SEC backs moves to ease bank secrecy law

The Securities and Exchange Commission (SEC) has called for the easing of the country’s stringent bank secrecy law to fortify efforts against money laundering, terrorist financing, tax evasion and other financial crimes.

In a statement on Thursday, the SEC expressed its support to the proposed amendments to Republic Act No. 1405, or the Secrecy of Bank Deposits Law, as espoused by House Bill No. 8991.

Among others, the bill seeks to empower the Bangko Sentral ng Pilipinas (BSP) to look into and examine deposits when there is reasonable ground to believe that fraud, serious irregularity or unlawful activity has been committed by stockholders, owners, directors, trustees, officers or employees of supervised institutions, or their representatives, agents, related parties or conspirators.

The bill will further allow the BSP to make the results of the inquiry or examination conducted available to the SEC, Philippine Deposit Insurance Corp., Anti-Money Laundering Council, Department of Justice, and the courts when necessary to prevent or prosecute any offense or crime.

Such provisions are seen to lift a long-standing barrier to effective investigation and prosecution of financial crimes.

“The enactment of House Bill No. 8991 will serve as one testament to the Philippines’ commitment to international standards and best practices against money laundering, terrorist financing and other financial crimes,” the SEC said.

“Consequently, the bill should improve the global competitiveness of the Philippine economy by ensuring the integrity of the financial sector and boosting investor confidence, among others,” it said.

The proposed amendments are also seen to benefit financial consumers by boosting the capacity of financial regulators such as the SEC to pursue persons and groups behind fraudulent activities such as investment scams.

“The passage of House Bill No. 8991 will be a win for every Filipino. It will not only protect the country from financial crimes but also support the development of the domestic capital market, the greater financial sector and the overall economy,” the SEC said.

To date, bank secrecy restrictions have limited the effectiveness of the SEC to establish the owners of bank accounts used in cases of violations of the Republic Act No. 8799, or the Securities Regulation Code; Republic Act No. 11232, or the Revised Corporation Code of the Philippines; and other laws implemented by the Commission. In certain cases, the Secrecy of Bank Deposits Law has prevented the SEC from validating information on the declared financial position of companies where there are grounds to believe that there is an effort to conceal misconduct, corporate fraud or noncompliance with certain requirements.

The Paris-based Financial Action Task Force (FATF), International Monetary Fund and other international organizations have repeatedly raised concerns about the country’s stringent bank secrecy law. They have recommended the easing of the law to enable effective supervision of the financial system. INQ

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