Definitions of Key Terms
- Trade transactions: Export/import transactions.
- Non-trade transactions: All other FX transactions excluding trade, including foreign currency loans and investments.
- AABs: All bank categories except Offshore Banking Units (OBUs) licensed by BSP.
- NBBSEs: Non-bank entities supervised by BSP under relevant laws.
- Forex Corporations: Subsidiaries/affiliates of AABs/NBBSEs engaged in FX buying/selling.
- Resident: Philippine citizens or entities with permanent residence or organized under Philippine laws.
- Non-resident: Any individual or entity not meeting resident criteria.
Application Requirements for FX Sale to Residents for Non-Trade Payments
- For amounts up to US$5,000: Standard application form required.
- For amounts exceeding US$5,000: Notarized application plus supporting documents are mandatory.
- Documentation thresholds ensure compliance and transparency.
Prohibition Against Splitting FX Purchases
- Splitting purchases below the US$5,000 threshold within 20 calendar days is prohibited.
- The aggregate FX sales to one purchaser within 20 days are consolidated.
- Violations subject entities (AABs/NBBSEs/Forex Corporations) to sanctions.
Documentation Requirements for FX Sale Related to Loans and Investments
- FX sales for foreign currency loans or investments require submission of specific documents as per annexes.
- Both short-term and long-term loan servicing are covered with detailed documentary proof.
Restrictions on FX Sales by NBBSEs and Forex Corporations
- Prohibited sales include:
- FX sales to non-residents.
- FX sales for investment purposes, capital repatriation, or remittance of profits by residents.
- FX payment of FX obligations to residents other than AABs.
- Payments on unregistered foreign currency loans and certain FCDU loans.
- Existing loans outstanding before October 27, 2000, may continue to be serviced.
Restrictions on AABs
- Not permitted to sell FX for payment of FX obligations to residents other than AABs.
Import Payments and Corresponding Documentation
- FX sales for import payments by NBBSEs and forex corporations require compliance with BSP Circular-Letter dated January 24, 2002.
- Exceptions include servicing unregistered imports shipped under prior arrangements.
Documentary Procedures and Record-Keeping
- Original documents must be presented on or before the maturity/delivery date.
- FX sales must be stamped "FX SOLD" with date and amount.
- Copies of all documents and proofs of payment must be retained and made available to BSP upon request.
Tax Compliance Requirements
- Sellers/remitters must ensure all applicable Philippine taxes relating to FX sales, remittances, and underlying transactions are paid.
- Receipts evidencing tax payment must be submitted.
Penalties for Violations
- Violations subject to penalties pursuant to R.A. No. 7653 (The New Central Bank Act) and other banking laws/regulations.
Repeal and Amendment of Previous Issuances
- Repeals earlier circulars and circular-letters including Circular No. 287 and parts of Circular No. 264.
- Amends inconsistent provisions in previous BSP issuances.
Definitions Detailed in Annex A
- Provides precise operational definitions for all relevant entities and transaction types.
- Clarifies roles of AABs, NBBSEs, Forex Corporations, residents, non-residents, and financial institutions.
Minimum Documentation for Various Non-Trade FX Uses (Annex B Section A)
- Detailed list of required documents for categories such as travel funds, education expenses, medical expenses, support of dependents abroad, emigrants’ assets, foreign expatriates’ earnings, royalties, commissions, freight charges, insurance, and others.
Documentation for FX Sales for Foreign Currency Loan Payments (Annex B Section B)
- Requirements vary by loan type (medium/long-term or short-term).
- Must include BSP registration/approval letters, schedules of payments, billing statements, and certifications.
Documentation for Capital Repatriation, Dividend Remittance, and Outward Investments (Annex B Section C)
- Requires BSP registration documents and supporting papers like broker’s sales invoices, board resolutions, audited financial statements.
- Additional clearances required for bank, insurance, and energy sector investments.
- Includes obligations related to remittance of earnings and proceeds, and requisite undertakings for outward investments.
These guidelines provide a comprehensive framework ensuring proper regulation, documentation, and compliance in the sale and remittance of foreign exchange for non-trade purposes by authorized financial institutions in the Philippines.