BSP wants changes to bank secrecy law certified urgent

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) will ask Malacañang to certify the proposed amendments to the bank secrecy law as urgent, noting that the Philippines is the only country in the world that maintains the secrecy of bank deposits.

In his weekly virtual press conference, BSP Governor Benjamin Diokno said the central bank would request President Duterte to certify the proposed bills seeking to amend Republic Act 1405 or The Secrecy of Bank Deposits Law as urgent as Congress is scheduled to resume session next month.

“This bill is actually urgent and so we expect the President, for example, to certify this as an urgent measure,” Diokno said.

The Philippines is the only country in the world with a bank secrecy law after Lebanon lifted the secrecy on bank deposits late last year.

House Bill 8991 filed by Quezon Rep. Junie Cua which grants the BSP the power to look into bank accounts provided there are “reasonable grounds” for fraud, serious irregularity, or unlawful activity committed, was approved on first reading by the House committee on banks and financial intermediaries last February.

Other bills seeking to amend the bank secrecy law, including HB 1498 and 3554, are now pending before the committee.

On the other hand, Senate Bills 663, 634, 539, 374, 26, and 1802 are now pending before the Senate committee on banks, financial institutions and currencies.

“We have been pressing this with both houses of Congress and as you can see there are a lot of initiatives already on the part of Congress. We expect this to be acted upon maybe as early when they reopen Congress sometime in May,” Diokno said.

He added the central bank fully supports the urgent passage of the Bank Deposits Secrecy bill to enhance the BSP’s capacity to supervise banks and other financial institutions, and promote the safety and soundness of the financial system.

“The proposed reforms will place the country’s deposit secrecy law at par with international standards. This is seen to strengthen the Filipino public’s and the global community’s trust in our banking system,” he said.

Diokno explained the proposed amendments would be limited within the confines of BSP’s banking supervision and its investigation of closed banks.

In the proposal supported by the BSP, the coverage of allowed inquiries is not too broad to include just any depositor, as it is limited only to deposits of specified persons and anchored on their commission of fraud, serious irregularity, or unlawful activity.

The proposed amendments also include provisions to protect banks against frivolous suits from depositors in line with BSP’s inquiry or examination of deposits; and against the use of the law for persecution or harassment, or to hamper competition in trade or commerce.

“This reform is seen to ultimately benefit depositors as the BSP will have strengthened capacity to protect them from losses due to fraud and other unlawful activities,” Diokno said.

The central bank is also supporting the proposed amendments in line with the country’s broader efforts to combat both domestic and global tax evasion, money laundering, and other financial crimes; to promote harmonious and supportive international relations; and to meet international standards on transparency.

Multilateral lender International Monetary Fund (IMF) earlier warned the Philippines could again be included in the gray list of Paris-based dirty money watchdog Financial Action Task Force (FATF) if it fails to enact the amendments to the country’s bank secrecy laws.

The IMF said the country could be reverted to the list of jurisdictions with serious anti-money laundering/counter financing of terrorism (AML/CFT) deficiencies and exposes the financial system to significant risks without major reforms by June this year.

“The banking sector is subject to bank secrecy laws that undermine financial stability, financial integrity, and development and expose the banking system to reputational risk,” the IMF said earlier.