SEC: Avoid Non-Registered Foreign Entities, Organizations and Corporations

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On Sunday, September 12th, 2021, the SEC of the Philippines released on advisory to the public against dealing with non-registered foreign entities, organizations and corporations.

The SEC has received a number of concerns about the consequences of interacting with non-registered foreign firms and entities whose products or services are available in the Philippines via their website, online apps, or platforms.

To do business in the Philippines, an entity must first register with the SEC.

Despite not having a recognized or licensed business in the Philippines, several of these unregistered organizations and entities allow Filipinos to use their online platforms and enroll, create, or register client accounts. Filipinos are sometimes targeted by aggressive internet advertisements on social media sites like Facebook, YouTube, and Instagram.

These unregistered online platforms include, but are not limited to, the following:

  1. Foreign Currency (Forex)Brokers and Exchanges
  2. Digital Asset/Cryptocurrency/Virtual Asset Exchanges
  3. Decentralized Finance (DeFi) Investment Platforms
  4. Yield Farming/Staking Platforms
  5. Multi-asset/Multi-security Brokerage Companies
  6. Websites for Securities Token Offerings/Token Generation Events
  7. Illegal Investment Scheme websites
  8. Binary Options Trading apps
  9. Pay-to-Click/Captcha websites
  10. Play-to-Earn Gaming platforms
  11. Various fiat/cryptocurrency gambling websites
  12. Various cryptocurrency-related investment websites

The public is urged to remain vigilant and conduct due diligence before transacting or dealing with any entity. To avoid losing their money, the public is also advised to avoid transacting with corporations or entities that do not have a business license or registration in the Philippines.

If an entity or activity is unlicensed or unregistered and based outside of the Philippines, you risk losing your money if it is sent outside of the Philippines. However, if you still want to do business with these companies and use their apps or platforms, you should be aware of the following:

  • Protection offered against registered corporations and entities. Transacting with registered domestic or foreign corporations operating as a branch, regional operating/area headquarters or representative office in the Philippines ensures domestic parties are protected by Philippine laws. If a future dispute arises due to a breach of contractual obligations, fraud or misconduct by the registered foreign party, the parties may seek redress under Philippine Law by filing claims or complaints with our local courts.
  • Risks of putting your earnings in unregistered corporations and entities or their platforms. If you invest in a platform accessible in the Philippines but run by unregistered corporations or entities, the government can only offer limited or no protection against any harm, damage, fraud, or other misconduct caused or committed by these corporations or entities. The foreign country where these corporations operate has jurisdiction over any fraud or other misconduct they may commit. Domestic participants must file a complaint in the country where these platforms are registered and operate to seek redress.

Always remember to check with the SEC to see if a corporation or entity is registered before transacting online. A visit to the SEC’s website, www.sec.gov.ph, will provide useful information on company registration, secondary licenses, investor protection, and investment. You may email the PhiliFintech Innovation Office at fintech@sec.gov.ph with your questions or concerns.

Source: https://www.sec.gov.ph/advisories-2021/sec-advisory-against-dealing-with-non-registered-foreign-entities-organizations-and-corporations/

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