Hard sell on easing bank secrecy

Like its predecessors, the Duterte administration wants to ease the restrictive provisions of the Bank Secrecy Law.

Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said the proposal, which formed part of the administration’s financial reform programs, was necessary to safeguard the Philippine economy and weed out corruption.

Enacted in 1955, the law prohibits the disclosure of information about bank deposits except (a) with the written consent of the depositor, (b) in cases of impeachment, (c) upon the order of a court in cases of bribery or dereliction of duty of public officials, and (d) when the deposit is the subject of litigation.

In 1989, Congress reduced the level of confidentiality of bank deposits when it authorized the Ombudsman to subpoena bank records as part of its investigation of a case pending in court.

The veil of secrecy over bank deposits was further partially lifted in 2001 with the enactment of the Anti-Money Laundering Law.

Its implementing arm, the Anti-Money Laundering Council (AMLC), was given the power to examine bank accounts pursuant to a court order if there is probable cause the funds are involved in unlawful activities or money laundering offenses.

The AMLC can also look into bank accounts without a court order if it has reason to believe the deposits are related to predicate crimes, such as kidnapping for ransom, hijacking and dangerous drugs.

The enactment of this law did not come easy. There was tremendous opposition from some members of Congress whose arguments ranged from invasion of privacy to disincentive to opening bank accounts to the possibility of the law being used as a tool for political harassment.

The lawmakers (grudgingly) enacted the law when the Financial Action Task Force, an intergovernmental organization formed in 1989 by the G-7 countries to combat laundering, put the squeeze on money remittances to the Philippines by overseas Filipino workers.

The political backlash from the families adversely affected by stricter remittance requirements forced the lawmakers to change their mind.

With its convoluted procedures and technical requirements, however, the law has not been of much help in minimizing money laundering or preventing the use of bank accounts to hide ill gotten wealth.

Thus, on a technicality, a senator who has clearly been proven to have misused his pork barrel funds was acquitted because the AMLC did not follow procedure on the examination of his bank accounts.

Based on experience on the passage of the Anti-Money Laundering Law, the administration’s plan to make access to information about bank accounts easier is not going to be a walk in the park. It will go through the wringer in the legislative mill.

Although majority of the members of Congress are considered or perceived to be allies of the administration, there is no assurance they will dance to the tune of the economic managers on this issue.

This is a personal gut issue, so expect party affiliation or political relationship to be set aside when they vote on the proposed measure. It will be every member of Congress to his or herself, or better still to his or her own bank account.

The sensitivity of some lawmakers to giving the government less stringent access to bank accounts (which of course includes their own and those of their families) raises some unsavory suspicions about the true motive behind their opposition.

Personal interest or public interest?

Left to its own device, the proposal to ease bank secrecy laws may not go beyond first reading in Congress. It may get stuck in the committee level and not make it at all to the plenary.

Recall that the Tax Reform for Acceleration and Inclusion (TRAIN) Law got stuck in the legislative mill until President Duterte certified it as urgent to assure its enactment.

The same intervention from the President may have to be sought by the economic managers if they want to make the Bank Secrecy Law an effective tool for the country’s financial development.