Banks handling foreign exchange transactions can face fines of up to P1 million per transactional violation and up to P100,000 per calendar day for violations of a continuing nature

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) approved stricter penalties and new reporting guidelines for foreign exchange (forex) transactions.

Among the key amendments in Circular No. 1197 are the revised maximum monetary penalties for violations. Banks now face a fine of up to P1 million for each transactional violation, which is defined as “an act or omission constituting a violation of any applicable law or any order, instruction/directive or regulation issued by the Monetary Board, or any order, instruction/directive or ruling by the Governor which is consummated and concluded in a single instance/occasion.”

Banks also have to pay P100,000 per calendar day for a violation of a continuing nature, which is defined as a violation that “persists or lingers over time from the instant the particular act was committed or omitted until the violation is stopped.”

The amended guidelines also further defined reports that are considered non-compliant with the central bank’s reporting standards, which are classified as erroneous, delayed, or unsubmitted. The fines for reporting violations are based on reporting entities and classification of reports.

The BSP also explicitly provided the process for notifying financial institutions and their directors, trustees, officers, and employees regarding the forex policy violation and corresponding penalty. The process for appeals and requests for reconsideration was also laid out.

“To ensure fairness, consistency, and reasonableness in monetary or non-monetary penalty imposition, the BSP takes into consideration its general principles, categories of enforcement actions, observance of due process, and attendant circumstances of each case,” the BSP said in a press release on Wednesday, July 17.

According to the central bank, the amended guidelines will facilitate timely submission of reports by banks and instill accountability. The more stringent measures will also work to protect the value of the Philippine peso, which is already weak against the US dollar, from being further eroded.

Circular No. 1197 was signed by BSP Governor Eli Remolona Jr. last Friday, July 12. It will take effect 15 banking days after its publication either in the Official Gazette or in a newspaper of general circulation in the Philippines. Reporting entities will be given until December 31, 2024, to adjust their systems and processes. – Rappler.com