A MEASURE relaxing restrictions under the bank secrecy law to allow the central bank to look into deposits for possible fraudulent activities has been filed in the Senate.

Senate Bill No. 1802 seeks to amend Republic Act No. 1405 or the Bank Secrecy Law which repealed exemptions to the absolute confidentiality rule in examining deposits provided under Presidential Decree (PD) No. 1792.

“With RA 1405, there are depositors who hide behind the cloak of deposit secrecy to perpetuate their ingenious ways of defrauding counter-parties, regulators or the government,” Senator Grace S. Poe-Llamanzares said in the explanatory note of the bill.

The bill will, in effect, reinstate the provisions of PD 1792 by allowing the Bangko Sentral ng Pilipinas (BSP) to examine bank deposits, provided it found reasonable grounds there may be fraud, serious irregularity or unlawful activities.

The bill also noted that the necessity to investigate bank deposits should be established and that it will be used exclusively by the BSP.

Ms. Poe-Llamanzares added investigations into bank deposits should be prohibited during the election period as a safeguard against “political harassment or malicious prosecution.”

“Such will prevent to a great extent the indiscriminate disclosure by any person who may have obtained any information on deposits, thereby adversely affecting the privacy of a depositor,” she said.

The said exemptions will also cover foreign currency deposits in banks operating in the Philippines as well as offshore branches of domestic banks.

Senate President Vicente C. Sotto III said in a text message that he will support the measure, provided there are safeguards in place.

Michael L. Ricafort, chief economist of the Rizal Commercial Banking Corp., said the amendments should be aligned with international standards, which should not only include safeguards, but also penalties.

“The proposed amendments to the bank secrecy law may need to be aligned with global best practices that would help make law enforcement, judicial processes, and governance more effective and expeditious,” Mr. Ricafort said in an e-mail.

“However, accordingly, there also needs to be strict controls/safeguards/penalties to prevent abuse by either sides/parties, especially to prevent unlawful elements/purposes.”

He added the amendments, which have long been pending, will improve collection of tax revenues and allow the Philippines to align its laws with other countries, particularly those in the Southeast Asian region.

There are four other bills amending the Bank Secrecy Law filed in the Senate, while two have been filed in the House of Representatives. All are pending at the committee level.

The Department of Finance and the BSP in July renewed calls to pass amendments to the law after two Philippine banks were dragged into the Wirecard AG scandal in June.

The German payment firm had initially claimed it kept $2.1 billion in the two local banks which it later said were actually nonexistent. Local authorities said they have identified 57 foreign and local individuals that could be involved in the scandal. — Charmaine A. Tadalan