Closing in Foreign CCY

Can a sale be settled in a foreign currency with the proceeds remitted to a foreign bank account? Typically, bank relationship managers (RMs) would tell you it's not possible. But it is POSSIBLE.

RMs tell you it's not possible because the process involves a lot of bank and forth between the RM and the bank's Treasury Department. Plus, it's a relatively significant regulatory risk (AMLA) for the remitting branch that produces minimal income. In other words, it's simpler for RMs to say it's not possible.

But as long as you're not doing anything illegal, you can always remit funds to foreign banks, provided that legal documents back up the remittance.

Guidelines on how to do this:

Let's assume the Seller couldn't fly to the PH and has an Attorney-in-Fact (AIF) to represent him.

1. The closing price in the Deed of Absolute Sale (DOAS) should be in PHP since taxes are based on this amount.

2. Before closing, the Seller and the Buyer shall execute a supplementary document stating the basis for when the PHP will be converted and at what rate. For example, you may specify "…the prevailing USD selling rate of XXX bank on XXX date.

3. The Seller will issue an SPA which states that they are authorizing their AIF to:

a) receive the funds for the sale on their behalf (this is for AMLA);

b) exchange the funds to a foreign currency; and

c) remit the funds to their foreign bank account.

4. On the closing date, the AIF and the Buyer would sign the DOAS, the BUYER would transfer the payment to the AIF's account, and the AIF would hand over the ownership documents to the Buyer.

5. Once the funds have cleared (ideally, the Manager's Check is from the same bank, so it's real-time), the AIF should ask the teller to purchase the foreign currency and execute the outward cross-border remittance. The SELLER will receive the funds within 1-3 working days.

I know you're thinking: "What if the AIF runs away with the money?" Well, it's possible. But that's a different issue. Ideally, the Seller chooses an AIF that they can trust. Otherwise, why is the title with the AIF?