FX purchases still require forms despite liberalized rules − BSP

ALL PURCHASES of foreign currency should still come with corresponding application forms to be submitted to the Bangko Sentral ng Pilipinas (BSP), the regulator clarified, even as it is easing rules on such transactions.

Circular Letter 2018-073 issued by the BSP’s Monetary and Economics Sector clarified that foreign currency purchases must still come with supporting documents.

All sales of foreign exchange carried out by authorized agent banks (AAB) to settle and service transactions “shall be supported by a duly accomplished Application to Purchase FX,” according to the issuance signed by sectorin-charge Assistant Governor Ma. Ramona Gertrudes T. Santiago.

“Accordingly, the AABs/AAB forex corps shall require from their clients (e.g., public and private sector entities) the submission of the duly accomplished Application to Purchase FX, together with other supporting documents (as applicable), prior to the sale of FX for servicing/ settlement of their clients’ FX transactions,” the circular read.

Banks usually require documents like dollar loan agreements for corporate buyers or travel papers for individual clients before they can buy foreign currency.

The central bank has been constantly reviewing and relaxing rules covering conversions from the peso to foreign currencies particularly the dollar. Such adjustments are meant to recapture transactions towards banks and away from the black market, with the latter largely out of bounds for regulators.

In particular, the BSP set tighter rules for money service businesses like money changers and remittance agents in order to curb dirty money transactions, especially in the aftermath of the $81-million Bangladesh Bank heist back in 2016.

For banks, a fresh wave of easing is in the works in order to simplify the entry and withdrawal of foreign investments to complement overall government efforts to improve the ease of doing business here.

The central bank has been liberalizing foreign exchange rules since 2007. Significant changes include a higher limit for overthe-counter dollar purchases at $500,000 for individuals and $1 million for companies. Dollars acquired through Philippine lenders may likewise be kept as dollar deposits with the banks concerned.

These come as dollar liquidity improved over the past decades, as lenders are now able to service bigger currency requirements at a given time.

However, BSP Deputy Governor Chuchi G. Fonacier has said that the central bank may hold off further relaxation of these standards amid a highly-volatile FX market in recent weeks.