As the only country in the world with a constraining deposits secrecy law, the Bangko Sentral ng Pilipinas (BSP) will request President Duterte to certify the proposed measures on Bank Secrecy Law as urgent, particularly the BSP’s version of the law as House Bill No. 8991.
BSP Governor Benjamin E. Diokno is dismayed that the Philippines holds the distinction as the only central bank to be restricted by a bank secrecy law (Republic Act No. 1405, also known as “The Secrecy of Bank Deposits Law) after Lebanon lifted its own bank secrecy law in May last year, in the middle of the pandemic.
“Clearly, it doesn’t look good for us. That’s why we want to pass this law to be at par with international standards,” Diokno said during his weekly online “GBED Talks”.
Before Lebanon’s move, the International Monetary Fund and World Bank has tagged the Philippines and Lebanon as the last two countries to have bank secrecy laws that “hamper implementation of prudential and anti-money laundering frameworks,” according to the BSP chief. “As Lebanon has lifted its bank secrecy laws in May 2020, it appears that the Philippines is the only country with such deposit secrecy laws.”
“We have been pressing this with both Houses of Congress and there are a lot of initiatives already on the part of Congress,” said Diokno. “We expect this to be acted upon maybe (when) they open Congress sometime in May. This bill is actually urgent and so we expect (President Duterte) to certify this as urgent measure.”
In BSP’s proposed version of the bill, it recommends that the easing of deposit secrecy be limited within the confines of BSP’s banking supervision and its investigation of closed banks.
“In the proposal supported by BSP, the coverage of allowed inquiries is not too broad to include just any depositor. Rather, it is limited only to deposits of specified persons and anchored on their commission of fraud, serious irregularity or unlawful activity,” he said.
“We’d like to emphasize that the proposed law protects the interest of depositors. This is clear in the provisions of the bill that limits inquiries to specified persons only; sets the parameters for sharing of information; and protects against political persecution, harassment or attempts to hamper competition in trade and commerce,” said Diokno . “Ultimately, this reform is seen to benefit depositors as BSP will have strengthened capacity to protect them from losses due to fraud and other unlawful activities.”
The passage of the bill will also have “wide-ranging beneficial impact” such as empowering the BSP to expand examination in assessing a bank’s financial condition, risk management and corporate governance.
“Compliance with international standards on transparency will boost the public’s and the global community’s trust in the domestic banking system,” said Diokno.
“Moreover, reforms in deposit secrecy provide support to the country’s broader efforts to combat domestic and global tax evasion, money laundering, and other financial crimes.”
Currently there are three proposals to amend RA No. 1405, such as: House Bill No. 8991 which is on second reading at the plenary; House Bill Nos. 1498 and 3554 at the House Committee on Banks and Financial Intermediaries; and Senate Bill Nos. 663, 634, 539, 374, 26, and 1802 at the Senate Committee on Banks, Financial Institutions and Currencies.