Amending R.A. No. 1405 (the Secrecy of Bank Deposits Law)

THE TWENTIETH CONGRESS OF THE RECEIVED ON THE SECRETS PHILIPP REPUBLIC OF THE PHILIPPINES OFFICE DATAN - 7 20262 First Regular Session SENAT TIME: 3:44 pm cs BY: _ BILLS & INDEX S. No.. SEN1E49 Introduced by Senator Raffy T. Tulfo AN ACT PROMOTING TRANSPARENT GOVERNANCE AND INSTITUTING ANTI- CORRUPTION MECHANISMS IN THE OPERATION OF BANKS AND OTHER FINANCIAL INSTITUTIONS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 1405, OTHERWISE KNOWN AS "THE SECRECY OF BANK DEPOSITS LAW EXPLANATORY NOTE The Secrecy of Bank Deposits Law, or Republic Act No. 1405 was signed into law on September 9, 1955. The aforementioned law aims to promote financial stability by ensuring the confidentiality of bank deposits, promoting confidentiality in the country's banking system, and encouraging Filipinos to deposit in banks. In reality, the absolute nature of bank secrecy has also restricted regulators' ability to prevent financial misconduct and efficiently supervise banks. However, the current policy may be used to conceal fraudulent activities, corruption, and other irregular transactions, thereby weakening regulatory oversight and accountability. The financial authorities' inability to access relevant deposit information, even when important for lawful supervision, poses a risk to the integrity and soundness of our country's financial system. The proposed measure lays out safeguards to ensure that information obtained shall be treated with strict confidentiality and used solely for regulatory and supervisory purposes, and penalties shall be imposed for any unauthorized disclosure of such information. It is imperative to have effective financial regulation, hence, this measure aims for government transparency, strengthening anti- corruption mechanisms, and enhancing public trust in the Philippine banking system.

It is for this purpose that the approval of this bill is earnestly sought. RAFFY T. TULFO

THE TWENTIETH CONGRESS OF THE & THE SECRE MA PHILIPP REPUBLIC OF THE PHILIPPINES EE RECEIVED, DATAN - 7 2026 = First Regular Session CS TIME: 3:44 pm BY: _ BILLS & INDEX S. No. S- NO 41649 Introduced by Senator Raffy T. Tulfo AN ACT PROMOTING TRANSPARENT GOVERNANCE AND INSTITUTING ANTI- CORRUPTION MECHANISMS IN THE OPERATION OF BANKS AND OTHER FINANCIAL INSTITUTIONS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 1405, OTHERWISE KNOWN AS "THE SECRECY OF BANK DEPOSITS LAW Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Section 2 of Republic Act No. 1405, otherwise known as "The

2 Secrecy of Bank Deposits Law" is hereby amended to read, as follows: "SECTION 2. All deposits [of whatever nature, with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities,] are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited of invested is the subject matter of the litigation, OR IN CASES WHERE THE INQUIRY OR EXAMINATION IS MADE BY THE BANGKO SENTRAL NG PILIPINAS (BSP), IN THE EXERCISE OF ITS SUPERVISORY POWERS, ON THE DEPOSIT OF THE STOCKHOLDER, OWNER, DIRECTOR, TRUSTEE, OFFICER OR EMPLOYEE OF AN ENTITY THAT IS SUBJECT TO THE SUPERVISION OR REGULATORY

POWER OF THE BSP, THE REPRESENTATIVE OR AGENT, THE RELATED PARTY, OR ANY OF THE CONSPIRATORS, OF THE PERSON INVOLVED, PROVIDED THAT, UPON DETERMINATION BY THE MONETARY BOARD, THERE IS A REASONABLE GROUND TO BELIEVE THAT FRAUD, SERIOUS IRREGULARITY OR UNLAWFUL ACTIVITY HAS BEEN OR IS BEING COMMITTED BY THE ABOVEMENTIONED PERSONS, AND THAT IT IS NECESSARY TO LOOK INTO THE DEPOSIT TO ESTABLISH SUCH FRAUD, SERIOUS IRREGULARITY OR UNLAWFUL ACTIVITY. THE AUTHORITY OF THE BSPTO INQUIRE AND EXAMINE DEPOSITS SHALL ALSO APPLY IN THE COURSE OF ITS INVESTIGATION OF CLOSED BANKS. AS USED IN THIS ACT, DEPOSITS SHALL REFER TO MONEY OR ITS EQUIVALENT RECEIVED BY A BANK IN THE USUAL COURSE OF BUSINESS, AND FOR WHICH IT HAS GIVEN OR IS OBLIGED TO GIVE CREDIT TO A COMMERCIAL, CHECKING, SAVINGS, TIME OR THRIFT ACCOUNT, EVIDENCED BY A PASSBOOK, CERTIFICATE OF DEPOSIT, OR OTHER EVIDENCE OF DEPOSIT, ISSUED IN ACCORDANCE WITH BSPRULES AND REGULATIONS AND OTHER APPLICABLE LAWS, AS WELL AS SUCH OTHER OBLIGATION OF A BANK THAT FORMS PART OF ITS DEPOSIT LIABILITIES PURSUANT TO BSP RULES AND REGULATIONS. THE RESULTS OF THE INQUIRY OR EXAMINATION CONDUCTED BY THE BSPSHALL BE FOR ITS EXCLUSIVE USE AND SHALL NOT BE MADE AVAILABLE TO ANY PERSON OR ENTITY, WHETHER PUBLIC OR PRIVATE, EXCEPT TO THE SECURITIES AND EXCHANGE COMMISSION, PHILIPPINE DEPOSIT INSURANCE CORPORATION, ANTI-MONEY LAUNDERING COUNCIL, DEPARTMENT OF JUSTICE, AND THE COURTS, PROVIDED, THAT THE SHARING OF THE RESULTS OF THE ABOVEMENTIONED

INQUIRY OR EXAMINATION IS NECESSARY TO PREVENT OR PROSECUTE ANY OFFENSE OR CRIME. THE EXEMPTIONS UNDER THIS SECTION SHALL APPLY TO FOREIGN CURRENCY DEPOSITS IN BANKS OPERATING IN THE PHILIPPINES INCLUDING OFF-SHORE BRANCHES OF DOMESTIC BANKS; PROVIDED, THAT THESE EXEMPTIONS SHALL NOT APPLY TO NON-STOCK SAVINGS & LOAN ASSOCIATIONS (NSSLAS) THAT ARE CATERING ONLY TO THEIR MEMBERS.

Sec. 2. Section 3 of the same Act, is hereby amended to read as follows:

"SECTION 3. NO BANK OR FINANCIAL INSTITUTION, OR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES, SHALL BE SUBJECT TO ANY ACTION, CLAIM OR DEMAND IN CONNECTION WITH, AND SHALL BE HELD FREE AND HARMLESS FROM LIABILITY FOR, ANY ACT DONE IN COMPLIANCE WITH AN ORDER FOR INQUIRY OR EXAMINATION OF DEPOSITS FROM THE BSP. HOWEVER, it shall be unlawful for any official or employee, of a banking institution OR THE BSP, to disclose ANY INFORMATION CONCERNING SAID DEPOSITS to any person AND UNDER SUCH CONDITIONS other than those mentioned in Section 2 hereof, [information concerning said deposits]. IT SHALL ALSO BE UNLAWFUL FOR ANY PERSON TO USE THIS ACT FOR PERSECUTION OR HARASSMENT OR AS AN INSTRUMENT TO HAMPER COMPETITION IN TRADE AND COMMERCE.

Sec. 3. Section 5 of the same Act, is hereby amended to read as follows:

SECTION 5. Any violation of this law will subject THE offender upon

conviction, to an imprisonment of not LESS THAN TWO (2) YEARS

NOR more than [five] TEN (10) years or a fine of not LESS THAN FIFTY THOUSAND PESOS (P50,000) NOR more than [twenty thousand] TWO MILLION PESOS (P2,000,000), or both, [in] AT the discretion of the court.

Sec. 4. Separability Clause. - If any provision or section of this Act is held to be

unconstitutional or invalid, the other provisions or sections hereof, which are not affected thereby shall continue to be in full force and effect.

Sec. 5. Repealing Clause.

a. Sections 2, 3 and 5 of Republic Act No. 1405, as amended, also known as the "Secrecy of Bank Deposits Act", are hereby amended; b. b. Sections 8 and 12-A of Republic Act No. 6426, as amended, also known as the "Foreign Currency Deposit Act of the Philippines," with respect to foreign currency deposits, are hereby amended; C. Section 33 of Republic Act No. 6848, also known as the "Charter of the Al- Amanah Islamic Investment Bank of the Philippines", is hereby amended; d. Section 26(a)(2) of Republic Act No. 7353, also known as the Rural Banks Act of 1992, is hereby amended; and e. Section 21(a)(2) of Republic Act No. 7906, also known as the Thrift Banks Act of 1995, is hereby amended. All other Acts or parts of Acts, Special Charters, Executive Order, Rules and Regulations, which are inconsistent with the provisions of this Act, are hereby repealed.

Sec. 6. Effectivity. - This Act shall take effect fifteen (15) days following its

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