BSP warning on Foreign Currency Transactions

James Ryan Jonas

Here is a press release issued by the Bangko Sentral ng Pilipinas (BSP) on June 26 warning the public against fraudulent schemes that involve "foreign currency trading" transactions.

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BSP Media Release: Warning on Foreign Currency Transactions

The Bangko Sentral ng Pilipinas (BSP) and Securities and Exchange Commission (SEC) are warning the public against the various kinds of schemes proliferating in today's financial markets, which include those schemes involving "foreign currency trading" transactions.

Any solicitation to engage in foreign currency trading and to commit funds for this purpose should be considered with extreme care and caution.

The following precautions should be considered before placing your funds with any foreign currency trading company.

1. Stay away from opportunities that sound too good to be true.

Get-rich-quick schemes, tend to be frauds.

2. Avoid any company that guarantees large profits or those that promise little or no financial risk.

Be wary and suspicious of companies that guarantee large profits and tout high performance but minimize the risks involved. In many cases, these claims tend to be false. Normally, the higher the promised return, the higher the risks involved.

Be suspicious of companies that downplay risks or state that written disclosure statements are routine formalities imposed by the government.

3. Don't trade on margin unless you understand what it means.

Certain foreign exchange transactions can make you responsible for losses that greatly exceed any amount you deposited.

Don't trade on margin unless you fully understand what you are doing and are prepared to ACCEPT LOSSES that exceed the margin amounts you paid.

In case of doubt, consult with reputable investment advisers/consultants and/or financial planners.

4. Be cautious of sending or transferring cash on the internet, by mail or otherwise. Be especially alert to the dangers of trading on-line; it is very easy to transfer funds on-line, but often can be impossible to get a refund.

Be cautious of companies that offer currency trading-on-line which do not provide information about their company, e.g. office address or other information identifying their nationality, contact numbers and other relevant data on their website. Be aware that if you transfer funds to those foreign/offshore firms, it may be very difficult or impossible to recover your funds.

5. Don't deal with anyone who won’t give you their background.

Try to conduct a background check of the persons running or promoting the company. Do not rely on the representations or promises of the company’s employees.

If you are not satisfied that the individual or company whom you are dealing with is legitimate and true, the best thing to do is to avoid transacting and dealing with them.

6. Always keep or retain a copy of the contracts/agreements and other document/s or any receipt/s issued by  these foreign currency exchange companies.

This is especially useful in an event involving legal action. A printout of the page of the website alone may not always be acceptable or sufficient as evidence of the transaction.

7. Contact the regulatory agencies

Please bear in mind that the mere issuance by the SEC of a certificate of incorporation to a corporation does not include a permit or license to engage in activities which require secondary license.

Always inquire as to whether or not the company had been authorized or licensed to undertake the above enumerated activities. Verification can be made with the proper government agencies.

Mr. Graciano P. Felizmenio, Jr.
Market Regulation Department
Tel No.: 721-50-58

Mr. Fernando B. Caballa
Supervision and Examination Department V
Tel Nos.: 524-70-11 local 3017 • 523-25-82

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.