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Avoid  Phisers looking for a mule in the remittance flow

(Article published in the Jan 23, 2008 issue of Manila Standard Today)  

Bangko Sentral Governor Amando M. Tetangco, Jr. made mention of overseas Filipinos twice during his remarks at the traditional vin d’honneur the BSP gave to the banking community on 15 January, at Fort San Antonio Abad.  In strong attendance, aside from his natural constituency of bankers, were the leaders ofother sectors of the economy, stressing that while the BSP is mandated to be an independent entity, its policies, programs, and activities are bound to affect others.

The first instance was in connection with the adverse impact on them of the 18.8% appreciation of the peso against the dollar in 2007, assuring them that the BSP and other agencies of government are addressing that concern.  The second was when he specifically singled them out as one of the BSP’s key stakeholders and thus target of its financial literacy and education program.

 In both cases,the good Governor fully recognized the overseas Filipinos’ vital contribution to the Philippine economy that for 2007 turned in its best performance in 30 years.

Indeed, overseas Filipinos constitute a sector deserving special tribute. From January to November, 2007, the inward remittances captured in the reporting systems of banks and local remittance companies amounted to US$13.1 billion, higher by 14.1 percent compared to the year-ago level of US$11.4 billion. The total, when all the figures for December have come in, is expected to reach US$14.3. 

But like all good things, the constant wave of remittances to the country attract exploitation by evil elements.  One hour before the guests started filing into the Governor’s reception last Tuesday, we took up with Ms. Lou Sicat, BSP Deputy Governor Diwa Gunigundo’s point person on the statistics of remittances from overseas Filipinos, how possibly some criminal elements could be polluting the flow of money to and from the country.


          As the BSP website currently states, the record high remittances for 2007 were, due to, in addition to the increased deployment of workers aboard, to the rise in the number of remittance centers abroad as banks and other financial institutions strengthened their tie-ups with foreign remittance agents.  Since not a single local financial institution has presence in every place where the overseas Filipino is, “tie-ups with foreign remittance agents” are a necessity.

The inevitable result is that money is passed several times from hand to hand, foreign and local until it reaches its destination in the country. I suggest that there is need, for both Philippine and foreign authorities, to jointly ensure that no contamination occurs somewhere along the chain.  If information that came our way is accurate, some pollution of the stream is a real possibility, if not, heaven forbid, an actuality.

There was a website that for a time was listed in four or five job search engines in the internet.  The site was maintained by an entity allegedly a five years old (obviously to imply stability) company doing financial services looking for “reliable and trustworthy” representatives all over the world (“global presence,” to reinforce impression of legitimacy).  In India, such a company is called a “phiser”, a corruption of “fisher” because the major tool in its bag of tricks is a stock of credit and other access device information previously stolen.

Promising attractive compensation, the phiser simply required the applicant to have a computer with e-mail access and three to four hours during the week, “mainly in the non-business hours.”

The job of the representative is to serve as a mule” (another term used in India) by receiving funds from the company’s “international clients” and transmitting the funds using, the “international [names of well-known foreign remittance agents operating in the Philippines] payment system.”

Quick action is required. The representative is told to “channel out received assets during two business days to our client as indicated in the contract. Our clients value our performance and are ready to pay extra for shorter transaction terms.  If we manage to deliver the merchandise to the buyer during 10 days, the deal considers (sic) to be fulfilled in rapid terms.”

 For such an easy job, the applicant is promised compensation as follows;  “Your compensation will also be deducted from the received funds on the commission basis.  During the probationary period (30 days) you will be paid 1100 USD per month, plus 8% commission from every payment received from a client.  After the completion of the probationary period your salary will go up to 1600 USD per month, plus 8% commission per successfully handled transfer.”

It appears from provided to us by one who took the bait that the inward remittance to the representative (on probation) in the Philippines is actually made.  A “person” from abroad uses an online remittance company in the United States to effect a money transfer, charged against a credit card, to the Philippine representative. The remittance is coursed through a bank or a payment company which has a tie-up with a local bank or money delivery company in the Philippines.  The latter, of course, accepts the transaction, relying on the know-your-client and other security precautions that the US receiving company is required by US remittance regulations to perform under those circumstances.

The local representative of the “international financial services company”, receives the money from the local bank or private remittance company.  But, following uniform practice, the local bank or private remittance company prudently requires the “mule” to undertake to return the funds received in case it turns out that the money was not rightfully delivered to him.  The money is then quickly transmitted to a person in another country named by the phiser and the remittance is made through the nearest agency of the named well-known foreign international remittance company.

After the money is remitted out by the  mule,  the legitimate credit card holder discovers the unauthorized use of his card and disallows the debit against his credit; the bank or foreign payment company in turn reverses the credit to the Philippine money delivery company; and the Philippine money delivery company is constrained to call on the mule to honor his signed undertaking to return.  With solution indebiti kicking in, in addition to the contractual commitment to return, the applicant-representative who now feels as stupid as a real mule is left holding an empty bag.

It is not, as if there are not enough signals to the applicant-representative to be extra wary.  Aside from the “too-good-to-be-true” ring of the internet enticement, there are other suspicious circumstances.  In the actual instance we know of, the country to which the money was directed was “Russia, City not needed.”  In the job description itself, it was recommended to the applicant-representative “to mention "assistance to friends’ or ‘family expenses’ in the Transfer Purpose field, as [name of international remittance company operating in the Philippines] general rules forbid to support business transfers and therefore your transfer might be rejected or even frozen.”

I am personally prepared at this time (based on the limited facts I have seen so far) to give the benefit of the doubt tothe Philippine resident who has acted as mule, and tentatively believe that the Filipino fell for it, like so many victims of other scams, unwittingly.  If there are out there similarly gypped, I suggest they bring their specific matter to the attention of the Bangko Sentrals Consumer Affairs Group so that the proper advisory can be issued to the public.

           As articulated by Gov. Say Tetangco to his appreciative audience, “no one acts in a vacuum; we are interrelated. It is in this spirit that we bring you together within the storied and historic walls of our Fort San Antonio Abad.” The BSP, we know, is interested in protecting the money flow in our payment system and is ensuring that well from which we all drink is not polluted by criminal elements.