There is one other matter that deserves full government attention and action in the ongoing investigation into the $81-million money laundering scam involving Rizal Commercial Banking Corp. and local casinos: the strict bank secrecy rules that have protected many crooks from criminal prosecution.
At the initial Senate hearing last week, the senators (and the viewing public) were exasperated when RCBC officials repeatedly invoked the Bank Secrecy Law when asked about the circumstances surrounding the laundering of $81 million stolen from the central bank of Bangladesh. “I apologize, your honor, I can’t talk specifically about this case because of the Bank Secrecy [Law]” or “I was advised by counsel, your honor, to refrain from talking about bank accounts and specific transactions. I apologize…” was the common reply of RCBC officials to inquiring legislators.
As early as 11 years ago, the United States criticized the Philippines’ bank secrecy rules as being “among the strictest in the world.” In a series of cables from 2005 to 2008 made public by the whistle-blower website WikiLeaks, former US ambassadors to Manila Francis Ricciardone and Kristie Kenney noted that the bank secrecy laws in the Philippines were “hampering” transparent governance and anticorruption mechanisms, and went against the global trend of financial transparency.
Washington was particularly concerned about the Foreign Currency Deposits Act (FCDA) or Republic Act No. 6426, a Marcos-era legislation that makes the disclosure of foreign currency deposit details unlawful, except upon a written permission of the depositor. The other piece of legislation is the much older Bank Secrecy Law or RA 1405, enacted on Sept. 9, 1955, and which declares all deposits absolutely confidential, with very few exceptions, among them if there is a written consent of the depositor or upon order of a competent court in cases of bribery or dereliction of duty of public officials.
This bank secrecy issue nearly stalled the impeachment proceedings in 2012 against then Chief Justice Renato Corona, whose main defense was his interpretation that he was not required to declare his money worth $2.4 million because of the absolute confidentiality of foreign bank accounts as provided for under the FCDA. In 2005, the Sandiganbayan also resumed efforts to prosecute the former Armed Forces of the Philippines comptroller, Maj. Gen. Carlos Garcia, for plunder and corruption. But strict bank secrecy rules prevented banks from fulfilling the court order to freeze Garcia’s dollar accounts. The AFP official and his wife and three children were charged by the Office of Ombudsman for plunder over their P303-million illegal wealth, but the case dragged on for years and the charges were dismissed in 2013 after Garcia entered into a plea bargain with the Ombudsman.
Investigations of money laundering are being hindered by Philippine banking secrecy laws that limit access to financial information vital to prosecute suspected scalawags. Kenney, in one cable sent to Washington, pointed out that giving suspects a notice of the investigations at an early stage—as the law requires—would provide an opportunity for the destruction of evidence, the concealment of other assets and the obstruction of justice as well as allow the account holder to prevent effective investigation by tying up the proceedings with litigation.
It is not that legislators, or at least some of them, are unaware of the need to relax the Bank Secrecy Law. The role of such bank laws in the Corona trial already moved some members of Congress to call for amendments. Sen. Ralph Recto has filed Senate Resolution No. 711 seeking a review of the FCDA and RA 1405, “to make certain that no one gets hurt or gets special treatment when the claws of these laws start to pounce on [their] object of prey.” In 2010, Sen.
Francis Escudero filed Senate Bill 107 that would require government employees to provide the Office of the Ombudsman with written permission to look into their bank accounts if they are accused of crimes. A counterpart bill was also filed in the House of Representatives to amend the FCDA by revoking the absolute confidentiality of foreign currency deposits in cases involving bribery and dereliction of duty.
“The era of banking secrecy is over,” declared a joint statement issued by the members of the Group of 20 developed countries, or G20, at their 2009 summit in London. That was a good seven years ago. Today, we can only wonder why the Philippines insists on these secrecy laws.
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