# 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`
- **Domain:** banking
- **Category:** protocol_error
- **Error Code:** `PH-CHECK-ENDORSEMENT-2`
- **Verification:** ai_generated
- **Fix Rate:** 85%

## 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.

## Version Compatibility

| Version | Status | Introduced | Deprecated |
|---------|--------|------------|------------|
| BSP Circular No. 980 (2018) | active | — | — |
| Philippine Clearing House Corporation (PCHC) rules | active | — | — |
| Cross-border check processing (USD/PHP) | active | — | — |

## Workarounds

1. **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.** (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.
   ```
2. **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.** (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.
   ```
3. **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.** (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.
   ```

## Dead Ends

- **** — Personal checks from foreign entities are subject to the same two-endorsement rule and may also face additional scrutiny for non-resident accounts. (85% 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. (90% 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. (70% fail)