Amended Annual Report for the year ended 31 December 2011 (17-A)

The other risks identified are: regulatory risk, legal risk, and technology risk.
Regulatory risk refers to the potential for the Company to suffer financial losses due to
changes in the laws or monetary, tax or other governmental regulations of the
Philippines or of a country. Losses may be in the form of regulatory sanctions for noncompliance,
and in extreme cases, may involve not just mere loss in terms of reputation
or financial penalties, but a revocation of the license, charter or franchise.
The Company’s Compliance Program, the implementation of which is overseen and
coordinated by the Compliance Officer, is the primary control process for regulatory risk
issues. The Compliance Officer is responsible for communicating and disseminating
new rules and regulations to all concerned units, analyzing and addressing compliance
issues, and reporting compliance findings to the Management Committee, Executive
Committee or the Board of Directors.
I-Remit’s subsidiaries, associates, affiliates, tie-ups and agents have and maintain all
licenses and permits necessary to provide remittance and money transfer services in
their host countries. Compliance officers are appointed in each of the Company’s
foreign offices whose primary responsibility is to ensure compliance with all local rules,
regulations, laws, and licensing requirements.
The Anti-Money Laundering Act (AMLA) of 2001 (Republic Act 9160) was passed into
law on November 29, 2001 and was subsequently amended on March 23, 2003
(Republic Act 9194). The AMLA created the Anti-Money Laundering Council (AMLC)
which is composed of the Governor of the Bangko Sentral ng Pilipinas (BSP) as
Chairman, and the Commissioner of the Insurance Commission and the Chairman of
the Securities and Exchange Commission as Members. The AMLC discharges the
functions enumerated in the AMLA, which basically regulates the transfer of funds via
the route of covered institutions.
As remittance agents are covered by the AMLA, the Bangko Sentral ng Pilipinas issued
BSP Circular No. 471, Series of 2005 on January 24, 2005 that prescribed rules and
regulations that govern the registration and operations of foreign exchange dealers,
money changers, and remittance agents. On January 5, 2011, the BSP issued BSP
Circular 706 Series of 2011 that prescribes updated anti-money laundering rules and
regulations.
The Company requires its subsidiaries, associates, and agents to validate the true
identity of a customer based on official or other reliable identifying documents or
records before accepting a transaction. The Company is required to submit a report on
“covered” transactions and “suspicious” transactions involving a single transaction in
cash or other monetary instruments in excess of PHP 500,000 within one (1) banking
day from the date of said transaction or from the date the Company gained information
that the transaction was done for the purpose of laundering proceeds of criminal or
other illegal activities or from the time the Company had reasonably suspected that said
transactions were entered into for the purpose of laundering proceeds of criminal and
other illegal activities.
The Company is required to establish and record the identities of its clients based on
official documents. The BSP requires all registered remittance agents to maintain
accurate and meaningful originator information on funds transferred or remitted by
requiring the sender or remitter to fill-out and sign an application form, which shall
contain minimum data and information, such as the printed name and signature of the
remitter, permanent address, nationality, amount and currency to be remitted and
source of foreign currency for individuals. For corporate or juridical entities, in addition
to a signed application form containing the applicable information for individual
customers, the requirement includes a photocopy of the authority and identification of
the person purporting to act in behalf of the client shall be required. In addition, all
records of transactions are required to be maintained and stored for five (5) years from
the date of a transaction.
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