Push for lifting of bank secrecy law intensifies
Several industry and business groups have expressed their support for the enactment of a bill that will ease the secrecy of bank deposits as this will help the Bangko Sentral ng Pilipinas (BSP) fulfill its mandate to keep the banking sector sound.
In a joint statement led by the Financial Executives Institute of the Philippines (FINEX), groups in the banking industry as well as local and foreign business chambers signified their “full support” for the signing of House Bill 8991, which seeks to amend Republic Act (RA) No. 1405 or the Bank Deposit Secrecy Law.
The BSP has likewise urged Congress to certify the bill as urgent. The House Committee on Banks and Financial Intermediaries in February approved the bill.
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., as well as foreign currency deposits of banks operating in the Philippines and offshore branches of local lenders.
“We consider the urgent passage of the Bank Deposits Secrecy Bill of paramount importance to address the unintended consequences of bank secrecy laws in the country,” the groups said in the joint statement.
“The global trend is to relax bank deposits secrecy laws across jurisdictions to effectively combat both domestic and global tax evasion, money laundering and other financial crimes and comply with international standards on transparency.
The Philippines has lagged behind this worldwide trend. Strict deposit secrecy in the country continues to make the Philippines a haven for tax evasion, a protected channel for international money laundering flows, and other illegal financial transactions,” they said.
The groups said existing bank secrecy laws have limited the BSP’s powers and, in turn, may threaten the stability of the banking system.
“Studies show that existing bank secrecy laws in the Philippines are more constraining for prudential supervision than similar laws in other jurisdictions… Recently, Lebanon passed two laws easing bank secrecy laws, leaving the Philippines as the only remaining country with bank deposit secrecy laws so stringent that they impede prudential supervision,” they said.
The groups noted that the bill “will simply restore the authority to have access to bank deposit accounts that the Bangko Sentral had prior to the passage of RA 7653 in 1993” and provides enough safeguards against abuse as only the central bank can look into suspicious accounts “under strict guidelines.”
“Indeed, the proposed Bank Deposits Secrecy Bill has wide-reaching implications. The bill will not only strengthen prudential supervision and allow BSP to effectively fulfill its mandate of maintaining stability of the banking system but also ensure compliance with the international standards on transparency and good governance which will preserve and fortify the public and the global community’s trust in Philippine the banking system,” they said.
Aside from FINEX, the groups that signed the statement were: American Chamber of Commerce of the Philippines; Australia-New Zealand Chamber of Commerce Philippines; Bankers Association of the Philippines; Cebu Business Club; Cebu Leads Foundation; Chamber Of Thrift Banks; CIBI Foundation, Inc.; European Chamber of Commerce of the Philippines; Fintech Alliance PH; Foundation for Economic Freedom; French Chamber of Commerce and Industry in the Philippines; and Fund Managers Association of the Philippines.
Source: BusinessWorld online