Osmeña: Bank secrecy law needs to be reviewed

MANILA, Philippines - Sen. Sergio Osmeña III sees the need to review the country’s outdated bank secrecy law to empower government agents to catch tax evaders even if he believes that the Philippines has the strongest bank secrecy law in the world.

“I want it passed at the House first, because if we will pass it here and then nothing at the House (of Representatives)… you know there are only 24 senators here and there are 288 congressmen, they are more than 10 times (in number compared to the Senate) they have more time to pass the bills,” Osmeña said.

The chairman of the Senate committee on banks, financial institutions and currencies said he is in favor of the recommendation of  Internal Revenue Commissioner Kim Henares to ease up restrictions on the bank secrecy law.

The Philippines’s bank secrecy law has been enacted in 1955, Osmena noted.

Amid fears that there lifting of the bank secrecy law restrictions might cause instability in the banking system, Osmeña recalled that there was a massive outcry at the height of the impeachment trial of ousted chief justice Renato Corona in 2012.

Corona was then facing impeachment from office for failure to include his foreign currency accounts in his Statement of Assets, Net Worth and Liabilities (SALN).

“Remember during the Corona trial, there was an outcry to remove the bank secrecy law? I had two whole boxes on bank secrecy, including the hearings we conducted. Pero alam kong walang mangyayari, at wala ngang nangyari,” he said.

The senator said there is a need to ease up the restriction because government agencies such as the Bureau of Internal Revenue (BIR) cannot catch tax evaders.

Earlier, Sen. Sonny Angara said he also supports the BIR recommendation but added that lawmakers have to study the pros and cons of whatever action will be taken by Congress.

Angara believes Henares “is correct that the trend is towards an easing of restrictions.”

However, Senators Francis Escudero, Vicente Sotto III, Grace Poe and Nancy Binay have expressed apprehension over immediately lifting the restrictions under the Bank Secrecy Law for tax purposes. They agreed the need to study the matter further to ensure that such will not be abused by the government and that the banking industry will not be adversely affected.

Osmeña said he would wait for the House of Representatives to pass the measure first before acting it at the Senate.

“I am in favor of lifting it... In the first amendment to the AMLA (Anti-Money Laundering Act) in 2003, it was one of the predicate crimes… and one of the conditions is the (lifting of the) bank secrecy law,” Osmena said, referring to AMLA amendments.

He said there are certain limits to the Bank Secrecy Law all over the world. 

“There is a Bank Secrecy Law in the United States. Believe me, the BIR or the IRS (Internal Revenue Service) in the U.S. can open your bank account without you knowing it,” the senator said.

In the United States, he said government agents can go to a judge to seek permission to look into bank accounts without notifying the bank holders, unlike in the Philippines.

“They have to go to a judge, and the judge will say, What’s your reason for opening the bank account of so and so? And you say, because he got a Ferrari and he is only earning $2,000/month?  Okay, ‘open it’,” he said, citing for example a lifestyle check on individuals in the U.S.

“You see, in our country, when you say I am violating the law, you have to prove it. When you say, I am evadingg taxes, you have to prove it.  In America, it’s the other way around. When you say that you are evading taxes, I have to prove that I earned it and how I earned it,” Osmena said.