HB 2403 strengthens BSP, PDIC

A bill has been filed at the House of Representatives increasing examination powers of the monetary authorities.

House Bill (HB) 2403 allows the Bangko Sentral ng Pilipinas (BSP), the Philippine Deposit Insurance Corp. (PDIC) and the Bureau of Internal Revenue (BIR) to look into bank deposits "for supervisory and tax audit purposes."

The recent closure of First Savings Bank demonstrate the need to increase monitoring and regulatory functions without fear of legal reprisals in a country known for an "interfering" legal system. The bill thus proposes amendments to the 50-year-old Bank Deposit Secrecy Act.

Rep. Herminio Teves of Negros Oriental said that the absolute secrecy of bank deposits has abetted unsound banking practices, which have led to the collapse of banks and the financial ruin of depositors.

"In a recent survey of 20 countries, it was found that the Philippines is the only country that has an obsolete law that bars regulators from examining deposit records and determining the actual financial condition of banks," Teves said in a press statement.

That is one of the key reasons why the powerful Financial Advisory Task Force (FATF) prefers not to de-list the Philippines in its watchlist.

The only time regulators could investigate bank deposits is a) when the depositor issues a written permission, b) in cases of impeachment, c) when there is a court order in cases of bribery or dereliction of duty of public officials, and d) when the deposit is the subject of a lawsuit.