EDITORIAL - Secret bank deposits

Congressmen stress that the ongoing inquiry being conducted by four committees of the House of Representatives is in aid of legislation. One such measure that the quad comm can recommend to the House plenary is the lifting or at least easing of bank secrecy laws. Whether the plenary will go along with such a recommendation, or whether the quad comm will even propose it, will test the commitment of the chamber to transparency in government.

The issue of bank secrecy was once again put in the spotlight when former senator Antonio Trillanes revived his allegations of corruption against Rodrigo Duterte, citing bank transactions supposedly showing huge amounts funneled into Duterte’s bank account by contributors to his 2016 campaign for the presidency, including suspected drug traffickers.

The Bangko Sentral ng Pilipinas itself has been pushing for the easing of bank secrecy laws to allow it to undertake effective supervision. The BSP notes that the Philippines is “the only country to still have restrictive banking laws, making it hard for the government to go after tax evaders and money launderers.” It points out that as early as 2011, the Group of 20 had declared that the era of bank secrecy is over in endorsing global standards of transparency and exchange of information.

In 2014, the Organization for Economic Cooperation and Development released new global standards for automatic exchange of detailed information from financial institutions, along with the automatic exchange of that information among jurisdictions, as part of efforts to combat tax evasion, money laundering and other crimes. The BSP noted that the International Monetary Fund has said the secrecy of bank deposits in the Philippines “undermines financial stability, financial integrity and development of the banking sector, and exposes the banking system to reputational risk.”

Republic Act 1405, the Law on Secrecy of Bank Deposits, was enacted way back in September 1955. Those were the post-war years when the country wanted to encourage the public to deposit their money in banks so the country could generate enough capital and credit facilities for rebuilding. RA 1405 was reinforced by the Foreign Currency Deposit Act that was passed on April 4, 1972.

Bank secrecy can be lifted under certain circumstances, which include a waiver by the depositor, in cases of impeachment, by order of the court or the Office of the Ombudsman in cases of unexplained wealth and corruption.

The BSP, however, has been pushing for global standards in banking transparency. The revival of the accusations against Duterte should prompt lawmakers to consider the BSP’s appeal. Failure to do so would indicate that all the talk about the need for transparency is just lip service, invoked mainly against political foes.