SEC supports easing of bank secrecy law

MANILA, Philippines — The Securities and Exchange Commission (SEC) is throwing its support behind proposals to ease the bank secrecy law, noting this will significantly help the country combat money laundering and other financial crimes.

Measures are pending in Congress to amend Republic Act 1405 or the Secrecy of Bank Deposits Law to empower the Bangko Sentral ng Pilipinas (BSP) to inquire into and examine deposits “when there is reasonable ground to believe that fraud, serious irregularity or unlawful activity has been committed by stockholders, owners, directors, trustees, officers or employees of supervised institutions, or their representatives, agents, related parties or conspirators.”

The bill will further allow the BSP to make available the results of the inquiry or examination conducted with the SEC, Philippine Deposit Insurance Corp., Anti-Money Laundering Council, Department of Justice and the courts, when necessary to prevent or prosecute any offense or crime.

Such provisions will lift a long-standing barrier to effective investigation and prosecution of financial crimes, said the SEC, a member of the Anti-Money Laundering Council.

At present, the SEC said the Secrecy of Bank Deposits Law has limited its power to establish the owners of bank accounts especially in cases of violations of Republic Act 8799 or the Securities Regulation Code; RA 11232 or the Revised Corporation Code of the Philippines, and other laws implemented by the Commission.

For instance, there are cases wherein the Secrecy of Bank Deposits Law prevented the SEC from validating information on the declared financial position of companies where there are grounds to believe that there is an effort to conceal misconduct, corporate fraud or noncompliance with certain requirements.

“The passage of House Bill 8991 will be a win for every Filipino. It will not only protect the country from financial crimes but also support the development of the domestic capital market, the greater financial sector and the overall economy,” the SEC said.

The bill will also result in lower costs of cross-border transactions and eased restrictions in investment and foreign currency inflows by keeping the Philippines off the Financial Action Task Force (FATF) gray list of jurisdictions under increased monitoring for high risk of money laundering and terrorist financing.

The FATF, International Monetary Fund and other international organizations have repeatedly raised concerns about the Philippines’ stringent bank secrecy law, saying that this has hampered the country’s fight against money laundering.