The Securities and Exchange Commission (SEC) is supporting moves to amend Republic Act No. 1405, or the Secrecy of Bank Deposits Law, to reinforce the country’s fight against money laundering, terrorist financing, tax evasion and other financial crimes.

The amendments put forward under House Bill No. 8991 will, among others, 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.

This in cases of activity 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 the results of the inquiry or examination conducted with the SEC, Philippine Deposit Insurance Corporation, 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.

The Secrecy of Bank Deposits Law has limited the effectiveness of the SEC, for instance, to establish the owners of bank accounts used in cases of violations of the Securities Regulation Code, the Revised Corporation Code of the Philippines, and other laws implemented by the Commission.

“In certain cases, the Secrecy of Bank Deposits Law has 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 SEC said.

The Financial Action Task Force, International Monetary Fund and other international organizations have repeatedly raised concerns about the unintended consequences of the country’s stringent bank secrecy law and accordingly recommended its easing to enable effective supervision of the financial system.

The enactment of House Bill No. 8991 will serve as one testament to the Philippines’ commitment to international standards and best practices against money laundering, terrorist financing and other financial crimes.

“Consequently, the bill should improve the global competitiveness of the Philippine economy by ensuring the integrity of the financial sector and boosting investor confidence, among others,” noted the SEC.

It added that, “The proposed amendments to the Secrecy of Bank Deposits Law will equally benefit financial consumers by boosting the capacity of financial regulators such as the SEC to pursue persons and groups behind fraudulent activities such as investment scams.”

The bill should likewise result in lower costs of cross-border transactions and eased restrictions in investment and foreign currency inflows by keeping the Philippines off the FATF “grey list” of jurisdictions under increased monitoring for high risks of money laundering and terrorist financing.

“The passage of House Bill No. 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,” said the SEC.