Amending the current Secrecy of Bank Deposits Law (Republic Act 1405) will allow the country “to reinforce the country’s fight against money laundering, terrorist financing, tax evasion and other financial crimes,” the Securities and Exchange Commission (SEC) said.
The SEC in particular noted the amendments under House Bill (HB) No. 8991 that will allow 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 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 Corp., Anti-Money Laundering Council, Department of Justice, and the courts, when necessary to prevent or prosecute any offense or crime,” it said.
“Such provisions will lift a long-standing barrier to effective investigation and prosecution of financial crimes,” it added.
The SEC said the current Secrecy of Bank Deposits Law has limited its effectiveness, for instance in establishing the owners of bank accounts used in cases of violations of the Securities Regulation Code (RA8799); the Revised Corporation Code of the Philippines (RA11232); and other laws implemented by the agency.
“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,” it 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.
“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,” it said.
The SEC said 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,” it added.
