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FX Transactions/Violations

07.23.2001

The Bangko Sentral ng Pilipinas has noted the recent rise in incidents of transactions aggressively testing the boundaries of existing prudential regulations, in fact, some have already breached such limits.  Such behavior contributes to the volatility of foreign exchange rates and should not be encouraged.

In view of the foregoing, the Monetary Board is issuing this reminder and stern warning to the banks, their directors and officers, including their subsidiaries and affiliates, that existing foreign exchange rules and regulations shall be strictly enforced. Sanctions under Sec. 37 of R.A. No. 7653 and applicable rules and regulations will be meted to those violating such foreign exchange rules and regulations.

The Monetary Board is also enumerating some of the more serious infractions, such as, disregard of prior Bangko Sentral approval where required, absence of supporting documents when transactions are consummated, remittance of non-registered investments, sales to non-residents or directly for credit to FCDU accounts, evidenced splitting of remittances, and determined speculative transactions which include “churning”. For these and similar offenses, depending on the gravity of the infraction, Bangko Sentral shall apply monetary and non-monetary sanctions as follows:

1.  Monetary Sanction - The amount of P30,000.00 penalty imposed per day per violation committed shall be based on per transaction basis; 

2.  Non-monetary  Sanction -  This shall be based on the gravity of offense or violation:

  • Reprimand of bank officers who approved the transaction;
  • Suspension of bank officers who approved the transaction;
  • Suspension of directors (for local banks) and Country Manager (for foreign banks);
  • Permanent disqualification of bank officers/directors;
  • Reduction or suspension of overbought limits;
  • Suspension of opening of letters of credit and over-the-counter sale of foreign exchange for a period of up to six (6) months;
  • Suspension of derivatives activities for a period of up to six (6) months; and
  • Suspension of foreign currency deposit unit (FCDU) authority for a period of up to six (6) months.

Bangko Sentral enjoins all concerned to please cooperate.

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