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Offshore Banking

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The use of a bank located outside the legal jurisdiction of the country of one’s residence for all banking and financial services can be called offshore banking. Offshore banks normally are situated in tax havens and provide secrecy and safety for the depositors. It was the English who coined the word offshore to specify tax havens located in the British Channel Islands, which were actually off the shores of Great Britain. The banks located in these islands offering tax savings were the pioneers and eventually the term has become generic to describe the industry itself.

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These islands became major global banking centers due to the tax and other benefits offered. These became the preferred banks to hold assets, save and invest. The local governments of these places do not have as many restrictive laws of banking as most countries do. Such freedom enables various types of offshore banking accounts that can be manipulated at will by the depositors. With a daily circulation of about $2Trillion, offshore banking is a major player in the global financial markets.

The business has come a long way from very small beginnings a few decades ago with a limited number of such centers. Many tales of drug money and illegal funds used to do the rounds then. All the services offered by regular banks can be obtained from offshore banks. Apart from regular corporate and personal checking accounts, offshore financial centers also provide secure Internet banking facilities that allow electronic banking. Transfer of funds, debit, credit and ATM cards valid globally, loans and mortgages are all possible.

Some facilities offer anonymous numbered accounts to provide the ultimate in confidentiality. Some banks offer investment management and custodial services as well. Foreign exchange dealings, corporate administration services, trustee services and funds management too can be had. There is a kind of specialization between retail and private banking and so each bank may not offer all the services. While retail banks are more economical offering standard services, private banks tend to be more expensive offering personalized services for their clients.

The following are the advantages of offshore banking. Unless proof of criminal activity on the part of the client is offered, offshore banks are not obliged to divulge personal or corporate information and as such, offer great privacy. Government bodies and/or tax authorities cannot get any information out of these banks. They cannot therefore take any kind of legal action against account holders. Offshore banks being usually located in tax havens, one’s investments can grow without any charge on account of taxes. So, tax savings is another major advantage.

It may however be necessary to pay taxes, if the funds are brought back into the country of residence. Lastly, your assets are completely protected. Your banked assets are protected from the prying eyes of invasive bureaucracy, lawsuits and seizures. OFFSHORE BANKING Offshore banking is better described than defined. With growth of international banking in the immediately preceding decades, it became a matter of convenience and expediency for the banks engaged in international finance to rely on booking centers which offer the best facilities in terms of cost and other tax advantages.

Regional location also mattered a great deal, since specific geographic advantages also serve particular countries more effectively. Moreover, these regions present benefits that relate to the timing of funds placement and generation and contribute to the increase in the efficiency of the international capital market. With international communications technology allowing transactions to be made in a matter of seconds, funds transactions can be effectively undertaken over different time zones during a large part of the 24-hour working cycle for the world.

These factors have contributed to the sophistication of the business of banking and have given rise, phenomenally, to what are known as “offshore” banking centers. As the term implies, offshore banks differ from domestic banks. In countries where offshore banks have been encouraged to be established, those banks are not allowed to undertake business which is normally reserved to domestic banking. However, offshore banks are free from interest rate and other reserve requirement controls that domestic banks are subject to. Before 1976, there were no offshore banks in the Philippines.

Therefore, Philippines experience in offshore banking units is limited. But in relation to the modest aspirations in this regard, it seems that the initial targets have been fulfilled. This experience poses a number of interesting issues for financial policy-making and therefore are of unique interest in that respect. In discussing this subject, it is useful to review the rationale for the creation of offshore banks in the Philippines, the benefits derived from them, the future of their financial operations, and, most important, from a Philippine viewpoint, to assess their contributions to the progress of the Philippine economy.

The establishment of offshore banks has given further vent to new financial issues confronting the Philippine policy on banking. However, the current financial crisis facing the Philippine economy poses a threat to the further growth of offshore banks at least in the near future. BACKGROUND TO THE BIRTH OF OFFSHORE BANKS The emergence of political independence in 1946 brought in central banking and the passage of the commercial banking law in 1949. The Philippine banking scene as a result saw the rapid development of banking and the multiplication of domestic banks.

The keystone of commercial banking policy was to reserve domestic banking to Philippine banks. Further, there was a policy preference for the development of private banking. Thus, domestic private banks became not only inevitable but were actively promoted. No foreign banks were allowed to operate in the domestic economy. Except for the four banks that were already operating in the country at the time of the adaptation of the commercial banking law, no further foreign branch banking was permitted.

This explains the preeminent locations of Citibank, Bank of America, the Hong Kong and Shanghai Bank, and Chartered Bank in the Philippine commercial banking. These banks had licenses to operate as branches in the Philippines before the enhancement of the national commercial banking act. Years of development within the financial sector, however, indicated some weaknesses in the progress of the domestic economy. For one thing, while many domestic banks had emerged in the banking scene, they were undercapitalized.

Therefore, the capacity of these banks to finance a growing economy was limited. Inadequate exposure to more advanced banking practices as well as isolation of contacts with the more dynamic international banks were surely the result of limited capitalization and the limited sphere of market objectives of the private domestic banks. Hence, these banks tended to be insular in outlook and their full potentials could not be harnessed. From a national viewpoint, however, it was essential to make them play a more active role in the financing of domestic economic activities.

Following the report of a study group which surveyed the needed reforms in the financial sector in 1972, the enlargement of the capital base of the banking system was recommended. To implement this program, the capitalization of the commercial banks was required to be raised to a minimum prescribed ceiling. One technique which was allowed in order to provide for a capital buildup was the liberalization of the participation of foreign interests in the equity ownership of domestic commercial banks. Such equity ownership was, however, only up to minority participation of no more than 40 percent of total capital.

This program led to the enlargement of the capital base of the domestic commercial banks and to the entry of some foreign banks in a minority basis in some Philippine banks. Still concerned that the country could not tap the international financial markets effectively without the participation of the foreign banks, a thorough study of the option of establishing offshore banks in the Philippines commenced. An offshore banking system was perceived to yield benefits to the Philippines by improving the country’s access to the world’s major financial institutions.

It would also provide an invaluable experience in the field of international finance to the financial community as well as training for young bankers. This was conceived as an effective vehicle for providing the transfer of banking technology and practice to the domestic banking sector through its direct contact with offshore banks. It was further conceived that offshore banks would assist in facilitating the growth of Manila into an important satellite among financial centers in the region of Southeast Asia and the Pacific.

The government was conscious of the fact that other cities have grown significantly as centers of finance in the region and that there would be room for more areas, as there is an element not only of competition in this growth, but, more important, of complementarity of the various centers not only in the region but also in the world. Offshore banks were allowed to be established in the Philippines in 1976. The law allowing their establishment recognized many factors that were needed to make offshore banking an attractive operation in the Philippines.

To begin with, policymakers were aware of the inherent disadvantages of Manila, compared to existing centers, which had to be overcome to make it marginally more attractive. This had to be done in the form of certain tax incentives. There will be more space to discuss these advantages and disadvantages below. The Central Bank prepared the guidelines for attracting foreign banks to establish offshore banks in the country. The offshore banking law was timed during a period when a quantum expansion of international banking was happening.

The Eurodollar market had been very liquid because of the large petrodollar surplus. In order to ensure the liquidity of the offshore banking units (henceforth referred to as OBU’s), each OBU was required to maintain at least a minimum net fund of US$1 million. The incentives structure for OBU’s was so designed and has evolved over time as to progressively make the operating environment attractive to them. To ensure that Filipinos were trained properly in this new financial activity, the OBU’s were also required to employ Filipino nationals while allowing them to employ expartriate personnel.

Eventually, and after some learning process, it was believed that Philippine nationals would became actively engaged in the profession. As of January 1983, the Philippine Central Bank had already approved the applications of 28 banks of establish OBU’s. Twenty-six of these are already operating. Among the more prominent of these institutions are Banque Nationale de Paris, Manufacturers Hanover, Chemical Bank, Bank of Tokyo, Barclays, Credit Lyonnals, and Chase Manhattan Bank. OBU OPERATIONS

As with similar systems elsewhere, Philippine-based offshore banks can engage in offshore fund generation and placements in foreign currency. They may also do the same with each other and the Foreign Currency Deposit Units (FCDU’s) of Philippine banks and engage in foreign currency-denominated lendings to Philippine residents subject to Central Bank approval. They have also been allowed to handle the importations of residents with a minimum of US$1 million but to be funded by the same OBU and to render financial advisory and related services.

The OBU may also trade in foreign exchange and discount bills, and invest in foreign securities and debt instruments of nonresidents and other OBU’s. There is no limit placed on their loans to offshore accounts. OBU’s in the Philippines are also empowered to handle foreign exchange remittances, a service field that is important to the Philippine economy because of the rapidly increasing number of Filipino workers abroad, especially in the Middle East. OBU’s are also operating indirectly in the peso lending market because their placements with domestic bank’s FCDU’s are converted by the latter into pesos for onlending.

However, this facility is available only on the basis of currency swaps approved by the Central Bank for OBU lending to onshore accounts. (This facility became an important element in financing domestic liquidity as well as in providing the Central Bank with external liquidity during the balance of payments crises in the Philippines. To the extent that the facility gave additional leg room for maneuvering of the financial position, OBU’s have helped in financing the Philippine economy.

An outside critic might argue, however, that this provided for an element of instability in the handling of the Philippine balance of payments, because, while it stretched the possibilities for external finance management, it also became a source of very large short-term instability, once funds even at that end dried up. ) The OBU’s are not allowed to accept local currency deposits, something which is allowed in two other financial centers in the region, Hong Kong and Singapore. FACTORS AFFECTING POSITIONING OF FINANCIAL OFFSHORE CENTERS These are several factors that affect the relative positioning among the financial centers.

In relation to the offshore centers located in Singapore and Hong Kong, Manila is only a small center and will probably remain so far many years. These are inherent factors that help as well as inhibit its present growth, and any one institution that has set up its OBU operation in Manila is aware of this. It may be useful to list a few of these factors which are as follows: (1) relative cost and tax incentives; (2) infrastructure, in particular telecommunications; (3) time zone difference; (4) resource endowments and commercial base of host country; (5) depth of the financial market; and (6) sovereign risk consideration.

Of those factors, the Philippines cannot claim advantage in many of them. In particular, some advantages (for instance, tax incentives and potential economic and commercial base) are outweighed perhaps by some disadvantages (such as relatively poor telecommunications and lack of financial depth) and, lately, by considerations of sovereign risk occasioned by factors that have been associated with the recent financial crisis. 1. Relative cost and tax incentives Trade-offs between cost of operations and income opportunities exist for the financial institutions. Manila represents the widest concessions in terms of tax incentives.

This is further supplemented by low housing cost for expartriates and the inexpensive salary levels for local talent. However, Manila also provides the least number of commercial banking activities possible between the three centers and this reduces the opportunity for trading and commercial opportunities. Tax incentives for Philippine OBU’s compare favorably with those of Hong Kong and Singapore, the offshore income tax was previously set at 10 percent but this tax was suspended recently for five years with proviso for the possible extension of the tax-exemption period.

This might be a reaction to the competitive nature of the tax environment, so that it may be designed to enhance her (Singapore’s) strong position in the region. 2. Infrastracture, especially telecommunication Singapore and Hong Kong have telecommunications which are equal to those in any developed country. In the Philippines, there is still much to be desired insofar as telecommunications, transport and utility infrastructure are concerned. Most critical among these is telecommunications which not only could be costly but, more importantly, sometimes unreliable.

As bank dealers very well know, communications, especially the factor of “speed of access” to it, is one of the prime ingredients for successful dealing operations. 3. Time Zone differences Tokyo virtually starts the trading day as the U. S. West Coast closes. If Honolulu, Sydney and Melbourne were to bridge the period between the closing of trading hours in the West Coast and the opening of trading hours in Tokyo, the world would be literally trading in foreign exchange around the clock. Manila, Hong Kong, and Singapore all start at the same time.

Singapore has consciously moved its official time thirty minutes ahead, thus precluding any previous advantage of Hong Kong and Manila. Bahrain starts five hours later, bridging a lull between Asia’s closing and Europe’s opening. 4. Resource endownments and commercial base Manila is the capital city of a country with a population base which is 20 times larger than that of either Hong Kong and Singapore. It has various natural resources ranging from agricultural land to offshore petroleum and geothermal power, while Hong Kong and Singapore are city states.

In terms of the depth of commercial development the city states are, however, much more developed. The entrepot nature of these two cities makes them virtually main port cities for the international traffic of goods, services and capital. Manila, on the other hand, is only basically an international port for the Philippines. The strategic geographical locations of the two city states and the high level of success of their recent economic growth, propelled by very favorable internal policies for foreign and domestic capital, have made them realize their important links to trade between the Asia-Pacific area and the rest of the world.

Therefore, multinationals based or doing business in Singapore and Hong Kong far exceeds the business of multinationals in Manila. This is basically because of the trade values going through the ports of these two city states. Their relative geographical smallness and the concentration of their trading and manufacturing activities have enabled them to improve their telecommunications and other infrastructure much more effectively than countries with a bigger hinterland in the region, like Thailand and the Philippines.

The infrastructure in place also enhances the attractiveness of these financial centers in a sort of virtuous circle. On the other hand, Manila still has to break bottlenecks in capital requirements for telecommunications and infrastructure, in spite of the country’s large economic potentials. Multinationals in Manila are concentrated more towards those long-term fixed investments in the country in natural resource development or import substitution industries. It is only recently that new enterprises with a large degree of foreign trade activity, including exports, have arisen in the manufacturing sector.

Experience has it that international commercial banks much prefer the trade financing documentary type of credit business instead of project or country lending. 5. Depth of financial market The greater the depth, variety, and volume of the commercial transactions, the more sophisticated the array of financial transactions and instruments possible. This factor, of course, is dependent on the degree of a country’s economic development. The level of economic development allows the growth of the financial markets as well. Hong Kong and Singapore are well-developed markets because of this edge in economic levels.

The licensing and regulatory framework likewise plays a major role in the development of the financial market. Because of their relative newness, the Philippine market allows at the present the time the least variety of transactions. Perhaps the fact that the relatively large but still underdeveloped Philippine economy has to be protected and gradually introduced to the offshore system is a disadvantage. The depth of Hong Kong’s financial markets, in contrast, extends over China, Taiwan, South Korea, and other parts of the region. 6. Sovereign risk Sovereign risk is a factor that ranks high in the estimate of banks.

That this is a factor of importance is shown in the case of Singapore, where there is a long line of applicants wishing to set up offshore banks. Because of a record of political stability without major disruptions especially since the late 1960’s, Singapore enjoys a high reputation. The uncertainties over Hong Kong’s future may have resulted in the wait and see attitude of some bankers when the issue of sovereignty in the year 1997 came to a head, but it is also a mark of the maturity of Hong Kong’s market that financial institutions with long-term commitments there have not been much fazed by those developments.

Manila’s future is partly held suspect at the present time because of the aftermath of recent political developments which were followed by adverse economic news. The resolution of political issues, which surely plays an important role in the sovereign risk calculation of potential banks and investors, is less intricate in the case of the Philippines to the extent that the present issues could be resolved internally. When external political factors are not within the control of a country as would presently appear in the case of Hong Kong, there may be greater long-term uncertainty.

The bilateral negotiations between Britain and China would certainly determine the parameters of Hong Kong’s future. And China has the upper hand, Hence, the degree of control by Hong Kong over its future destiny is dependent at this time on external factors that are not within its control. In reviewing all these factors, it is to be noted that Manila’s role as a financial offshore center is still in its formative stage and that it will most certainly continue to trail behind the more developed and sophisticated markets in Singapore and Hong Kong.

Manila has some inherent disadvantages which play a role in the future growth of offshore banking. One of these is the level of economic development, in spite of the much larger potential economic base of the Philippines. A difficult obstacle to this is the relatively poor communications which continue to hamper Manila’s role. In the future, improvement programs to provide better telecommunications will be realized. The natural growth of the economy also surface from the present maze of economic difficulties that have beset the country in recent years, especially in 1983, when an external debt crisis of crippling proportions emerged.

The complimentary developments within the financial system, including that of the offshore banks, will certainly be affected by these new problems. The infrastructure in banking which is already presently in place will provide some basis for the growth of offshore banking. But certain important issues that need attention are offshoots of the entry of offshore banks and of the debt crisis. The resolution of these problems and issues could affect the character of offshore banking in the Philippines. CBP CIRCULAR NO. 1389 Series of 1993

CONSOLIDATED FOREIGN EXCHANGE RULES AND REGULATIONS PART III (OBUs, Representative Offices and FCDUs) CHAPTER I – Offshore Banking Units of Foreign Banks SECTION 45. Definition of Terms. — As used in this Chapter, the following terms shall have the meaning indicated unless the context clearly indicates otherwise: 1. “Offshore Banking” shall refer to the conduct of banking transactions in foreign currencies involving the receipt of funds principally from external sources and, as allowed in this Circular, from internal sources and utilization of such funds, as provided herein. 2. Offshore Banking Unit” or “OBU” shall refer to a branch, subsidiary or affiliate of a foreign banking corporation which is duly authorized by the Central Bank of the Philippines to transact offshore banking business in the Philippines. 3. “Net office funds” shall refer to the net credit balance of the “Due to Head Office (HO)/Branches/Parent Company Account” after deducting the “Due from HO/Branches/Parent Company Account”, as shown in the following computation: Due to HO/Branches/Parent Company Remittances/Advances/Deposits to OBU by HO/Branches/Parent Company xxxxx Unremitted earnings of OBU xxxxx

Total $xxxxx Less: Due from HO/Branches/Parent Company Remittances/Advances/ Deposits of OBU with its HO/Branches/Parent Companyxxxxx Net Office Funds$xxxxx 4. “Deposits” shall refer to funds in foreign currencies which are accepted and held by an OBU in the regular course of business, with the obligation to return an equivalent amount to the owner thereof, with or without interest. 5. “Resident” shall mean — a. an individual citizen of the Philippines residing therein; or b. n individual who is not a citizen of the Philippines but is permanently residing therein; or c. a corporation or other juridical person organized under the laws of the Philippines; or d. a branch, subsidiary, affiliate, extension office or any other unit of corporations or juridical persons which are organized under the laws of any country and operating in the Philippines.

6. “Non-resident” shall mean an individual, corporation or other juridical person not included in the above definition of “resident”. 7. Foreign currency deposit unit” or “FCDU” shall refer to that unit of a local bank or of a local branch of a foreign bank authorized by the Central Bank to engage in foreign currency-denominated transactions, pursuant to the provisions of R. A. 6426, as amended. “Local bank” shall refer to a thrift bank or a commercial bank organized under the laws of the Republic of the Philippines. “Local branch of a foreign bank” shall refer to a branch of a foreign bank doing business in the Philippines, pursuant to the provisions of R.

A. No. 337, as amended. 8. “Acceptable foreign exchange” comprise those foreign currencies which are acceptable to and exchangeable at the Central Bank and which form part of the international reserves of the country. SECTION 46. Approvals Required. — A foreign bank may operate an offshore banking unit (OBU) in the Philippines, after issuance to it of a Certificate of Authority to operate by the Monetary Board and registration with the Securities and Exchange Commission. SECTION 47. Criteria for Selection. The following factors shall serve as basis for the issuance of certificate of authority to operate an offshore banking unit: (1) liquidity and solvency positions; (2) networth and resources base; (3) managerial and international banking expertise of applicant bank (4) contribution to the Philippine economy; and (5) other relevant factors, such as participation in the equity of local commercial banks and appropriate geographic representations.

SECTION 48. Pre-Operation Requirements. Upon advice from the Central Bank, a qualified bank shall submit a sworn undertaking of its head office, or parent company, through any of its duly authorized officers, supported by an appropriate resolution of its board of directors, to the effect that it shall: 1. on demand, provide the necessary currencies to cover liquidity needs that may arise or other shortfall that its OBU may incur. 2. manage the operations of its OBU soundly and with prudence. 3. train continually a specific number of Filipinos in international banking and foreign exchange trading with a view to reducing the number of expatriates; 4. rovide and maintain in its offshore banking unit at all times net office funds in the minimum amount of US$1 million. 5. start operations of its OBU within one hundred eighty (180) days from receipt of its certificate of authority to operate such unit. 6. comply with applicable local laws relating to labor and employment. 7. submit before start of operations, other documents as may be required by the Central Bank such as certification or similar documents showing that it is duly authorized by the proper Government entity of its country to engage in offshore banking business in the Philippines.

SECTION 49. Annual Fee. — Upon issuance of a certificate of authority to operate an OBU in the Philippines, and yearly thereafter, the authorized bank shall pay the Central Bank a fee of not less than US$20,000. 00. SECTION 50. Transactions with Non-Residents and/or with OBUs. — An OBU may freely engage in all normal banking transactions with non-residents and/or with other OBUs, involving any currency other than the Philippine peso. SECTION 51. Transactions with Foreign Currency Deposit Units (FCDUs). Subject to Central Bank regulations, an OBU may engage in the following transactions with local banks incorporated or registered in the Philippines as FCDU(s) in any currency other than the Philippine peso: 1. Accept time, demand and call deposits or issue negotiable certificates of time deposits. 2. Borrow with maturities not exceeding 360 days. 3. Deposit. 4. Extend loans and advances. 5. Deal in foreign currency instruments. 6. Discount bills, acceptances, and negotiable certificates of deposits. 7. Engage in foreign exchange trading. 8.

Engage in such other transactions as are authorized under this section between OBUs and resident banks authorized to accept foreign currency deposits under the provisions of R. A. No. 6426, as amended. Interbank short-term transactions of not exceeding 360 days such as credit lines of Philippine banks with correspondent banks, interbank call loans and interbank loans for general liquidity purposes shall not require prior Central Bank approval. SECTION 52. Transactions with Residents which are not Banks. — An OBU may engage in the following transactions with residents which are not banks: 1. Deal in foreign currency instruments. . Extend foreign currency loans and advances, subject to existing regulations on foreign borrowings. 3. Open letters of credit (L/Cs) for importations of resident-borrowers provided such importations shall be funded by a Central Bank-approved OBU foreign currency loan to the resident borrower involved. 4. Negotiate inward (export) Letters of Credit (L/Cs) and handle other export transactions (including documents against acceptance [D/A] and documents against payments ([D/P] and open account arrangements [O/A]) coursed thru their worldwide network of branches and correspondents subject to the following conditions: a.

OBUs shall bring in foreign exchange sourced outside of the Trade Facility which shall be sold to the domestic banking system; and b. OBUs’ share in the total export L/C negotiation business shall be limited to ½ of the growth (incremental) element in the country’s total annual export. This limit shall be observed yearly until this equals 10 percent of total exports. Exports not covered by L/Cs, i. e. , done thru documents against acceptance/open account arrangements shall be considered subject to this overall limit; 5.

Provide full foreign exchange service for all foreign currency non-trade remittances and trade remittances resulting from or related to their own negotiations of export L/Cs. 6. Render financial, advisory and related services. 7. Refinance trust receipts without prior Central Bank approval arising from import transactions of Philippine residents in U. S. dollars or in other acceptable foreign currencies. The refinancing shall be evidenced by bankers acceptances. SECTION 53. Peso Deposits. — OBUs may open and maintain peso deposit accounts with domestic agent banks exclusively for the following purposes: 1.

To meet administrative and other operating expenses, such as salaries, rentals and the like. 2. To pay the peso equivalent of foreign exchange sold by beneficiaries of inward remittances of Filipino overseas workers or of Filipino or multinational companies, coursed through the OBUs’ correspondent banks abroad. 3. To pay to the designated beneficiaries in the Philippines the peso equivalent of foreign exchange inward remittances other than remittances related to trade. 4. To pay the peso equivalent of foreign exchange sold by beneficiaries of export L/Cs negotiated with the OBUs.

The peso deposit accounts shall be funded exclusively by inward remittances of foreign exchange eligible to form part of the Philippine international reserves. OBUs may also sell inward remittances of foreign exchange for pesos to the Central Bank through the Treasury Department, for credit to the demand deposit account of the designated commercial bank for account of the OBU. SECTION 54. Financial Assistance to Officers/Employees. — OBUs may extend financial assistance (real estate, car, personal loans, etc. ) in local or foreign currency to their Filipino officers and employees as part of their fringe benefit program.

They may likewise grant foreign currency loans to their expatriate officers without need of Central Bank approval. SECTION 55. Secrecy of Deposits. — The provisions of R. A. No. 6426 (Foreign Currency Deposit Act), as amended, shall apply to deposits in OBUs; Provided, however, that numbered deposit accounts shall not be used. SECTION 56. Exemption from Certain Laws. — The provisions of Act No. 2655 (Usury Law) as amended, R. A. No. 529 (Uniform Currency Law) as amended, and R. A. No. 3591 (Deposit Insurance Law) as amended, shall not apply to transactions and/or deposits in OBUs in the Philippines. SECTION 57. Accounting and Reporting. OBUs shall maintain an accounting system in accordance with guidelines prescribed by the Central Bank.

Periodically or as required, existing reports shall continue to be submitted in the prescribed forms to the Central Bank. SECTION 58. Supervision. — The operations and activities of offshore banking units shall be conducted under the supervision of the Central Bank of the Philippines. SECTION 59. Taxes, Customs Duties. — Transactions of OBUs in the Philippines shall be subject to such taxes as are prescribed in Presidential Decree No. 1034, as implemented by regulations of the Bureau of Internal Revenue. SECTION 60.

Revocation/Suspension. — The Monetary Board, by the recommendation of the Governor, may revoke or suspend the authority of an Offshore Banking Unit to operate in the Philippines for violation of P. D. No. 1034 or these regulations. PART IV (General Provisions) CHAPTER I – Reports and Post-Verification SECTION 89. Reportorial Requirements. — The following reports are required to be submitted to the CB by the AABS and by OBUs, when applicable: Title of Report Submission Frequency/Deadline E. Offshore Banking Units 1. Statement of Assets and Liabilities, CBP 6. 40. 01 Monthly, within ten (10) banking days after end of reference month 2.

Statement of Earnings and Expenses, CBP 6. 40. 02 afterSemestral, within ten (10) banking days end of reference semester 3. Report on Spot and Forward FX Transactions of OBUS, CBP 6. 40. 06Monthly, within ten (10) banking days after end of reference month 4. Financial Assistance and Training Granted by OBUs to its Filipino StaffAnnually, within ten (10) banking days after end of year 5. FX Cash Receipts and Cash Disbursements Monthly, within ten (10) banking days after end of reference month 6. Updated List and Bio-Data of Expatriates Annually, within ten (10) banking days end of year

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Offshore Banking. (2016, Oct 19). Retrieved from https://graduateway.com/offshore-banking/

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