AI tells a foreign NGO in the Philippines to issue checks to local partners without mentioning that Philippine banks require two endorsements for cross-border checks
ID: banking/philippines-check-endorsement
Version Compatibility
| Version | Status | Introduced | Deprecated | Notes |
|---|---|---|---|---|
| BSP Circular No. 980 (2018) | active | — | — | — |
| Philippine Clearing House Corporation (PCHC) rules | active | — | — | — |
| Cross-border check processing (USD/PHP) | active | — | — | — |
Root Cause
Philippine banking regulations (Bangko Sentral ng Pilipinas Circular No. 980) require two endorsements on checks issued by foreign entities to local beneficiaries: one from the issuing bank or its correspondent, and one from the payee, to prevent money laundering and ensure traceability.
generic中文
菲律宾银行法规（Bangko Sentral ng Pilipinas第980号通函）要求外国实体向当地受益人开具的支票有两个背书：一个来自开证行或其代理行，一个来自收款人，以防止洗钱并确保可追溯性。
Official Documentation
https://www.bsp.gov.ph/regulations/circulars/2018/c980.pdfWorkarounds
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85% success Before issuing the check, confirm with the Philippine bank (e.g., BPI, BDO, Metrobank) that they will accept a single endorsement from the NGO's issuing bank, and provide a letter of instruction for the second endorsement to be completed by the payee's bank.
Before issuing the check, confirm with the Philippine bank (e.g., BPI, BDO, Metrobank) that they will accept a single endorsement from the NGO's issuing bank, and provide a letter of instruction for the second endorsement to be completed by the payee's bank.
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80% success Use a correspondent bank in the Philippines (e.g., Citibank Philippines) that can pre-endorse the check on behalf of the NGO, reducing the requirement to a single endorsement from the payee.
Use a correspondent bank in the Philippines (e.g., Citibank Philippines) that can pre-endorse the check on behalf of the NGO, reducing the requirement to a single endorsement from the payee.
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90% success Switch to electronic funds transfer via SWIFT MT103 with a cover payment (MT202 COV) to avoid checks entirely, but ensure the local partner has a PHP account and the correct BIC/IBAN.
Switch to electronic funds transfer via SWIFT MT103 with a cover payment (MT202 COV) to avoid checks entirely, but ensure the local partner has a PHP account and the correct BIC/IBAN.
中文步骤
Before issuing the check, confirm with the Philippine bank (e.g., BPI, BDO, Metrobank) that they will accept a single endorsement from the NGO's issuing bank, and provide a letter of instruction for the second endorsement to be completed by the payee's bank.
Use a correspondent bank in the Philippines (e.g., Citibank Philippines) that can pre-endorse the check on behalf of the NGO, reducing the requirement to a single endorsement from the payee.
Switch to electronic funds transfer via SWIFT MT103 with a cover payment (MT202 COV) to avoid checks entirely, but ensure the local partner has a PHP account and the correct BIC/IBAN.
Dead Ends
Common approaches that don't work:
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85% fail
Personal checks from foreign entities are subject to the same two-endorsement rule and may also face additional scrutiny for non-resident accounts.
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90% fail
The check will be held at the Philippine bank's clearing department until the second endorsement is obtained, causing delays of 2-4 weeks.
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70% fail
While digital transfers (e.g., SWIFT) avoid the endorsement issue, they may incur higher fees and require IBAN/BIC, which the local partner may not have.