BSP to further tighten banks’ dollar deals

The Bangko Sentral ng Pilipinas (BSP) plans to further tighten trade-related dollar transactions, warning banks that they could be ordered to cease foreign exchange operations if they fail to cooperate with the examination of their forex transactions.

The BSP is considering the issuance of a new circular to tighten trade-related dollar transactions and allow BSP examiners to verify bank compliance.

The BSP said some banks have been resisting official examiners, invoking the privacy provisions of the Bank Secrecy Law.

BSP Deputy Governor Alberto Reyes said the new circular would allow banks to credit trade-related dollar transactions against their foreign currency deposit units but only for three days.

However, he said banks would have to undertake a waiver of the Bank Secrecy Law so that BSP examiners could look into these transactions and ensure that the three-day rule was not being violated.

Reyes warned banks that their officers could face severe penalties if they do not cooperate with the BSP’s examination, including cease and desist orders against the bank.

"We can even issue a CDO against the bank if the BSP’s examiners are refused access," Reyes said, adding there are banks that resist.

He said the BSP has also tightened the documentary requirements for trade-related transactions by requiring all original documents or certified and notarized copy of the originals.

"We want to ferret out unscrupulous people who use the same documents to buy dollars from several banks or use the same documents to buy several times from the same bank," Reyes said.

He said the BSP is also studying other administrative measures that could be implemented if the peso does not improve against the dollar.

The BSP has begun scrutinizing the sale of equity and debt instruments that banks could be using to generate pesos that they use to buy dollars in anticipation of further volatility in the peso-dollar exchange rate.