SEC warns against non-registered foreign entities, organizations and corporations

The Securities and Exchange Commission (SEC) urges the public to be careful when dealing or transacting with corporations or entities that are not licensed or registered in the Philippines.

The SEC has received numerous inquiries regarding the implications of transacting with non-registered foreign corporations and entities whose products or services are reachable in the Philippines through their website or online apps and platforms.

By law, an entity is required to register and obtain a primary registration with the SEC if they intend to conduct business in the Philippines.

A number of these unregistered corporations and entities allow Filipinos to access their online platforms and permit the enrollment, creation, or registration of client accounts through online means despite having no registration or license to do business in the Philippines. In some cases, Filipinos are even targeted by their aggressive online advertisements in various social media networking sites like Facebook, YouTube or Instagram. Such unregistered online platforms include, but are not limited to, the following:

a. Foreign Currency (Forex) Brokers and Exchanges

b. Digital Asset/Cryptocurrency/Virtual Asset Exchanges

c. Decentralized Finance (DeFi) Investment Platforms

d. Yield Farming/Staking Platforms

e. Multi-asset/Multi-security Brokerage Companies

f. Websites for Securities Token Offerings/Token Generation Events

g. Illegal Investment Scheme websites

h. Binary Options Trading apps

i. Pay-to-Click/Captcha websites

j. “Play-to-Earn Gaming” platforms

k. Various fiat/cryptocurrency gambling websites

l. Various cryptocurrency-related investment websites

The public is reminded to be vigilant and to do their due diligence prior to transacting/dealing with any entity. The public is also advised to avoid transacting with corporations or entities without any registration or license to do business in the Philippines in order to avoid losing their earnings.

If an entity or an activity is unlicensed or unregistered and is based abroad, you run the risk of not getting your money back once these are transmitted outside of the Philippines. However, should you still decide to transact with these entities and use their apps or platforms, the public is informed and advised of the following:

a. Protection offered against registered corporations and entities. Dealing or transacting with registered domestic corporations or foreign corporations with registration to do business as a branch, regional operating/area headquarters or representative office within the Philippines assures domestic parties that they are duly protected by Philippine Laws. In case of any future conflict with the corporation or entity arising out of breach of contractual obligations or in case of any fraud or misconduct committed by the registered foreign party which leads to criminal prosecution, parties may avail of remedies under Philippine Laws by filing their claims or complaints with our local courts having jurisdiction over the same.

b. Risks of putting your earnings in unregistered corporations and entities or their platforms. If you put your earnings in a platform which is reachable in the Philippines, but is operated by non-registered corporations or entities, the government can offer very limited protection or, in some cases, no protection from any harm, damage, fraud or any form of misconduct which may be caused or committed by these corporations or entities. Jurisdiction over fraud or any form of misconduct committed by these corporations falls under the jurisdiction of the foreign country where they operate. Domestic participants would have to go to the country where these platforms are registered and where they operate to file the appropriate complaint in order to seek redress.

Always remember that in case of doubt as to whether or not it is safe to transact with an online platform or entity, always #CheckWithSEC if the corporation or entity is registered or not. The SEC’s website, www.sec.gov.ph, provides useful information on company registration, registration statements, secondary licenses, advisories, investor protection and investments. At the SEC, you may send your queries or concerns via email to the PhiliFintech Innovation Office at fintech@sec.gov.ph.