House bill seeks to amend bank deposit secrecy law to boost BSP supervision
A BILL seeking to amend the Philippines’ decades-old bank deposit secrecy law to allow the central bank to examine select accounts to improve transparency in financial transactions has been filed at the House of Representatives.
Filed on June 30, House Bill (HB) No. 7 seeks to amend Republic Act No. 1405 or Law on Secrecy of Bank Deposits, which was enacted in September 1955, to allow the Bangko Sentral ng Pilipinas (BSP) to look into bank deposits, including those in foreign currency accounts, that are under suspicion of illegal activities.
“We want to send a clear message: the Philippines should no longer be a safe haven for dirty money,” Leyte Rep. Ferdinand Martin G. Romualdez, who authored the measure, said in a statement.
“If we want honest governance and a stronger financial system, we must update our laws and give our regulators the tools they need to protect the people’s money,” he added. “The bill is designed to bring the Philippines closer to international best practices and remove barriers that hinder the fight against illicit finance.”
A similar bill was made a priority measure by the Marcos administration in the 19th Congress. It was approved by the House, but its counterpart measure languished in the Senate’s banks committee.
Under the proposal, the BSP will be allowed to examine bank deposits “in specific circumstances.” These include investigations of closed banks or when its policy-setting Monetary Board finds reasonable ground to believe that “fraud, serious irregularity, or unlawful activity” was committed by officials, employees, or any related parties of entities under the central bank’s supervision.
BSP-supervised institutions are banks, nonbank financial institutions with quasi-banking functions, and other entities that are engaged in financial activities like pawnshops, electronic money issuers, money service business, and trust corporations.
Results of the BSP’s investigation may only be shared with the Securities and Exchange Commission, Philippine Deposit Insurance Corp. and the Anti-Money Laundering Council. The central bank may also provide information to the Justice department and courts for prosecution purposes.
The BSP has been pushing for amendments to the Philippines’ tight bank secrecy laws to boost its oversight of the financial sector by preventing cases of insider abuse, citing cases where bankers themselves borrow from their own banks or hide proceeds of fraudulent activities in their banks, which endanger depositors.
The International Monetary Fund said in reports released in 2020 and 2021 that the Philippines’ bank secrecy laws restrict the BSP’s supervisory ability and undermine financial stability and integrity, exposing the industry to reputational risk and affecting its development.
Still, under the Anti-Financial Account Scamming Act signed last year, the BSP can now investigate and inquire into financial accounts involved in prohibited acts or offenses under the law. These include money mule activities and social engineering schemes, mass mailers, or human trafficking, as well as other offenses such as opening a financial account under a fictitious name or using the identity or identification documents of another person.
The bill’s explanatory note said the measure seeks to promote transparent governance and institute “anti-corruption” mechanisms in financial institutions’ operations, adding that the current law’s provisions have weakened oversight as they have been exploited to conceal illegal activities like money laundering and tax evasion.
“By balancing the need for depositor privacy with the imperative of transparency and accountability, the bill modernizes the country’s bank secrecy framework while strengthening institutional efforts to detect and deter financial misconduct. It reinforces the State’s commitment to fight corruption and uphold public trust in financial institutions and regulatory agencies,” it said. — Kenneth Christiane L. Basilio
