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

Sellate Office of the eroretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES JAN 28 P 3:57 First Regular Session SENATE RECEIVED BY. S.B. No. 1728 (In substitution of S.B. Nos. 38, 150, 232, 286, 397, 1047, 1364, 1433, and 1649, taking into consideration H.B. No. 6707) Prepared by the Committee on Banks, Financial Institutions and Currencies joint with the Committee on Justice and Human Rights, with Senators Lacson, Zubiri, Escudero, Pangilinan, Estrada, Tulfo (E.), Villanueva, and Tulfo (R.) as authors thereof AN ACT EXPANDING THE SCOPE OF DISCLOSURE OF BANK AND FINANCIAL DEPOSITS, REPEALING FOR THE PURPOSE PERTINENT PROVISIONS OF LAWS GOVERNING THE 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

2 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 6 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 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. Definition of Deposits. - As used in this Act, deposits shall refer

to money or its equivalent received by a bank or a non-banking financial institution 5 in the usual course of business, and for which it has given or is obliged to give 6 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 the Bangko Sentral ng Pilipinas (BSP) rules and regulations, other relevant 9 and applicable laws, as well as other obligations of a bank that forms part of its 10 deposit liabilities pursuant to BSP rules and regulations.

SEC. 4. Confidentiality of Deposits; Exceptions. - All deposits of

whatever nature or currency denomination with banks and non-banking financial institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, shall be confidential and may not be examined, inquired, or looked into, except for the following legitimate purposes and subject to, if applicable, Section 5 of this Act: 18 a) Without need of a court order, when the depositor is an elective or appointive official or employee of the Republic of the Philippines, permanent or temporary, whether in the career or non-career service, whether or not they receive compensation, regardless of amount, 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 government owned and controlled corporations and their subsidiaries, who is under criminal proceeding before any court involving acts or omissions in violation of (i) Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, and/or (ii) Act No. 3815, as amended, otherwise known as the Revised Penal Code, particularly Book 2, Title VII, Chapters II to IV; b) Investigations or inquiries by the Office of the Ombudsman, or pursuant to, or in relation with, its constitutional and/or statutory mandate; c) •Upon order of a competent court in relation to a case pending before it;

1 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, including investigations conducted in aid of legislation and proceedings related to impeachment; e) Supervisory examinations or inquiries conducted by the BSP, in the exercise of its mandate under Republic Act No. 7653, or the New Central Bank Act, as amended, 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: Provided, That upon the determination by the Monetary Board, there is 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, irregularity or unlawful activity. The authority of the BSP to inquire and examine deposits shall also apply in the course of its investigation of closed banks; f) Investigations necessary in the exercise of its mandates by the following government agencies or financial regulators: (i) Anti-Money Laundering Council (AMLC) with regard to the investigation of acts or omissions which may constitute as predicate crimes under Republic Act No. 9160, otherwise known as the Anti-Money Laundering Act, as amended, and relevant laws and regulations, (ii) Bureau of Internal Revenue (BIR), (iii) Securities and Exchange Commission (SEC), (iv) Philippine Deposit Insurance Corporation (PDIC), and (v) Insurance Commission (IC); g) Inquiries by an independent auditor or a qualified agent engaged by a 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; or Upon written permission or waiver of the depositor, if the person or entity does not fall under the abovementioned enumeration.

Any examination or inquiry and any result thereof shall be for the exclusive use of the requesting government agency or financial regulator and shall not be made available to any person or entity, whether public or private, except to those entities mentioned in Sections 4(b), 4(d), 4(e), and 4(f) hereof, as the case may 5 be, and under such conditions as may be prescribed by the said government 6 agency or financial regulator in compliance with the provisions of this Act. 7 Furthermore, no court shall issue a temporary restraining order or writ of injunction 8 against any act to examine, inquire, or look into bank deposits except upon an 9 order issued by the Court of Appeals or the Supreme Court.

SEC. 5. Authority to Issue Order. - In cases where a 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 4(b) of this Act, the Ombudsman; b) In the case of Section 4(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; c) In the case of Section 4(d) of this Act, the Office of the Senate President or the Office of the Speaker of the House of Representatives, as the case may be; In the case of Section 4(e) of this Act, the Governor of the BSP; or e) In the case of Section 4(f) 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. 6. Clearing House and Authentication of Order. - The

government agencies or financial regulators mentioned in Sections 4(e) and 4(f) hereof shall establish or designate a department, unit, or office, as the case may be, which shall act as a clearing house of any order issued pursuant to Section 5(d) or 5(e) hereof. The said department, unit, or office shall ensure that the order is authentic, for a legitimate purpose, and not violative of Republic Act No. 10173, or the Data Privacy Act of 2012.

SEC. 7. 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; and the bank or non-bank financial institution concerned, their officers, and employees shall not refuse to allow such examination or provide the desired information. No bank or non-bank financial institution, or any of its directors, trustees, 8 officers, or employees, shall be subject to any action, claim, or demand in 9 connection with, and shall be held free and harmless from liability for, any act 10 done in compliance with an order for investigation, inquiry, or examination of 11 deposits in accordance with the provisions of this Act.

SEC. 8. Right to Privacy. - Any inquiry, examination, disclosure or use of

13 deposits shall, at all times, be for a legitimate purpose pursuant to Section 4 and 14 in relation to Sections 5, 6 and 7 of this Act and shall not be used in any manner to harass, threaten, or violate the right to privacy of any person.

SEC. 9. Penalties. - Any person who (a) initiates, conducts, or uses any

inquiry, investigation, or examination of accounts (i) without legitimate purpose, 18 (ii) for political persecution; (iii) for harassment, or (iv) to hamper competition in trade and commerce; (b) refuses to disclose or report deposits as required pursuant to the provisions of this Act without justifiable reason; or (c) unlawfully discloses, divulges, or makes known to any unauthorized person any information or detail regarding a deposit, account, or related financial transaction, in violation 23 of the confidentiality provisions of this Act, shall, upon conviction and without prejudice to other liabilities provided by applicable laws, be punished by a penalty of imprisonment of not less than five (5) years but not more than ten (10) years, or a fine of not less than Five Hundred Thousand Pesos (P500,000.00) but not more than Two Million Pesos (P2,000,000.00), or both, upon the discretion of the court. If the offender is a government official or employee, the penalty of perpetual absolute disqualification to hold appointive or elective public office shall likewise be imposed.

When an offender is a juridical person, the directors, officers, employees, or personnel of the juridical person who directly participated in, authorized, consented to, or tolerated the commission of the violation (the "responsible officers") shall be jointly and severally liable with the juridical person and shall suffer the corresponding penalties prescribed under this Act. The liability imposed on the juridical person shall be without prejudice to the criminal liability of the responsible officer who committed the prohibited acts or other offenses under this 8 Act.

SEC. 10. Administrative Sanctions. - Without prejudice to the criminal

liabilities prescribed under this Act, the administrative sanctions specified in Republic Act No. 7653, as amended, shall be imposed upon the offending bank or non-bank financial institution, its directors, officers, trustees, employees, or agents, for violation of this Act or any related rules, regulations, orders, or instructions of the BSP.

SEC. 11. Implementing Rules and Regulations. - Within one hundred

eighty (180) days from the effectivity of this Act, the government agencies and financial regulators under Sections 4(e) and 4(f) shall, in consultation with the Department of Justice, other concerned financial regulators, and relevant stakeholders, promulgate the necessary implementing rules and regulations ("IRR") for the effective and efficient enforcement of this Act. Unjustified or willful failure or refusal 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 under applicable laws.

SEC. 12. Separability Clause. - If any provision of this Act is declared

unconstitutional, the remainder thereof not otherwise affected shall remain in full force and effect.

SEC. 13. Repealing Clause. - The following provisions of law insofar as

5 they relate to deposits are hereby repealed: a) Republic Act No. 1405, as amended, or the Secrecy of Bank Deposits Act; b) Section 12-A of Republic Act No. 6426, as amended, or the Foreign Currency Deposit Act of the Philippines; C)

Section 6 of Republic Act No. 8367, or the Revised Non-Stock Savings and

Loan Association Act of 1997, with respect to all deposits of whatever nature with a Non-Stock Savings and Loan Association as provided under Republic Act No. 8367;

Section 33 of Republic Act No. 6848, or the Charter of the Al Amanah ISlamic

Investment Bank of the Philippines, with respect to banking transactions relating to all deposits of whatever nature as provided under Republic Act No. 6848; e)

Section 55.1(b) of Republic Act No. 8791, or the General Banking Law of

2000; f)

Section 26(a)(2) of Republic Act No. 7353, or the Rural Banks Act of 1992;

g)

Section 21(a)(2) of Republic Act 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 Republic Act No. 9160, as amended, in so far as it requires an

order of any competent court before the AMLC can inquire into bank deposits, including related accounts, with any banking institution or non-bank financial institution. All other laws, presidential decrees or issuances, executive orders, letter of instructions, and rules or regulations inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 14. Effectivity. - This Act shall take effect after fifteen (15) days

2 following its publication in the Official Gazette or in a newspaper of general circulation. Approved,