BSP CIRCULAR NO. 85

Law Summary

Introduction

This document summarizes the amendments to Section 2 of Central Bank Circular No. 1389, as amended, as adopted by the Monetary Board through Resolution No. 938 on August 23, 1995. The amendments pertain to the sale of foreign exchange by Authorized Agent Banks (AABs) to residents.

Sales of Foreign Exchange by AABs

Legal Principle: AABs are authorized to sell foreign exchange to residents for non-trade purposes without prior approval from the Bangko Sentral ng Pilipinas (BSP).
Key Definitions:
- AABs: Authorized Agent Banks, which are licensed banks allowed to engage in foreign exchange transactions.
- Residents: Individuals or entities residing within the Philippines, including government entities and government-owned corporations.
Requirements and Procedures:
- For Sales Exceeding US$25,000:
  - AABs must require a written application and supporting documents from the purchaser.
- For Sales Not Exceeding US$25,000:
  - No written application or supporting documents are required.
  - The purchaser must disclose the specific purpose of the foreign exchange purchase.
  - AABs must report these transactions using FED Form 1 with the appropriate transaction code.
Additional Requirements for Foreign Loan or Investment Payments:
- For sales intended for payment of foreign loans or investments, AABs must require proof of BSP approval and/or registration as stipulated by existing regulations.
Effective Date: This Circular took effect immediately upon its adoption on August 29, 1995.

Key Takeaways

AABs can sell foreign exchange for non-trade purposes without BSP approval, streamlining the process for residents.
Sales exceeding US$25,000 require additional documentation, while smaller transactions necessitate only a purpose disclosure.
Transactions related to foreign loans or investments are subject to further verification of compliance with BSP regulations.
The amendments are effective immediately, reflecting urgent regulatory changes in foreign exchange policy.