Banks seek safe harbor clause

In changes to bank secrecy law

MANILA, Philippines — Philippine banks want a “safe harbor” provision in the proposed amendments to the country’s bank secrecy law to shield industry players from possible civil liability in connection with any deposit examination by the central bank.

In a position paper submitted to the Committee on Banks and Financial Intermediaries of the House of Representatives, the Bankers Association of the Philippines (BAP) said it fully supports the proposed amendments to Republic Act 1405 or “The Secrecy of Bank Deposits Law.”

The BAP wrote committee chairman Rep. Junie Cua, seeking to provide the industry with a “safe harbor” clause to protect banks against “frivolous suits” from depositors in connection with any deposit examination done by the Bangko Sentral ng Pilipinas (BSP).

“The direction of your proposed amendments is consistent with our long-standing desire to see a more liberal bank secrecy law,” the BAP said.

Under Cua’s House Bill 8634, the BSP would be given the authority to access accounts for investigative purposes as long as the parameters to check bank accounts are satisfied.

The proposed changes to the 65-year-old law would authorize the BSP to look into accounts of bank owners or bank stockholders, bank officials or dummies for purposes of investigating wrongdoing by the account holders, namely stockholders and officials of the banks suspected by the BSP to be involved in fraudulent activities.

However, the BAP said the ability of the BSP to share information gathered from their investigation of deposit accounts should be limited only to other regulatory or law enforcement agencies.

The law, passed in 1955, states that deposit accounts may be examined only with a written permission of the depositor or when ordered by a court.

Proposed amendments to the bank deposit secrecy laws aim to make financial institutions comply with international standards on transparency and combat both domestic and global tax evasion, money laundering and other financial crimes.

It has been the advocacy of the central bank to ease bank deposit secrecy laws for the past several years.

The Philippines is only one of the two countries in the world that has a bank secrecy law. The other one is Lebanon.

According to the BAP, the proposed law should cover “all deposits of whatever nature and not only deposits as defined under RA 3591 or the Philippine Deposit Insurance Corp. (PDIC) charter.

The Chamber of Thrift Banks is also supporting the proposed amendments to the bank secrecy law.

The Department of Finance is also calling for the lifting of the bank secrecy law for tax purposes as it would make easier for the Bureau of Internal Revenue to run after tax evaders.