.

"We understand there are businesses that are cash-based, and I think the banks know this. The businessman can come to the bank and say, 'I need cash, more than P500,000 and this is why I need the cash.' The bank will understand that," he said. "We want to go digital, so this may encourage that shift." Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said money laundering will still be possible using alternative means such as cryptocurrency, shell firms, or trade-based laundering despite the BSP's new regulations limiting cash withdrawals.