Banking Reform for Integrity, Good Governance, Honesty, and Trasparency (Bright) Act

Senate Office of the fbertetary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 OCT -1 P1:09 First Regular Session ) RECEIVED BY: SENATE Senate Bill No. 1433 Introduced by Senator JOEL VILLANUEVA AN ACT EXPANDING THE SCOPE OF DISCLOSURE OF BANK AND FINANCIAL DEPOSITS, REPEALING FOR THE PURPOSE PERTINENT LAWS ON SECRECY OF DEPOSITS EXPLANATORY NOTE For over six decades, the Philippines has maintained one of the most restrictive bank secrecy regimes in the world. While these laws were originally enacted to protect depositor privacy and encourage confidence in the banking system, they have since become a significant obstacle to transparency, good governance, and effective financial regulation. These outdated laws have been widely exploited to conceal illicit wealth and to shield individuals involved in money laundering, tax evasion, and corruption. As a result, authorities are often unable to effectively trace financial crimes or recover ill-gotten assets. Despite strong global momentum toward transparency-beginning with the G20's 2009 declaration that "the era of bank secrecy is over," and further reinforced by the OECD's 2014 standards on the automatic exchange of financial information— the Philippines remains the only country with banking secrecy laws that continue to severely restrict legitimate access to financial data.? This legal gap has drawn criticism from international bodies and placed the Philippines at risk of reputational damage, especially in its ongoing engagement with the Financial Action Task Force (FATF). 1 Global Forum on Transparency and Exchange of Information for Tax Purposes, Transparency and Exchange of Information for Tax Purposes-Multilateral the World, Available at https://www.oecd.org/contentjdam/oecd/en/networks/global-forum-tax-transparency/global-forum-10-years- report.pdf (Accessed on 30 September 2025). 2 Organisation for Economic Co-operation and Development, Available at https://www.oecd.org/en.html (Accessed on 30 September 2025).

The Department of Finance has pointed out that this outdated policy contributes to hundreds of billions of pesos in uncollected taxes each year, weakening the government's ability to fund essential public services. 3 The International Monetary Fund has likewise emphasized that restrictive bank secrecy laws undermine financial integrity and regulatory oversight, urging legislative reform to allow competent authorities, particularly the Bangko Sentral ng Pilipinas, direct access to depositor information for supervisory and enforcement purposes. The proposed Banking Reform for Integrity, Good Governance, Honesty, and Transparency (BRIGHT) Act seeks to repeal or amend antiquated provisions under Republic Act No. 1405, or the Secrecy of Bank Deposits Law, and other related statutes. It aims to permit the disclosure and examination of bank deposits under clearly defined conditions and legitimate purposes. These include investigations conducted by the Office of the Ombudsman, the courts, or Congress; inquiries related to violations of anti-graft and anti-corruption laws; lawful access by financial regulators and tax authorities in the performance of their mandates; and requests related to the accounts of deceased depositors. The bill also provides for a centralized verification mechanism through the Bangko Sentral ng Pilipinas, ensuring that such disclosures are strictly regulated, justified, and consistent with the Data Privacy Act. To prevent misuse, the bill imposes clear penalties on individuals or institutions that abuse the authority to access deposit information, as well as those who unjustifiably refuse to disclose it when required by law. This measure is carefully crafted to balance the right to financial privacy with the broader public interest in accountability, transparency, and the rule of law. Ultimately, the BRIGHT Act aligns Philippine law with international standards, helps safeguard national revenue, strengthens anti-corruption efforts, and promotes a fairer, more transparent financial system. It is a long-overdue reform that will reinforce public trust in our institutions and support the country's sustainable economic development. In view of the foregoing, the immediate passage of this bill is earnestly sought. JOEL, VILLANUEVA@ 3 Manila Bulletin, DOF estimates P668-B tax losses due to bank secrecy, Published on 03 May 2017, Available at https://business.mb.com.ph/2017/0S/03/dof-estimates-p668-b-tax-losses-due-tobank-secrecy/ (Accessed on 30 September 2025).

Senate Office of the fortretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 OCT -1 P1:09 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1433 Introduced by Senator JOEL VILLANUEVA AN ACT EXPANDING THE SCOPE OF DISCLOSURE OF BANK AND FINANCIAL DEPOSITS, REPEALING FOR THE PURPOSE PERTINENT LAWS ON SECRECY OF DEPOSITS Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Banking Reform

for Integrity, Good Governance, Honesty, and Transparency (BRIGHT) Act ".

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the

4 State to effectively combat domestic and international tax evasion, money laundering, graft and corrupt practices in the government sector, and other financial crimes. The State also seeks to promote good governance, strengthen public accountability, and uphold the highest standards of integrity in public service. Furthermore, it is the policy of the State to foster harmonious and cooperative international relations, and to align with globally recognized standards on financial transparency and regulatory compliance. The State also recognizes the fundamental human right to privacy of communication and commits to safeguarding this right while ensuring the free and secure flow of information that promotes innovation, inclusive growth, and responsible data use.

SEC. 3. Non-confidentiality of Deposits. - All deposits of whatever

2 nature of currency denomination with banks and non-banking financial institutions in the Philippines are hereby no longer considered as absolutely confidential in nature and can now be examined, inquired, or looked into under the following legitimate purposes, subject to, if applicable, Section 4 of this Act: 6 a) The depositor is an elective or appointive official or employee of the Republic of the Philippines, whether in the executive, legislative, or judiciary, including the officers and members of the Armed Forces of the Philippines, the Philippine National Police, and all members of the uniformed services and officers, and employees of the government owned and controlled corporations and their subsidiaries who are under criminal proceeding before any court involving acts or omissions in violation of (1) Republic Act ("RA") No. 3019, and/or (2) Act No. 3815, as amended, or the Revised Penal Code, Book 2, Title VII, Chapters II to IV, without a need of a court order; b) Investigations or inquiry by the Office of the Ombudsman, or pursuant to or in relation to its Constitutional and/or statutory mandate; 17 C) Upon order of a competent court in relation to a case pending before it; d) Investigations by the Senate, the House of Representatives, or any of its Committees, in the course of, or pursuant to, the exercise of its Constitutional and/or statutory mandate; e) Investigations necessary in the exercise of its mandates by any government agency or financial regulator, including, but not limited to, the Anti-Money Laundering Council ("AMLC"), Bureau of Internal Revenue ("BIR"), Bangko Sentral ng Pilipinas ("BSP"), Securities and Exchange Commission ("SEC"), Philippine Deposit Insurance Corporation ("PDIC"), and Insurance Commission ("IC"); f) Inquiries by independent auditors or a qualified agent engaged by the bank to provide independent audit or technical services subject to a strict confidentiality agreement; Inquiries on the account/s of a deceased depositor by his/her immediate family members or compulsory heirs. Further, any examination or inquiry and any result thereof shall be for the exclusive use of the requesting body and

shall not be made available to any person or entity, whether public or private, except upon prescription by the persons enumerated under Section 4 of this Act, as the case may be. Furthermore, no court shall issue a temporary restraining order or writ or injunction against any act to examine, inquire, or look into bank deposits except upon order issued by the Court of Appeals or the Supreme Court; and 7 h) Upon written permission or waiver of the depositor, if the person or entity does not fall under the abovementioned enumeration.

SEC. 4. Authority to Issue Order. - In cases where the deposit shall be

examined, inquired, or looked into, the authority to issue the Order requiring such examination or inquiry shall be limited to the following persons: a) In the case of Section 3 (b) of this Act, the Ombudsman; b) In the case of Section 3 (c) of this Act, the Regional Trial Courts, the Court of Tax Appeals, the Court of Appeals, the Sandiganbayan or the Supreme Court as the case maybe 16 c) In the case of Section 3 (d) of this Act, the Senate President of the Speaker of the House of Representatives, as the case may be; or 18 d) In the case of Section 3 (e) of this Act, the head of the government agency or financial regulator concerned, provided that if the government agency or financial regulator has a governing board or council, consent of the latter shall also be required.

SEC. 5. Clearing House and Authentication of Order. - The BSP shall

act as the clearing house of any order issued pursuant to Section 4 hereof. It shall ensure that the Order is authentic and for a legitimate purpose and is not violative of RA No. 10173 or the Data Privacy Act of 2012.

SEC. 6. Mandatory Disclosures. - Pursuant to the provisions of this Act,

the bank or non-bank financial institution concerned, their officers, and employees are mandated to disclose and report the requested deposit account information; the bank or financial institution concerned, their officers, and employees shall not refuse to allow such examination or to provide the desired information.

SEC. 7. Right to Privacy. - Inquiry, examination, disclosure or use of

2 deposits shall, at all times, be for a legitimate purpose pursuant to Section 3 and in relation to Sections 4 and 5 of this Act and shall not be used in any manner to harass, threaten, or violate the right to privacy of any person.

SEC. 8. Penalty Clause. - Any abuse on the initiation, conduct, or use of

6 any inquiry or examination of accounts or the refusal to disclose or report deposits as required pursuant to the provisions of this Act without justifiable reason shall, upon conviction and without prejudice to other liabilities provided by law, suffer the penalty of imprisonment of at least three (3) years or a fine of at least Five 10 Hundred Thousand Pesos (P500,000.00) or both, upon the discretion of the court. In the case of government officials or employees, the penalty of perpetual absolute disqualification to hold public office shall be likewise imposed.

SEC. 5. Implementing Rules and Regulations. - Within sixty (60) days

from the effectivity of this Act, the BSP shall, in consultation with the Department of Justice and other concerned financial regulators, promulgate the necessary implementing rules and regulations for the effective and efficient enforcement of this Act: Provided, That the implementing rules and regulations shall take effect fifteen (15) days following its publication in two (2) newspapers of general circulation. Failure of the relevant government agencies to promulgate the IRR within the specified period shall subject the heads of these government agencies to administrative penalties under applicable civil service laws. Should the IRR contain provisions that are contrary to this Act, the heads of the government agencies responsible for such provision, when done in bad faith or with gross negligence, shall be held administratively liable.

SEC. 10. Separability Clause. - If any portion or provision of this Act is

declared unconstitutional, the remainder hereof or any provisions not affected thereby shall remain in force and effect.

SEC. 11. Repealing Clause. - The following provisions of the law insofar

as they relate to deposits are hereby repealed: a) RA No. 1405, as amended, or the Secrecy of Bank Deposits Act;

1 b) Sections 8 and 12-A of RA No. 6426, as amended, or the Foreign Currency 2 Deposit Act of the Philippines, with respect to foreign currency deposits; 3 C) Section 6 of RA No. 8367, or the Revised Non-Stock Savings and Loan 4 Association Act of 1997, with respect to all deposits of whatever nature with a Non-Stock Savings and Loan Association as provided under RA No. 8367; 6 d) Section 33 of RA No. 6848, or the Charter of the Al Amanah Islamic 7 Investment Bank of the Philippines, with respect to banking transactions relating 8 to all deposits of whatever nature as provided under RA No. 6848; 9 e) Section SS(b) of RA No. 8791, or the General Banking Law of 2000; 10 f) Section 26(a)(2) of RA No. 7353, or the Rural Banks Act of 1992; g)

Section 2l(a)(2) of RA No. 7906, or the Thrift Banks Act of 1995;

h)

Section 22 of Executive Order No. 81, or the 1986 Revised Charter of the

Development Bank of the Philippines with respect to banking transactions relating to all deposits of whatever nature; and i) Section 11 of RA No. 9160, as amended, or the Anti- Money Laundering Act of 2001, as amended, in so far as it requires an order of any competent court 17 before the AMLC can inquire into bank deposits, including related accounts, with 18 any banking institution or non-bank financial institution. Any law, presidential decree or issuance, executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 12. Effectivity. - This Act shall take effect fifteen (15) days after its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,