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House open to ‘safe harbor’ provision in Bank Secrecy Law amendments


By Luz Wendy T. Noble, Reporter

THE HOUSE of Representatives is open to the banking industry’s request for a “safe harbor” clause in the proposed amendments to the Bank Secrecy Law.

Quirino Rep. Junie E. Cua, chair of the House Committee on Banks and Financial Intermediaries, said the request by the Bankers Association of the Philippines (BAP) is “well taken,” noting the provision could be included in the bill to ease concerns of the industry.

“Those things will further be clarified in the IRR (implementing rules and regulations). The first safeguard in the bill is that it provides for a thorough study from the Monetary Board, before it approves (the request to open an account),” Mr. Cua told BusinessWorld in a phone interview.

He added the banking industry will also be part of crafting the IRR to ensure their concerns are addressed.


Mr. Cua authored House Bill 8634 that seeks to expand the central bank’s supervisory powers to examine deposits, provided the Monetary Board finds “reasonable ground” of a deposit’s link to a fraud, serious irregularity or other unlawful activities.

Under the bill, the Bangko Sentral ng Pilipinas’ supervisory powers is extended to foreign currency deposits in banks with Philippine operations as well as foreign units of local lenders.

Results of the examination will only be available to the BSP, the Securities and Exchange Commission, Philippine Deposit Insurance Corp., the Anti-Money Laundering Council, the Department of Justice and the courts.

BAP President Cezar P. Consing supported amendments to the Bank Secrecy Law, saying it will make the Philippines less prone to “dirty money” flows. However, he said there should be a provision that will protect banks from possible civil liability in relation to deposits examined by the Bangko Sentral ng Pilipinas (BSP).

“Now, when banks open up an account [within the mandates of the bill], what banks want to make sure is that they are not subject to frivolous suits or to other things like that,” Mr. Consing said in a One News interview on Tuesday.

“[I]f the central bank comes to us and says open up that bank account because we think something is happening there…let’s make sure that by complying with one law, we are not breaking another law. That’s why we are asking for protection,” he added.

Republic Act No. 1405, the country’s governing Bank Secrecy Law, was passed in 1955 with a primary aim to “deter private hoarding, boost the economy, and enhance state protection of privacy rights,” Mr. Cua said in the bill’s explanatory note, noting the financial sector landscape has evolved since then to allow transactions to become more complex and funds to flow faster.

“There are depositors who hide behind the cloak of deposit secrecy to perpetuate their ingenious ways of defrauding counterparties, regulators or the government,” Mr. Cua said.

Banks are also mandated to protect their clients’ information in observance of the Republic Act No. 10173 or Data Privacy Act of 2012.

Mr. Cua said the bill will fast-track the process of running after culprits or flows that are involved in unlawful transactions. Currently, the law only allows a deposit account to be opened by authorities once court approval is secured.

Kasi siyempre sa korte, may appeal process ‘yung mga ‘yan, so hindi ganoon kabilis ‘yun, matagal-tagal talaga ‘yun. Baka by the time na nabuksan ‘yung account wala ng laman (In a court, there is an appeal process which could take a long process. By the time an account is approved to be opened up, it is possible the funds are not there anymore), he explained.

The International Monetary Fund (IMF) said in November last year that the country’s Bank Secrecy Law should be updated since it is preventing the BSP from effectively supervising the industry. The IMF said the BSP should be granted “unimpaired access to information on all customer accounts” for prudential purposes.


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