Bank secrecy lifting pushed to avoid financial fraud

By: - Reporter / @bendeveraINQ
/ 04:12 AM July 13, 2020

To avoid a repeat of cross-border financial fraud that implicated local financial institutions, it’s time for Congress to ease the antiquated bank secrecy law while the government tightens enforcement against such crimes, Finance Secretary Carlos Dominguez III said.

Stephen Cutler, a security analyst and antimoney laundering consultant, noted that the Philippines seemed “to attract financial fraud,” citing the involvement of local banks in the Bangladesh Bank cyberheist in 2016 and the more recent controversies involving Australia’s Westpac and Germany’s Wirecard.


Cutler blamed the Philippine financial sector’s vulnerability to fraudulent activities to shortcomings in enforcement of regulators such as the Securities and Exchange Commission (SEC), the Bangko Sentral ng Pilipinas (BSP) and the Anti-Money Laundering Council (AMLC) as well as a weak whistleblower program covering crimes in the private sector.

Dominguez said this vulnerability could be addressed by focusing on enforcement—detection, prosecution and conviction.


Dominguez admitted that the SEC, for instance, had a poor record of law enforcement of financial fraud perpetrators.

“For example, [there were] no convictions of pyramid scheme operators,” Dominguez noted, even as the SEC had been going after these Ponzi schemes.Dominguez said he had discussed how to address this concern with the SEC.

Dominguez added that the passage of the proposed measure to get the country’s bank secrecy law in line with international best practices would be necessary to prevent the involvement of domestic players in global-scale financial crimes.

The Department of Finance and the BSP have been pushing to lift bank secrecy for tax purposes and automatic exchange of information as well as amendments to give more teeth to the Anti-Money Laundering Act (Amla).

Congress had been lukewarm to proposals to ease the law, which had been in place since 1955, despite the fact that the Philippines and Lebanon remained the only countries still restricting access to bank accounts.

In March, Dominguez said the Amla “remains a weak tool against money laundering and other unlawful activities.”

“Tax evasion and other financial wrongdoings are not among the predicate crimes listed under the law that would allow the AMLC to examine bank accounts after securing a court order. This leaves us powerless in going after tax evaders and other criminals using funds for other illegal activities,” Dominguez said. INQ


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TAGS: bank secrecy, Business, Carlos Dominguez III
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