BSP FX Sale Guidelines for AABs and NBBSEs

Scope: covered actors and transactions

The Circular applies to the sale of FX for non-trade transactions by AABs, NBBSEs, and their subsidiary/affiliate forex corporations.
The Circular allows NBBSEs, including their forex corporations, to sell FX under the authority and conditions stated in the Circular.
The Circular treats trade transactions as export and/or import transactions and treats all other FX dealings as non-trade transactions.
The documentation regime under the Circular applies to FX sales to residents for non-trade purposes, and applies differently depending on whether the obligation is foreign currency loan-/investment-related or not.

Core documentation rules for non-trade FX

For sale of FX to residents to cover non-trade payments, other than those that are foreign currency loan-/investment related, the required documents depend on the US$5,000 threshold under Section 2.
For such non-loan/non-investment non-trade purposes, when the sale does not exceed US$5,000, the transaction requires an application to purchase FX using the attached format.
For such non-loan/non-investment non-trade purposes, when the sale exceeds US$5,000, the transaction requires a notarized application using the format in Attachment 1, supported by the documents listed in Item A of Annex B.
For payment of non-trade obligations that are foreign currency loan or foreign investment-related, the required documents are the documents listed in Items B and C of Annex B, together with an application to purchase FX using the attached format, under Section 4.
Unless otherwise indicated, original documents must be presented to the AAB/NBBSE/Forex Corporation on or before the maturity/delivery date of the spot/forward contract to sell FX, and the seller must stamp “FX SOLD”, indicating the date and amount of FX sold, and sign as the authorized signatory (Section 8).
The AABs/NBBSEs/Forex Corporations must retain copies of all duly marked supporting documents (including proofs of payment) for BSP verification, mark them “Original Documents Presented as Required”, and ensure they are duly signed by the seller as authorized signatory (Section 8).

US$5,000 limit and anti-splitting

The Circular requires that AABs/NBBSEs/Forex Corporations ensure the US$5,000 limit on FX sale for the applicable non-trade payments is not breached by splitting purchases into smaller amounts that avoid the limit (Section 3).
Splitting exists if the total sales of FX to any one purchaser within a 20 calendar-day period exceeds US$5,000 (Section 3).
The US$5,000 limit applies on a consolidated basis for AABs/NBBSEs/forex corporations (Section 3).

Prohibited FX sales and resident restrictions

NBBSEs, including forex corporations, are prohibited from selling FX to non-residents (Section 5(a)).
NBBSEs, including forex corporations, are prohibited from selling FX to residents for any of the following purposes (Section 5(b)):
1. Investment purposes (domestic or abroad), including capital repatriation and remittance of profits and dividends.
2. Payment of FX obligations to residents other than AABs.
3. Payment of unregistered foreign currency loans/obligations to non-resident financial institutions, with a servicing exception for outstanding unregistered loans/obligations as of October 27, 2000 (the effectivity date of Circular No. 264) which may continue to be serviced by forex corporations.
4. Payment of FCDU loans not eligible to be serviced with FX purchased from the banking system, with a servicing exception for FCDU loans outstanding as of October 27, 2000 which may continue to be serviced by forex corporations.
AABs are prohibited from selling FX to residents for payment of FX obligations to residents other than AABs (Section 6).
Sale of FX for payment of importations, regardless of amount, by NBBSEs including forex corporations is subject to the documentation requirements under specified provisions of a prior BSP issuance referenced by the Circular (Section 7).
Payments for unregistered importations of residents shipped under DA/OA arrangements prior to the effectivity of this Circular may be serviced by forex corporations (Section 7).

Tax compliance and conditions on net remittance

The seller/remitter of FX must ensure that applicable Philippine taxes related to: (a) the sale of FX, (b) the remittance of FX, and (c) the underlying FX transaction have been paid.
The seller/remitter must ensure the remittance is net of such taxes under Section 9.
For that purpose, the seller/remitter must require submission of receipt(s) evidencing payment of applicable taxes (Section 9).

Enforcement, penalties, and regulatory consequences

Any violation of the Circular is subject to the penalty provisions under Republic Act No. 7653 (The New Central Bank Act) and other existing banking laws and regulations (Section 9).

Definitions governing interpretation

Trade transactions mean export and/or import transactions (Annex A, Item 1).
Non-trade transactions mean all FX transactions not included in trade transactions, including foreign currency loans and foreign investments (Annex A, Item 2).
Authorized Agent Banks (AABs) refer to all categories of banks (except Offshore Banking Units (OBUs) duly licensed by the Bangko Sentral ng Pilipinas), and each bank category must operate within its legal/regulatory operational parameters.
Non-Bank BSP-Supervised Entities (NBBSEs) refer to non-bank entities supervised by the BSP under Republic Act No. 7653, Republic Act No. 8791, and other special laws, including NBQBs, subsidiary/affiliate of AABs/NBQBs engaged in allied activities, and trust entities (Annex A, Item 4).
Subsidiary and Affiliate are defined by reference to the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions (Annex A, Items 5 and 6).
Forex Corporations are entities, whether or not named as such, that are subsidiaries/affiliates of AABs/NBBSEs whose business includes buying and selling of foreign exchange (Annex A, Item 7).
Resident includes: (a) a Philippine citizen residing therein; (b) an individual not a citizen but permanently residing therein; (c) a corporation or other juridical person organized under Philippine laws; and (d) a branch/subsidiary/affiliate/extension office or any other unit of corporations/juridical persons organized under laws of any country and operating in the Philippines (Annex A, Item 8).
Non-resident refers to individuals, corporations, or other juridical persons not included in the definition of resident (Annex A, Item 9).
Financial Institutions refer to business organizations offering financial services, including those listed by the Circular (e.g., banks, investment houses, insurance companies, securities brokers and dealers, stock exchanges, mutual funds, trust corporations, leasing companies, financing companies, credit card companies, and entities engaged in foreign exchange dealership/brokerage, among others) (Annex A, Item 10).

Repeals and amendments; immediate changes

The Circular repeals Circular No. 287 dated July 26, 2001, Circular-Letters dated September 17, 1997, October 2, 1997, October 31, 2000, July 26, 2001, August 9, 2001 (non-trade transactions), and May 17, 2002.
The Circular amends: Items 1, 2 and 3 of Circular No. 264 dated October 27, 2000; Item 3 of Circular-Letter dated August 24, 2000; Sections 2, 29 and Appendix 11 of Circular No. 1389 dated April 13, 1993, as amended; and other BSP issuances that may be inconsistent with these implementing guidelines (final paragraphs of the Circular).
The Circular is effective immediately.

Minimum Annex B documentation: loans and investments

Annex B sets the minimum documentation requirements for sale of FX for non-trade purposes by AABs/NBBSEs and their subsidiary/affiliate forex corporations.
For non-trade purposes under Section 2 of Circular No. 1389 (1993), as amended, Annex B enumerates document sets by purpose (including travel funds, educational expenses/student maintenance, medical expenses, support of dependents abroad, emigrants’ assets, salary/bonus/dividend/other benefits of foreign expatriates, and numerous other listed purposes), including additional requirements for travel funds over US$10,000.
For payment of foreign currency loan payments covered by Sections 22 to 31 of Circular No. 1389 (1993), as amended, Annex B requires specific loan-type documentation and restricts FX purchase amounts to the maturing amounts or unutilized balances or the lower of amounts/rates or outstanding balances, as stated for each loan category (including medium/long-term loans over 1 year and short-term loans up to 1 year).
For capital repatriation/remittance of dividend/profits/earnings and outward investments under Sections 32 to 44 of Circular No. 1389 (1993), as amended, Annex B requires documentation tied to the investment type (including PSE-listed securities using BSRD and broker’s invoices; direct foreign equity investments using BSRD, repatriation/distribution evidence, regulatory clearances, and audited financial statements; and money market instruments/time deposits using COP/COS or equivalent sale/deed and matured confirmations), and requires additional BSP approval and registration for outward investments exceeding an aggregate of US$6 million per investor per year funded by FX purchased from AABs.
Annex B includes a requirement that banks indicate FX sales—whether spot or forward—on prescribed documents and that Annex B documents are originals unless otherwise indicated, and contains specified marking instructions such as stamping “FX SOLD” on certain BSP approvals/registration letters or loan-related certifications.