Corruption and the bank secrecy law

On Sept. 9, 1955, Republic Act No. 1405, otherwise known as An Act Prohibiting Disclosure of or Inquiry into Deposits with any Banking Institution (or the bank secrecy law), was approved. This law was enacted to encourage individuals to deposit their money in banks instead of hoarding them.

Being a private matter, transactions happening in your bank account are not just empty figures. There are stories affixed to such transactions. Thus, these financial transactions are akin to your personal activities which, as the law provides, should not be easily accessible to anyone.

The bank secrecy law thus protects all deposits of whatever nature in banking institutions in the Philippines, including investments in government bonds. The law prohibits any person, subject to certain exceptions, from disclosing to any person any information relating to the funds, assets, or properties belonging to depositors. Put simply, no one can go to your bank and ask for your bank balance.

While there are many exceptions, securing them is not an easy task. The easiest way is to waive the secrecy in writing, made voluntarily, knowingly and with sufficient awareness of relevant circumstances and consequences. And, as a matter of practice, banks will require the depositor to state in his waiver the specific bank account, bank branch, name of depositor, period covered by the transactions, and the name of the person authorized to access the bank account.

Imagine then how difficult it is to go after politicians, government officials, and rent-seekers suspected or accused of corruption without money trail.

On July 6, 2014, Rappler reported on the top 10 cases in the anti-graft court, involving a total of P9.4 billion; most of the cases were either dismissed or remained pending at the time. The P4.098-billion plunder case versus former president Joseph Estrada topped the list of these Sandiganbayan cases. We can only wonder how much the amounts involved in graft cases before the Sandiganbayan have now ballooned.

The recent Senate hearings on the PhilHeath and Department of Health corruption allegations will likely end the same way as many other similar investigations “in aid of legislation” had ended—with suspected perpetrators getting off scot-free with the people’s money.

The Philippines is among the only three countries in the world (Lebanon and North Korea the other two) that maintain the secrecy of bank deposits. That’s according to then Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr., who disclosed the information on Sept. 5, 2016, during a joint hearing of the committee on banks and the committee on ways and means. When asked if the BSP would support a repeal of the bank secrecy law, Tetangco replied: “Our main concern, Mr. Chairman, with respect to the bank secrecy law, is in terms of being able to ensure that existing regulations are being complied with. That’s number one. And number two, to provide some form of deterrent for possible fraud, unlawful activity, or irregularity…”

Why is it that up to now, the Senate and the House of Representatives keep missing the point that the best legislation to aid all their investigations into corruption in government is to repeal the bank secrecy law?

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Norman Cabrera is a member of the National Council of the Kapatiran Party.