THE BILL seeking to ease the country’s deposit secrecy law to give the Bangko Sentral ng Pilipinas (BSP) the power to look into accounts of bank officials and employees for fraud is expected to hurdle the House of Representatives by next month.
“The expected date of passage will be in November. If there are no oppositions, the bill may be approved in the same month,” House Committee on Banks and Financial Intermediaries Chairperson and Manila Rep. Irwin C. Tiengco told BusinessWorld.
House Bill 4313 filed by Mr. Tiengco, which proposes amendments to Republic Act No. 1405 or the Bank Secrecy Law, has been pending with the committee since Sept. 6.
It seeks to exempt from the Bank Secrecy Law the BSP’s inquiry or examination of deposits in relation to possible fraud, serious irregularity, or unlawful activity being committed by bank officials.
The amendments will be limited to the BSP’s exercise of supervisory powers over financial institutions.
The results of such inquiry and examination will be used exclusively by the BSP and shall not be made available to any other person or entity, except to the Securities and Exchange Commission, Philippine Deposit Insurance Corp., Anti-Money Laundering Council, the Department of Justice, and the courts.
“The exemptions are also recommended to apply to foreign currency deposits in banks operating in the Philippines, including offshore branches of domestic banks,” Mr. Tiengco said.
The bill aims to make the financial system more transparent, he added.
“The country’s Bank Secrecy Law was passed during the 1950s, and needs to be changed as it can be abused,” Richard Leo M. Baldueza, secretary of the House Committee on Banks and Financial Intermediaries, said in an interview.
“If we have tight bank secrecy laws, investors might not invest in the country since they don’t know if their money will be abused,” Mr. Baldueza added. “Once the bill is enacted, it aims to attract more investors.”
A similar bill was taken up in the previous Congress, but it only reached the committee level as it was tacked during the third regular session, Mr. Baldueza said.
“But now, we are early. We are on our first regular session, and we’re hoping the House of Representatives and the Senate can approve it immediately,” he added.
The BSP has long sought these amendments that have also been recommended by multilateral institutions, noting the Philippines is the only country where the prudential regulator, or the central bank, has no authority to look at bank deposits despite being the regulator of financial institutions.
With most lenders closed by the Monetary Board being due to insider abuse, the exemption will boost the BSP’s supervisory powers over banks.
The central bank has also said the proposed changes will improve the Philippines’ defenses against money laundering, which could help the country exit the Financial Action Task Force’s (FATF) “gray list” early.
The FATF put the Philippines on its gray list of jurisdictions under increased monitoring for “dirty money” risks in June 2021 and officials hope the country can be removed by January 2023.
The dirty money watchdog has said stringent bank secrecy has prevented authorities from implementing anti-money laundering measures. — K.A. Bulan