BSP bats for more power to probe bank deposits, stiffer penalties vs info leaks

MANILA, Philippines — Parties who misuse information on accounts of bank clients — including leaking them to the press to have them published for political persecution or harassment — will face long jail terms and stiff fines under the central bank’s new proposal to update the country’s archaic deposit secrecy laws.

In an online press briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the bills backed by the regulator currently being deliberated on in Congress will make it easier for authorities to examine suspicious bank accounts, but also sets heavy penalties to guard against its abuse.

“The proposed reforms will place the country’s deposit secrecy law at par with international standards,” he said, explaining that international authorities now regard the Philippines as the only country in the world where laws deter the effective execution of anti-money laundering efforts after Lebanon eased its own deposit secrecy laws last year.

BSP Deputy General Counsel Asma Panda said that the safeguards against abuse of these enhanced powers being proposed by the central bank include imprisonment of two to ten years and monetary penalties from P50,000 to P2 million for anyone proven to have misused the deposit data of bank clients.

Over the years, the Philippines — despite its restrictive deposit secrecy laws — has seen several incidences of bank account information of prominent politicians and businessmen being leaked to the public either through the press, social media or during legislative investigations. This has prompted calls from some sectors for more safeguards against abuse to offset the greater investigative power being requested by regulators.

“This [proposed law] is seen to strengthen the Filipino public’s and the global community’s trust in our banking system,” Diokno said, adding that the regulator will ask President Duterte to certify the bill as urgent once Congress returns from its recess.

In particular, the central bank recommended amendments to Republic Act No. 1405, also known as “The Secrecy of Bank Deposits Law,” to be limited within the confines of BSP’s banking supervision and its investigation of closed banks.

In the proposal supported by the BSP, the coverage of allowed inquiries is not too broad to include just any depositor, as it is limited only to deposits of specified persons and anchored on their commission of fraud, serious irregularity, or unlawful activity.

The proposed amendments also include provisions to protect banks against frivolous suits from depositors in line with BSP’s inquiry or examination of deposits, and against the use of the law for persecution or harassment, or to hamper competition in trade or commerce.

“This reform is seen to ultimately benefit depositors as the BSP will have strengthened capacity to protect them from losses due to fraud and other unlawful activities,” Diokno said.

The BSP also supports amendments to the Secrecy of Bank Deposits Law in line with the country’s broader efforts to combat both domestic and global tax evasion, money laundering, and other financial crimes; to promote harmonious and supportive international relations; and to meet international standards on transparency.