Intrusive bank documents

Some local banks are taking seriously the lessons in confidentiality of deposits and anti-money laundering that the impeachment trial of then Chief Justice Renato Corona has taught.

It will be recalled that, during the hearing, the banks where Corona maintained his accounts were summoned to testify on his deposits to validate the entries in his Statement of Assets, Liabilities and Net Worth.

The disclosure of his peso deposits went easily. His dollar deposits, however, became problematic. The bank refused to give the information requested without Corona’s consent or go signal from the Supreme Court.

Unexpectedly, the gaps in bank data were filled by the report submitted by the Anti-Money Laundering Council to Ombudsman Conchita Carpio-Morales on the movements in Corona’s bank accounts in various banks.

The concerns raised by the senators about that report brought to the fore the broad reach of the anti-money laundering law and AMLC’s power to look into bank transactions.

The discussion on these subjects has prompted some banks to take a closer look at their internal processes and procedures to make sure they do not run afoul with the law or the regulatory authorities.

Disclosure

At present, deposits and withdrawals in some banks are not as easy as they used to be when all the depositor had to do was indicate in the bank slip his account number and amount deposited or withdrawn.

Depending on the nature of the deposit, the depositor was required to either give a breakdown of the cash or details of the checks.

If a withdrawal is being made from a joint account, the person making the withdrawal has to declare “under the penalty of perjury” that his co-depositors are still alive.

Taking a leaf from the requirement of the Anti-Money Laundering Law for all banks to report to AMLC transactions in excess of P500,000 or US$10,000, or are otherwise suspicious in character, some banks have made changes in their deposit and withdrawal slips.

Deposits or withdrawals that fall within the thresholds mentioned continue to use the traditional simple procedure.

However, if the deposit exceeds the cut-off, the depositor has to indicate (by checking the proper box) the nature and source of his deposit, i.e., investment proceeds, business proceeds, salary, personal savings, inheritance, pension or retirement funds, sale of assets or others.

Ticking the boxes for “personal savings,” “sale of assets,” and “others” would trigger the obligation to provide additional information.

Although no instructions are given on how to answer this item, the depositor may (perhaps) indicate the source of his savings, the nature of the property sold or, if applicable, the name of the person who loaned him the amount.

Purposes

A similar inquisitive approach has been adopted for withdrawals higher than P500,000 or US$10,000. This time, the bank account holder has to specify the purpose of the withdrawal, i.e., investment, personal use, purchase of assets, business use or others.

Except for withdrawals made for investment purposes, additional information has to be given for the rest of the purposes.

What kind of information would meet the criteria for the other purposes is a big question mark. If the account holder gives a vague answer or otherwise fudges his reply, can the bank compel him to submit documents to support his answer under pain of not being allowed to withdraw his own money?

What’s more, does the bank have the competence or ability to determine whether the purpose given is sufficient to “justify” the requested withdrawal?

As if the nosey approach is not enough, clauses in deposit and withdrawal slips have been added that would allow the bank where the account is recorded, other branches, subsidiaries, affiliates and associated companies to share among themselves any information they have about the depositor.

This means, the personal data given in confidence by a depositor to a bank when he opens an account can be accessed by entities that have any relation, directly or indirectly, to such bank.

If that bank has interests in companies engaged in businesses other than banking and finance, the depositor concerned could find himself the recipient of spam, unsolicited advertisements and other unwanted promotional materials.

Consequences

Without passing judgment, the zealous (and sometimes too aggressive) enforcement of anti-money laundering rules has prompted some people to shun the banks and keep their money elsewhere.

For people with valid security concerns, the porous state of bank records is a compelling disincentive to be forthright and honest in giving personal information to the banks.

During Corona’s impeachment trial, copies of supposedly confidential records of his bank deposits in Philippine Savings Bank were found in the possession of the prosecution.

How they got there was never explained. Neither has any action been taken to prosecute the persons who may have violated the secrecy of bank deposits law.

With confidentiality of bank deposits reduced practically to a myth and anti-money laundering rules making life difficult for people who want to maintain their financial lives private, the alternative left for those who want to stay below the radar for security reasons is to keep their money in their homes or offices.

This probably explains why safety vaults and other cash storage facilities are enjoying brisk sales lately.