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Concerns about bank secrecy

IN THE wake of the Senate investigation on the alleged money laundering of $81 million stolen from the Bangladesh Bank, Bangko Sentral ng Pilipinas Governor Amado Tetangco called on Congress to relax rules on secrecy of bank deposits.

He wants the Anti-Money Laundering Council (AMLC) to be given the authority, under certain conditions, to examine bank deposits before a crime is committed rather than after its commission.

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At present, bank deposits can be looked into only in the following instances: (a) the depositor agrees to it in writing, (b) in cases of impeachment, (c) upon order of a competent court in cases of bribery or dereliction of duty by public officials, and (d) the money deposited is the subject of litigation.

The enactment of the Anti-Money Laundering Act somehow lifted the veil of confidentiality on bank deposits, but there has to be a predicate (or underlying) crime before the examination can be undertaken by the AMLC.

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Several attempts in the past to amend the law to make it easier for government regulators to inquire into bank deposits have not been successful.

The oppositors expressed apprehension that the authority can be used to harass politicians, businessmen and other people who are not in the good graces of the administration or party in power.

Responsibility

There was also the fear that easier access to information about bank deposits will give crime syndicates, in connivance with rogue bank officials, leads on prospective victims.

These concerns cannot be dismissed or pooh-poohed as mere paranoia. There have been instances in the past when confidential bank information was used for political purposes or otherwise resulted in putting a wealthy bank depositor in harm’s way.

The biggest obstacle to the amendment of the bank secrecy law is the anxiety that the expanded authority will be misused or abused by the people to whom it will be given.

Although there are avenues for redress in case of violation of the rules on the examination and disclosure of confidential bank information, relief from the judicial system (assuming it is favorable) will either take years or be too little too late to compensate for the damage suffered by the wronged depositor.

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The proponents of liberalized bank secrecy have to convince the lawmakers and the public that their initiative will redound to the best interests of the country, and that the men and women who will be entrusted with the power to look into bank deposits will perform their task strictly in accordance with the mandate given to them.

Safeguards

The additional grounds or causes that would justify the inspection of bank deposits should be definite or specific. Not every crime or offense can be tied to or be connected to bank deposits.

The inspection of a bank deposit can, for example, be allowed if there is proof the bank deposit is being used as a conduit or instrument through which a crime was or is about to be committed, or to hide the proceeds of a crime.

Meaning, the subject bank deposit is an integral element of the crime sought to be prevented or solved. Or, unless it is allowed to be examined, it will be very difficult for law enforcement authorities to find out how the crime was committed or the people behind it.

In addition to the substantive aspect, there is also the procedure to be followed before, during and after the examination of a bank deposit that has to be spelled out.

What documents must be filed by the party requesting the review of a bank deposit? Who shall have the final say on that action? The BSP Governor, the AMLC acting as a body or, as in the case of freezing bank accounts in anti-money laundering cases, a justice of the Court of Appeals?

The point is, the protocol to be observed in breaking the right of a private citizen to maintain the confidentiality of his bank deposits must be clear and unmistakable, and not simply left to the discretion of a public official.

Accountability

With the procedures sufficiently defined and delineated, accountability or responsibility can be easily pinpointed in case something goes wrong in the inspection of a bank deposit.

It is common knowledge that when shit hits the ceiling in government offices, it’s every man or woman for his or herself.  The finger-pointing on who should be held responsible for booboos in government decisions often goes downward, with the subordinates winding up as scapegoats.

By identifying the persons responsible or accountable for certain actions prior to, during and after the examination of bank deposits, the officials concerned will be impelled into exercising caution before signing.

Knowing they could find their neck on the chopping block will encourage these officials to personally undertake (rather than delegate) the review of the documents needed to justify the examination of bank deposits.

Another possible deterrent to the misuse or abuse of the authority to pry into bank deposits is to make any violation painful, personally or financially, to the guilty party.

The punishment should be of such gravity, either by way of long prison terms or stiff fines, that whoever has the final say on breaking the seal of confidentiality on bank deposits will make sure he has carefully examined the facts of the case and that he is convinced about the validity of his action.

If the public is assured that the confidentiality of bank deposits can be broken only for strong justifiable reasons and under strict conditions that guarantee that any unauthorized examination will result in serious consequences to the responsible party, the proposal to liberalize our bank secrecy laws may go through the legislative mill smoothly, or at least with minimal resistance.

For comments, please send your e-mail to [email protected]

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