How to Start a Money Changer Business in the Philippines

Establishing and operating a “money changer” business can be a profitable venture. It caters a wide market composed of tourists from other countries who need our local currency to do transactions in our country, Filipinos who are travelling abroad and need to exchange their pesos to foreign currency to use abroad, OFWs (Overseas Filipino Workers) who need to exchange their foreign currency remittances to pesos, online business owners and professionals who serve foreign clients and earn US dollars, importers who need foreign currency for their foreign purchase or imports, and other customers who need to exchange foreign currency units to our local currency unit, and vice versa.

If you are planning or is interested in this business opportunity, here is a guide on how to start and register a money changer business in the Philippines.

 

Definition and regulation

Money Changers (MCs), interchangeably referred to as Foreign Exchange Dealers (FXDs), refer to those regularly engaged in the business of buying and/or selling foreign currencies – Section 1 of BSP Circular No. 471, as amended. They are subject to the provisions of R.A. No. 7653 (The New Central Bank Act) and R.A. No. 9160 (Anti-Money Laundering Act of 2001, as amended by R.A. No. 9194) and its implementing rules and regulations, particularly on customer identification, record keeping and reporting of covered transactions and suspicious transactions.

The registration and regulation of money changers are outlined in the BSP Circular No. 471 dated January 24, 2005, as amended by Circular No. 652 dated May 5, 2009. Please read the discussion on registration and licensing below.

 

Location and safety

It is important to choose the right location for this kind of business. The following are important things to consider in choosing the best location for your money changer business:

1. It should be easily accessible by your targeted customers. You should consider if that location is easily reachable by your customers, who might be OFWs, tourists and other potential clients.

2. Consider the cost of space. If you are renting a place or space, you also have to consider the cost of rent or lease.

3. It should be in a secure place or area. Money changers are handling financial transactions and keeping large amount of cash on their custody which may be prone to theft and robbery. Thus a secure place and area is a must.

4. Consider your competition. You also have to consider the number of money changer businesses that are operating in that particular area to ensure that you will be gaining a favorable share of the market.

 

Capital and business formation

Unlike banks, financing companies, and pawnshops which are involved in lending or granting loans to consumers and are required an initial minimum amount of capital to be established, there is no initial minimum capital required by the BSP to start a money changer business. However, since money changing deals on active cash transactions, one who wishes to start this kind of business should have at least a minimum of Php500,000 of initial capital, excluding the money that will be spent on space improvements, furnishings and equipment. Most of the initial capital will be formed as cash assets to satisfy the company’s foreign exchange transactions. Therefore, if you want to serve more customers, you have to invest a bigger amount of capital to run your business.

A money changer can be formed as a single proprietorship, partnership or corporation type of business. A proprietorship business should register its business trade name with the Department of Trade and Industry (DTI), while partnerships and corporations are required to be registered with the Security and Exchange Commission (SEC). The succeeding discussion will give you an idea on how to register a money changer business in the Philippines.

 

Registration and licensing

Like other types of businesses, a money changer business should be registered with the different government offices where it is required to be registered. Proprietorship should be registered with the DTI, while partnerships and corporation should secure a certificate of registration from the SEC. A money changing business should also secure a Mayor’s business permit or license to operate in the city or municipality where the business is located and operated. And since money changers and foreign currency dealers are making transactions with financial consumers, they are also required to be registered with the Bangko Sentral ng Pilipinas (BSP).

Aside from registering with the DTI, SEC (for partnership and corporation), City or Municipal Mayor’s Office, and BSP, they may also be required to register with other government offices, like SSS, Philhealth and HDMF, especially if they have employees. And more importantly, they must be registered with the Bureau of Internal Revenue (BIR) to comply with their tax duties and obligations. You may read the following guidelines for registering a business with the different government offices in the Philippines:

– How to register your business trade name with the DTI
– How to register a corporation with SEC
– How to get a Mayor’s business permit
– How to register a business with the BIR
– How to register your business with the SSS
– A guide to registering your business in the Philippines

For the registration of money changers or foreign exchange dealers with the BSP, here are the documentary requirements:

1. Application form for the Registration as FXD/MC and RA (including a deed of undertaking)

2. Incorporations papers duly authenticated by the Securities Exchange Commission (for corporation and partnership)/CDA Registration (for Cooperative) (Activity applied for should be indicated/added in the purpose clause);

3. Copy of certificate of Registration duly authenticated by the Department of Trade and Industry (for single proprietorship);

4. Copy of business license/permit from the city or municipality having territorial jurisdiction over the place of establishment and operation (Activity applied for should be indicated/added in the kind of business and original copy should be presented);

5. List of stockholders/partners/proprietor/directors/principal officers as the case may be; (Name, Designation, Contact No. and Address);

6. Notarized Deed of Undertaking (Annex B) to strictly comply with the requirements of all relevant laws, rules and regulations, signed either by the owner, partner, president or officer of equivalent rank;

7. Two (2) copies passport size pictures and Xerox copy of one (1) valid ID with picture and signature of the proprietor or the officer duly authorized by the Board of Directors or Partners;

8. Attendance in the Anti-Money Laundering Law Seminar (also, for branch staff); and

9. Any additional documents which the BSP may require from time to time.

For more details on the registration of money changers with the BSP, you can contact or visit them at the following:

Bangko Sentral ng Pilipinas
A. Mabini St. cor. P. Ocampo St.,
Malate Manila, Philippines 1004
Tel. No. : (632) 708.77.01
E-mail: bspmail@bsp.gov.ph

Reference:
Bangko Sentral ng Pilipinas (BSP)

 

Disclaimer: This article was written and published for informational use only and is not provided to serve as legal, tax, or investment advice. Furthermore, new and subsequent laws, regulations, issuances, and rulings related to the topic that will occur in the future may render the whole or part of the article obsolete or inaccurate. We do not guarantee and is not liable for the accuracy or completeness of any information provided herein or in any outcome as a result for using this information.