BSP to allow pawn shops to buy gold from miners

Pawnbrokers may soon be allowed to buy gold from small mining companies with a view to later selling it to the Bangko Sentral ng Pilipinas (BSP).

In the draft circular, the BSP identified gold trading as a new ancillary activity of pawnshops along with foreign exchange dealers and/or payment system operators. However, the circular states that these ancillary businesses will be subject to central bank accreditation.

“(Gold trading as an ancillary business activity) for the purpose of purchasing gold from registered small-scale mining companies and subsequently selling it to Bangko Sentral,” the BSP said.

The draft circular also allows pawn shops to be a “financial access point” for financial services, such as acting as sub-agents for remittances; performing the functions of cash agents of banks and points of entry/withdrawal of cash (CICO); and gold buying stations or partners with accredited gold dealers.

The draft circular also provided that pawnshops could market and facilitate on behalf of their partners the use of microinsurance, microinvestment and microfinance products and services.

Pawnshops can also act as payment and/or replenishment partners for utility and other companies; collection services and/or as partners in corporate disbursements; and such other services as may be determined by the Monetary Board.

“(It) is stipulated that the relevant supervisory department of Bangko Sentral will be notified within five working days from the date the pawnshop actually engages in such business activity,” the draft circular said.

However, the draft circular states that pawnshops should not engage in any activity that will promote and/or encourage gambling in any form. This includes, but is not limited to, participating in and/or operating as betting shops or branches of any gambling operation and/or facilitating the financing of gambling and/or betting thereon.

Once approved, the BSP will give pawn shops one year from the effective date of the circular to re-evaluate their business activities and cease any activities that are contrary and/or inconsistent with the order.

“This preparation period should be considered an observation period. The imposition of applicable penalties for non-compliance will begin after the end of the monitoring period,” the BSP said.

Stakeholders have until December 6 to submit their comments on the draft circular. Once approved, the circular will come into force 15 calendar days after its publication in the Official Gazette or a newspaper of general circulation.