Push for lifting of bank secrecy law intensifies
Banks and businesses have renewed calls for Congress to pass the bill amending Republic Act No. 1405 or the Secrecy of Bank Deposits for a more relaxed version of the law to allow the Bangko Sentral ng Pilipinas (BSP) to look into and investigate the bank accounts of suspicious individuals, especially government officials and politicians.
As the Philippines is the last country in the world to have a restrictive bank secrecy law, some 26 groupings of the largest banks and corporations have again banded together to remind lawmakers to do their jobs of ensuring no outdated law will encourage tax evasion or money laundering.
“The global trend is to relax bank deposits secrecy laws across jurisdictions to effectively combat both domestic and global tax evasion, money laundering and other financial crimes and comply with international standards on transparency. The Philippines has lagged behind this worldwide trend,” according to the joint statement of the big business groups.
“Strict deposit secrecy in the country continues to make the Philippines a haven for tax evasion, a protected channel for international money laundering flows, and other illegal financial transactions,” they said.
“It also allows politicians and other government officials to hide unexplained wealth, constraining citizens’ ability to exercise their public duty to elect honest officials. It does not promote good governance principles of transparency, fairness and accountability,” they also said, citing that this is the reason why the Philippines has a low score on the Economic Freedom Index.
The proposed bank deposits secrecy bill will empower the BSP to open the bank deposit accounts of any individual but only under certain conditions and if the Monetary Board has found reasonable ground for fraud, serious irregularity or unlawful activity by the owner or owners of the bank deposit accounts.
The business groups reiterated that only the BSP will be allowed – and under strict guidelines – to have access into suspicious deposit accounts. “The bill will continue to provide protection for ordinary honest citizens by restricting access to deposits to the banking regulators like in other countries with strong deposit secrecy traditions and policies,” they stressed.
The business groups also pointed out that because of the strict guidelines of proposed bill, the lifting of the bank secrecy law will not result to capital flight from banks, nor will it be used for the improper disclosure of bank deposits information. The BSP’s findings will be for its exclusive use and will not be disclosed to any persons but in cases of offense or crime, it could be used by government regulators and the courts.
“The bill provides a safe harbor clause to protect the banks and other financial institutions against frivolous suits from depositors in connection with the inquiry and examination of deposits by BSP,” the groups emphasized, that it will “strengthen prudential supervision and allow BSP to effectively fulfill its mandate of maintaining stability of the banking system but also ensure compliance with the international standards on transparency and good governance which will preserve and fortify the public and the global community’s trust in Philippine the banking system.”
The Joint Statement is signed by 26 Groups, Namely: American Chamber of Commerce of the Philippines, Australia-New Zealand Chamber of Commerce Philippines, Bankers Association of the Philippines, Cebu Business Club, Cebu Leads Foundation, Chamber of Thrift Bank, CIBI Foundation Inc., European Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines, Fintech Alliance PH, Foundation For Economic Freedom, French Chamber of Commerce and Industry in the Philippines, Fund Managers Association of the Philippines, Guild of Real Estate Entrepreneurs and Professionals Inc., Institute Of Corporate Directors, Intellectual Property Association of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Licensing Executives Society Philippines, Makati Business Club, Management Association of the Philippines, Philippine Center For Entrepreneurship (Go Negosyo), Philippine Council of Association and Association Executives, Philippine Life Insurance Association, Shareholders’ Association of the Philippines, Tax Management Association of the Philippines, and Women’s Business Council Philippines.