Confidentiality of bank data

Getting information from the Anti-Money Laundering Council about bank deposits has become more difficult.

In a recent decision, the Court of Appeals set aside an earlier order of a trial court directing then AMLC Executive Director Vicente Aquino to testify in court and bring with him documents relating to the bank accounts of Rosario Baladjay, her husband and their companies.

In 2000, Baladjay organized Multinational Telecom Investors Corp. (Multitel) as front for a pyramid scam. She enticed investments in the company with promises of 4 to 5 percent returns or double-your-money after 18 months.

The scheme collapsed in 2003 after thousands of investors had reportedly been bilked more than P100 billion. (Eat your heart out Janet Lim-Napoles!)

In 2009, Baladjay was convicted for large-scale estafa and sentenced to life imprisonment. On appeal, however, the punishment was reduced to 20 years.

With her arrest and conviction, the companies she set up were shuttered and turned over to receivers who asked the trial court to declare them as insolvent.

For this purpose, they claimed it was necessary for AMLC to disclose information about the bank accounts of Baladjay and her cohorts.

Confidential

In stopping the disclosure, the appellate court cited Rule 8.4 of AMLC’s  rules and regulations which states that “members of the AMLC, the executive director, and all members of the secretariat, whether permanent, on detail or on secondment, shall not reveal in any manner, any information known to them by reason of their office.”

The prohibition is perpetual, i.e., the lips of the people mentioned are forever sealed with regard to such information. Any violation of the rule will give rise to criminal and civil liabilities.

The confidentiality of bank deposits, except in cases that the law allows their revelation, is essential in maintaining the public’s trust and confidence in the banking system.

For reasons of privacy and security, no reasonably minded person would want his bank transactions to be made available to people who have no business knowing how he manages his funds.

These considerations, however, are set aside when banks and other related institutions are used to hide or “launder” the proceeds of the crimes enumerated in the Anti-Money Laundering Act.

The veil of secrecy accorded bank deposits is lifted if there is reason to believe the money in those accounts came from or were obtained through the commission of crimes, such as kidnapping for ransom, plunder and large scale swindling.

Coverage

Unless the ruling is reversed by the Supreme Court, bank depositors, especially those who feel they are in the crosshairs of kidnap syndicates, can take some comfort from it.

It gives some level of assurance that the lower courts cannot, for any reason they may fancy or under the mantra of judicial discretion, order AMLC to divulge information about bank accounts that come under its review.

With the recent amendments on anti-money laundering rules under pressure from international financial watchdog Financial Action Task Force, AMLC’s ability to scrutinize and order the freezing of suspicious bank accounts has gone beyond the original objective for its creation.

In 1988, when the rules against money laundering were first agreed upon in the United Nations, the target of the action was narcotic drugs and organized crime.

Exception

Acts of terrorism were included in the list after the Sept. 11, 2001 attacks in the United States. From then on, the net of anti-money laundering has widened to cover other crimes that our lawmakers believed should form part of the prohibited acts.

Unknown to many, 114 criminal acts are considered unlawful activities that justify AMLC looking into bank accounts. More activities may be added to the list depending on AMLC’s judgment.

While most bank depositors have reason to be thankful for the subject ruling, government officials and employees and their immediate family cannot share in the elation.

A clause in the Statement of Assets, Liabilities and Net Worth that government personnel are required to file every year negates or renders ineffective the cloak of confidentiality that the bank secrecy and anti-money laundering rules grant to bank depositors.

The last paragraph of the SALN reads:

“I authorize the Ombudsman or his/her duly authorized representative to obtain and secure from all appropriate government agencies, including the Bureau of Internal Revenue, such documents that may show my assets, liabilities, net worth, business interests and financial connections, to include those of my spouse and unmarried children below 18 years of age living with me in my household covering previous years…”

The phrase “all appropriate government agencies” covers AMCL and its employees, regardless of the nature of their employment.

This is the authority Ombudsman Conchita Carpio-Morales invoked when she testified at the Senate last year during the impeachment trial of then Chief Justice Renato Corona.

Even if none of the crimes that may trigger an inquiry into Corona’s bank accounts was suspected to have been committed, upon the Ombudsman’s demand, AMLC disclosed to her the details of his bank transactions. The data revealed led to Corona’s crucifixion.

By signing the SALN, the government official or employee concerned waives or surrenders the confidentiality of his bank accounts.

Thus, when the Ombudsman asks AMLC for information about the bank accounts of government personnel, the latter has no choice but comply with the order.

If it refuses to, the official or staff concerned could find himself in trouble for obstruction of justice or whatever crime the Ombudsman may file against him.

Confidentiality of bank deposits has a different meaning for people in government.

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