10th Oct 2017

bank secrecy

The current banter between President Duterte and Senator Trillianes about bank secrecy waivers has piqued the interest of the public on the matter of bank secrecy.  So, what is bank secrecy? Is it absolute? Are there any exceptions?

 

On 09 September 1955, Republic Act No. 1405, otherwise known as An Act Prohibiting Disclosure of or Inquiry into, Deposits with any Banking Institution (“Bank Secrecy Law”), was approved. This law was enacted to encourage individuals to deposit their money in banks instead of hoarding them.

 

You may ask, why is there a need to protect the secrecy of bank deposits? Technically speaking, the law prefers that money be deposited in banks so they may be properly utilized to assist in the economic development of the country.  However, it is more relevant on a practical matter.  Let’s use you dear reader as an example.  Suppose that you only have P1,000 in your bank account. Surely, you do not want any person (such as your friend, employer or any stranger) to find that out.  Either you do not want others to know that you do not have sufficient money or you simply do not feel comfortable in people prying in your financial affairs.  On the other hand, if you have P100,000,000.00 in your bank account, you also do not want others to find that out for fear that you might be kidnapped, or relatives might borrow from you, or simply, it’s your personal affair. In all these cases, one’s financial status is a private matter. Transactions happening in your bank account are not just empty figures. There are stories affixed to such transactions.  Thus, these financial transactions are akin to your personal activities which should not be easily accessible to anyone.

 

The Bank Secrecy Law protects all deposits of whatever nature in banks or banking institutions in the Philippines as well as investments in government bond.  This law prohibits any person, subject to the exceptions below, from disclosing to any person any information, relative to the funds or properties belonging to the depositors in the custody of the bank. Simply put, no one can just go to your bank and ask for your bank balance.

 

However, the rule is not absolute.  The following are the exceptions to the bank secrecy law:

 

1.  Written permission or consent in writing by the depositor;

2.  In cases of impeachment;

3.  Upon order of the court in cases of bribery or dereliction of duty of public officials;

4.  Upon order of the court in cases where the money deposited or invested is the subject matter of the litigation;

5.  Upon a subpoena issued by the Ombudsman concerning an investigation it is conducting, provided that there must already be a case pending in court, the account be clearly identified, the inspection be limited to the subject matter of the pending case; and the bank personnel and the depositor must be notified to be present during the inspection;

6.  The BIR can inquire into bank deposits in an application for compromise of tax liability or determination of a decedent’s gross estate;

7.  The Anti-Money Laundering Council (“AMLC”) can examine bank accounts pursuant to a court order, where there is probable cause that the deposits are related to an unlawful activity or money laundering offense;

8.  The AMLC can examine bank accounts, WITHOUT a court order, where there is probable cause that the deposits are related to certain crimes such as kidnapping for ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson, murder and violations of RA 6235 (acts inimical to civil aviation);

9.  The Bangko Sentral can examine bank accounts in the course of its periodic or special examination regarding compliance with Anti-Money Laundering Law.

 

As you can see, although there are many exceptions, securing such exceptions is not an easy task.  The easiest way to waive the secrecy of bank deposits is through a written waiver.  Although there is no prescribed form for a waiver, it is necessary that the waiver be made voluntarily, knowingly and with sufficient awareness of relevant circumstances and consequences. Thus, as a matter of practice, banks will require the depositor to state in his waiver the specific bank account, bank branch, name of depositor, period covered by the transactions and the name of the person authorized to access the bank account.

 

How about dollar deposits? Now, foreign currency deposits are governed by a different law, namely Republic Act No. 6426 and has fewer exceptions.  This will be discussed in a separate article.

 

You may be curious if there is any criminal liability for violating the bank secrecy law. Yes, there is criminal liability.  Any person violating this law may be imprisoned for not more than five (5) years, or meted a fine not exceeding P20,000.00 or both.

 

Nicolas & De Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 4706126, +632 4706130, +632 4016392 or e-mail us at info@ndvlaw.com .

 

Related Posts:

Comments are closed.

  • fb
  • twitter
  • twitter