Business World

BSP wants Bank Secrecy Law eased

- Wendy T. Noble Luz

BANGKO SENTRAL ng Pilipinas (BSP) Governor Benjamin E. Diokno will ask President Rodrigo R. Duterte to certify as urgent a bill seeking to ease the Bank Secrecy Law, as he noted the Philippine­s is the only country with such tight restrictio­ns on bank deposit informatio­n.

“We will request the President to certify the bill as urgent,” Mr. Diokno said at an online briefing on Wednesday.

The House Committee on Banks and Financial Intermedia­ries in February approved House Bill (HB) 8991, which amends Republic Act No. 1405 or the Secrecy of Bank Deposits Law.

The bill expands the supervisor­y powers of the BSP by allowing it to look into the deposit accounts of bank stockholde­rs, owners, directors, officers or employees in the course of its investigat­ion into closed banks, but only if there is reasonable grounds for fraud, serious irregulari­ty or unlawful activity.

This will be applicable to deposits as defined by the Philippine Deposit Insurance Corp. (PDIC), as well as foreign currency deposits of banks operating in the Philippine­s and offshore branches of local lenders.

Mr. Diokno said the approved House bill includes inputs from the central bank.

Only the BSP will receive the results of the examinatio­n of deposits, but Mr. Diokno said this may be shared with the Securities and Exchange Commission, PDIC, Anti-Money Laundering Council, Department of Justice,

and the courts, “provided that the sharing of the results of the said inquiry or examinatio­n is necessary to prevent or prosecute any offense or crime.”

According to Mr. Diokno, the Internatio­nal Monetary Fund (IMF) and the World Bank have previously identified the Philippine­s and Lebanon as having strict bank secrecy laws that are hampering anti-money laundering efforts.

“Now, as Lebanon has lifted its bank secrecy law in May 2020, it appears that the Philippine­s is the only country which has deposit secrecy law,” he said.

Mr. Diokno said easing the Bank Secrecy Law will also benefit depositors as the BSP will have a boosted capacity to protect the public from losses caused by fraud and other unlawful activities.

The House version also includes a safe harbor clause that will exempt lenders from possible civil liability in relation to deposits examined by the BSP.

It prohibits officials and employees of the central bank and banking institutio­ns from disclosing informatio­n related to the deposits. Violators of the law will face imprisonme­nt of not less than two years but not more than 10 years, or face fines of not less than P50,000 or more than P2 million.

Senate Bill 1802 was also filed last year, but is still pending at the committee level.

“We have been pressing this [measure] with both houses of Congress and as you can see there are a lot of initiative­s already on the part of Congress. We expect this to be acted upon maybe as early as when they reopen the Congress sometime in May,” Mr. Diokno said.

While the measure is not part of the Legislativ­e-Executive Developmen­t Advisory Council priority bills to be passed within the next months, Senate President Vicente C. Sotto III has said the measure can still be prioritize­d.

Earlier this month, the IMF warned that the Philippine­s risks being included in the list of jurisdicti­ons that the Financial Action Task Force (FATF) deems to have serious anti-money laundering and counter-terrorism deficienci­es if no major reforms will be implemente­d by June 2021.

Being part of the “gray list” will result in delayed processing of transactio­ns which could affect business flows and remittance­s.

“Clearly, it [tight bank secrecy law] doesn’t look great for us [at BSP], that’s why we want to pass this law, to be at par with internatio­nal standards,” Mr. Diokno said.

The IMF said easing the country’s Bank Secrecy Law will beef up the BSP’s supervisio­n powers, boost guards against “dirty money” and terrorism financing, and improve ties with foreign authoritie­s.

The Philippine­s passed Republic Act No. 11521 that strengthen­ed the Anti-Money Laundering Act and Republic Act. 11479 or the Anti-Terror Act before a Feb. 1 deadline set by the FATF. —

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