Financial Crime World

Financing Companies’ Net Worth Revealed: Only 18% Have Customers with Net Worth Above PhP20 Million

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A recent survey by the Securities and Exchange Commission (SEC) has shed light on the financial standing of financing companies operating in the Philippines. According to the report, only a small percentage of these companies have customers with net worth exceeding PhP20 million.

Finances of Financing Companies’ Customers

The survey found that:

  • Only 18% of financing companies surveyed had customers with net worth above PhP20 million
  • The majority (82%) had customers with net worth below this threshold
  • The median net worth of these financing companies’ customers was around PhP1.5 million

Financing Companies’ Business Profile

The report also revealed that there are:

  • 3,302 SEC-registered lending companies operating in the Philippines as of December 2020
  • None of these companies are involved in any quasi-banking function
  • The Securities and Exchange Commission (SEC) is currently supervising 165 of these companies as “covered persons” for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) purposes

Lending Companies’ Financial Performance

The survey also looked into the financial performance of lending companies, including their assets, revenue, and loan portfolio. According to the report:

  • The total amount of assets of these companies stood at PhP11.5 billion as of December 2019
  • The average value of assets per entity was around PhP9.9 million
  • Lending companies had a total gross revenue of PhP4.4 billion and a total loan portfolio of PhP7.9 billion
  • Transactions on payday loans by these companies were reported to be 2,278,821 transactions, equivalent to around 43,823 transactions per entity

Complexity of Transactions

The report noted that while most lending companies’ transactions were simple, some entities had indicated involvement in complex transactions where it might be difficult to determine the beneficial ownership. Only:

  • Three covered persons and two non-covered persons surveyed for this risk assessment reported being involved in such complex transactions
  • These complex transactions highlighted the vulnerability of financing companies to money laundering and terrorist financing

Conclusion

Overall, the vulnerability of financing companies to money laundering and terrorist financing was assessed as MEDIUM by the SEC. The report emphasized the need for these companies to implement effective AML/CFT measures to mitigate risks and ensure compliance with relevant regulations.