The Securities and Exchange Commission (SEC) said it is backing proposals to amend existing bank secrecy laws, as part of the government’s continuing fight against corruption.
Several bills are currently pending before the House of Representatives for the lifting of the bank secrecy law, primarily to promote transparency and tackle corruption in the government.
The amendments seek to empower the Bangko Sentral ng Pilipinas 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.
In a statement issued Wednesday, Francis Lim, SEC chairman, described the amendments as “a necessary measure to uphold trust and confidence in the Philippine capital market and overall economy.”
“Corruption is a major concern for local and foreign investors alike. It does not only create crippling uncertainties; it translates to real, unnecessary, additional costs of doing business in the country. The ability to access critical financial information, particularly in cases of insider trading, market manipulation, and investment fraud, will significantly enhance the enforcement capabilities of the SEC,” he explained.
Lim rationalized that the amendments will sends “a clear message” that the capital markets are governed by “transparency and accountability.”
Lim noted that the bank secrecy law has often been used as a shield for owners of bank accounts in cases of violations of the Republic Act No. 8799, or the Securities Regulation Code and Republic Act No. 11232, or the Revised Corporation Code of the Philippines, among other laws implemented by the Commission, limiting the enforcement capacities of the SEC.
It has also prevented the Commission 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, Lim said.
“Amendments to the law could potentially enhance the Commission’s investigative power, as it could easily gather evidence from bank records and trace funds flowing into or out of entities or individuals suspected of securities fraud, misrepresentation, or unregistered securities offering,” Lim said. “The initiative could further speed up the resolution of investigations and cases as it reduces the need for separate court proceedings just to access bank information.”
Lim also said that the reforms serve as testament to the Philippines’ commitment to international standards and best practices against money laundering, terrorist financing and other financial crimes, noting that organizations such as the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), and Financial Action Task Force (FATF) have long recommended reforms in the Philippines’ bank secrecy laws, in line with global efforts to tackle money laundering, terrorist financing, tax evasion, corruption and other financial crimes.
