The private sector is cool to the proposal for the immediate lifting of bank secrecy law in the country, but also equally stressed the need to protect depositors.
George Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI), emphasized his point in reaction to Sen. Francis Escudero call for the immediate approval of a bill that mandates all government officials and employees to waive their rights under the bank secrecy law.
“Generally, it (lifting secrecy on bank deposits) is important to avoid tax evasion and money laundering. We are very open-minded about this,” said Barcelon. But, he likewise stressed the need to protect depositors because lifting the confidentiality on an individual’s account could make him sustainable to harassment, such as kidnap for ransom activities.
That’s why, he said that any move to lift the confidentiality of bank accounts must be complemented with guidelines to protect depositors.
“The guidelines must ensure the new law will not be used to the disadvantaged of depositors,” he said.
On one hand, he said, lifting the bank secrecy could also be helpful for businesses in checking the capability of a business partner.
Barcelon said the banking industry must have been consulted already on the proposed bill, but not yet the private sector from the trade and industry side.
He also cautioned that there have been several laws in the country with very good intentions only to find out their defects once they are implemented.
He noted that the previous attempt to lift the bank confidentiality was on condition that government was to extend tax amnesty on these deposits.
The bank secrecy law as also implemented at a time when there was lack of foreign currency and the law can be credited for building up the country’s foreign currency haul and the foreign currency deposit units in local banks.
“It was understandable because of our situation then when we lacked foreign currency,” he said.
At present, he said, the central bank has also tightened bank deposit transactions, especially for the Philippine Offshore Gaming Operators (POGO) sector.
In calling for the lifting of the bank secrecy for government officials and employers, Escudero said the country’s Republic Act (RA) 1405, or the Bank Secrecy Law, was enacted in 1955 to encourage people to deposit their money in banking institutions and discourage private hoarding as part of policies meant to promote economic development.
This was further strengthened with the passage of RA 6426 or An Act Instituting a Foreign Currency Deposit System in the Philippines in 1974.
Both laws, RA 1405 and RA 6426, offered only very limited exceptions from the secrecy of bank deposits. Escudero said that RA 6426 treats foreign currency deposits with absolute confidentiality.
“The policy intent is quite tenable given that the above laws on bank deposits have passed the test of time and remained unchanged,” Escudero said.
Although not the intent of the law, banks are being used as institutions “to hide illegal wealth, fund illegal activities, launder money, evade taxes and commit other financial crimes.”
In fact, he said, all countries, except the Philippines, have already lifted the secrecy of bank deposits.