BSP Tightens Oversight: What Pawnshops Must Now Do to Avoid AMLA Sanctions

More rules are coming — and if you run a pawnshop, you better pay attention.

The Bangko Sentral ng Pilipinas (BSP) is now looking more closely at pawnshops and money service businesses (MSBs). They’ve started using a new way of checking if these businesses are doing enough to prevent dirty money from passing through their hands.

In short: just because you’re not a bank doesn’t mean you’re off the hook.

What’s Going On?

On May 7, 2025, The Philippine Star reported that the BSP will now apply a “proportionate, risk-based approach” when supervising pawnshops and MSBs. That means the bigger the risk your business poses to the financial system, the more the regulators will be watching.

Why now? Because pawnshops and remittance centers are part of the formal financial system. And when something goes wrong in that system — like money laundering — it affects everyone, not just the big players.

But We’re Not a Bank…

That’s exactly the problem.

Pawnshops have long been seen as “low risk” — smaller amounts, neighborhood locations, faster transactions. But criminals know that too. That’s why they target MSBs to move money in ways that avoid the radar.

Here are a few tactics dirty money runners use:

1. Fake IDs and Paperwork
   They walk in as someone else, using borrowed or fabricated identification, then pawn an item or send funds.
2. Rotating or Cycling Items
   The same watch or piece of jewelry is pawned over and over again — usually to launder repeated “payments.”
3. Split Transactions
   Instead of sending ₱600,000 in one go, they split it into 12 transactions of ₱50,000 to avoid being flagged.

And yes — pawnshops are officially included under the AMLA (Anti-Money Laundering Act) as “covered persons.” That puts them in the same category as banks, casinos, and insurance providers [AMLA Sec. 3(a)].

What BSP Expects from You

The BSP isn’t just tightening rules for the sake of it. They want a financial system that protects both consumers and businesses — especially the small ones.

So, what should you be doing?

Here’s what BSP and AMLA already require:

1. Know Your Customer (KYC)
   You need to check and record valid identification, with proper verification procedures.
2. Keep Good Records
   Keep transaction logs, customer IDs, and pawn tickets organized and accessible — not just in filing cabinets, but in digital backups if possible.
3. Spot Suspicious Behavior
   File a Suspicious Transaction Report (STR) if something seems off — even if the amount is small.
4. Assign a Compliance Officer
   Someone in your business must be in charge of monitoring AML obligations.
5. Conduct Regular Training
   Everyone from frontliners to branch heads should understand AML basics. It’s not just a “head office” thing.

These aren’t new — they’ve been in the law for years. But with the BSP’s renewed focus, you can expect more audits and surprise checks.

If you’re unsure how to meet AML compliance requirements, UCheck can help screen names and reduce manual verification work.

Can Small Pawnshops Keep Up?

The short answer: yes — if they prepare.

Most of the rules are manageable. The challenge is the paperwork and constant updates. That’s where digital tools come in. Some compliance platforms already help pawnshops:

• verify IDs using national databases,
• generate reports for BSP or AMLC,
• and flag suspicious patterns automatically.

The best part? Many of these tools don’t cost a fortune. Some are even priced per transaction — perfect for shops with low daily volumes.

The Bottom Line

The BSP isn’t out to shut you down. But they are watching more closely — and if you’re not ready, you’re taking a big risk.

Don’t wait for a surprise inspection. Fix your compliance processes now.

Remember: “I didn’t know” won’t hold up when the regulators come knocking.