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LBC On The Rocks?

18 September 2011

Confidence collapses as the screw tightens?

An OFW Journalism Consortium news flash exclusive


KUALA LUMPUR, MALAYSIA-WHILE Filipinos here know little about the recent closure of LBC Development Bank in their motherland, many Filipinos in the Malaysian capital already knew that the remittance service of LBC Remittance Express Sdn. Bhd. had been discontinued by Malaysian banking authorities.

Bank Negara Malaysia, the country's central bank, revoked the remittance license of LBC Remittance Express in Malaysia in a December ?28, 2010 notice-with the order took effect since January this year.

"Bank Negara Malaysia would like to inform members of the public that the following companies are no longer permitted to conduct remittance business:?LBC Remittance Express Sdn. Bhd., and?Worldwide RemittanceSdn. Bhd.," BNM's announcement, in Bahasa Malaysia, wrote.

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No longer king of remittances as its operations are shut down?

A January 2011 announcement, in English, then followed the December ?28 announcement.

"Members of the public are reminded not to remit funds through these companies as there is the risk of the funds not being received by the beneficiaries," BNM wrote.

BNM added customers who deal with persons "not permitted to operate remittance services may be affected if the funds involved are frozen" pursuant to an investigation under the Anti-Money Laundering and Anti-Terrorism Financing Act 2001.

Though a visit by the OFW Journalism Consortium to LBC Express's outlet in the city's Kota Raya Shopping Mall showed that business operations of LBC Express are normal, although the remittance service isn't offered amid the non-removal of a poster promoting the remittance service of LBC Remittance Express Sdn. Bhd.

LBC Express's main business is air cargo forwarding and courier, especially balikabayan boxes, for Filipino workers. Kota Raya is the most frequented watering hole of Filipino workers here in Kuala Lumpur, especially during Sundays.

A Filipina-Malaysian here said she was not aware about the closure of LBC Development Bank last week as ordered by the Bangko Sentral ng Pilipinas.

"But LBC Remittance Express doesn't have a remittance service for quite some time already," the Filipina-Malaysian told the OFW Journalism Consortium.

The BSP ordered the closure of LBC Development Bank, a thrift bank, over allegations that LBC Express failed to honor billion-peso advances for the remittance transactions of overseas Filipino workers sending money through LBC, as well as the bigger domestic remittance market


BSP Deputy Governor Nestor Espenilla Jr. said LBC Express Inc. "regularly accepted money-transfer transactions from millions of customers in the country and abroad but never bothered to settle the advances".

Espenilla was quoted by some Metro Manila broadsheets as saying said LBC Development Bank "extended billions... of cash advances to LBC Express for several years as part of role as payout agent".

"Each time a customer remitted money to beneficiaries through one of the many offices of LBC Express in the Philippines, and abroad, LBC Bank advanced the money to the beneficiary, effectively extending the affiliate another credit. The problem is the credits were never settled," Espenilla was quoted in media reports as saying.

LBC Express General Counsel Luis Manuel?Ermita?o wrote Espenilla a September 15 letter and called his accusatory statements "erroneous and untrue".

Espenilla's statements relating to the courier firm's business dealings with LBC Development Bank-with each being independently-operating companies-"have had a negative impact on the conduct of their business,"?Ermita?o said.

Though, the Filipina-Malaysian source wonders whatever happened to the money the OFWs here in Kuala Lumpur "remitted" prior to the rebuking of LBC Remittance Express's Malaysian remittance license and the closure of LBC Development Bank.

She is also aware that LBC Remittance Express personnel have a service that's similar to what some Philippine commercial banks with overseas remittance operations do: remit money through an LBC Development Bank account, and that the remittance will enable the migrant family to have a savings account with LBC Development Bank.

The source said it was reported that BNM, which calls companies like LBC Remittance Express a non-bank remittance service provider, allegedly allowed an unknown remitter to send money over MYR10,000 in one day [MYR1 = PhP14].

A 2010 study by the Economic Resource Center for Overseas Filipinos and the International Organization for Migration (IOM) Manila wrote that ?non-bank RSPs have a per-day, per-customer limit of RM10,000 but banks sending RM50,000 or more must disclose the remittance transaction to BNM.

"For amounts below RM50,000 but are above RM10,000, banks must inform BNM of the country of destination and the purpose of the remittance," Ercof and IOM wrote, citing BNM regulations.


OFW Journalism Consortium

This exclusive news flash story is free to be published/broadcast/uploaded and shared online, provided the?OFW Journalism Consortium? is acknowledged and the hyperlink is added


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