Banking Laws - Secrecy of Deposits (RA 1405)
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Questions and Answers

The main purpose of the Secrecy of Bank Deposits Law is to encourage individuals to hoard their money rather than deposit it in banks.

False (B)

Any person, including government officials, is allowed to examine bank deposits without any restrictions.

False (B)

Trust accounts are included under the deposits covered by the Secrecy of Bank Deposits Law.

True (A)

A subpoena from the Ombudsman grants access to bank accounts without needing further justification.

<p>True (A)</p> Signup and view all the answers

A depositor must give written permission for their bank deposits to be disclosed under any circumstances.

<p>False (B)</p> Signup and view all the answers

The law allows for bank deposit examination in cases of bribery or dereliction of duty of public officials.

<p>True (A)</p> Signup and view all the answers

Investments in government bonds are exempt from the provisions of the Secrecy of Bank Deposits Law.

<p>False (B)</p> Signup and view all the answers

The AMLC can investigate bank accounts based on probable cause of money laundering without a court order.

<p>True (A)</p> Signup and view all the answers

PDIC is liable for all insured deposits once a bank is closed.

<p>False (B)</p> Signup and view all the answers

The period for PDIC to settle a claim is 12 months from the filing date.

<p>False (B)</p> Signup and view all the answers

Depositors retain claims for any portion of their deposits that are uninsured, even after having their insured deposits paid.

<p>True (A)</p> Signup and view all the answers

PDIC's payment of insured deposits is treated as a preferred credit similar to taxes due to the National Government.

<p>True (A)</p> Signup and view all the answers

PDIC may withhold payment of insured deposits if a depositor has outstanding liabilities to the closed bank.

<p>True (A)</p> Signup and view all the answers

Robbery committed in an uninhabited place cannot be classified as robbery under RPC.

<p>False (B)</p> Signup and view all the answers

A depositor will receive cash payments exclusively as a mode of payment from PDIC.

<p>False (B)</p> Signup and view all the answers

After PDIC pays an insured deposit, it does not have any rights to recover dividends from a closed bank.

<p>False (B)</p> Signup and view all the answers

Qualified Theft under Article 310 only applies if the property stolen is a vehicle.

<p>False (B)</p> Signup and view all the answers

The act of plunder is covered under RA 7080.

<p>True (A)</p> Signup and view all the answers

PDIC's involvement in liquidation proceedings grants it preference in payment distribution.

<p>True (A)</p> Signup and view all the answers

Aiding and abetting pirates is not considered a crime under the RPC.

<p>False (B)</p> Signup and view all the answers

Failure to settle a claim for insured deposit within 6 months can lead to imprisonment from 6 months to one year for responsible personnel.

<p>True (A)</p> Signup and view all the answers

The Truth in Lending Act aims to increase the rates of credit to protect the national economy.

<p>False (B)</p> Signup and view all the answers

Swindling, or Estafa, is addressed under Article 315 of the RPC.

<p>True (A)</p> Signup and view all the answers

Terrorism financing is addressed in Republic Act No. 10168.

<p>True (A)</p> Signup and view all the answers

Under BSP Circular No. 755, the objective of transparent pricing is to limit the rates charged by credit providers.

<p>False (B)</p> Signup and view all the answers

The Electronic Commerce Act (RA 8792) does not include provisions for unlawful activities.

<p>False (B)</p> Signup and view all the answers

Any creditor must provide a written statement detailing the finance charge before the transaction is consummated.

<p>True (A)</p> Signup and view all the answers

Destructive arson is a crime under RPC but not linked to murder.

<p>False (B)</p> Signup and view all the answers

The cash price or delivered price of a good does not need to be disclosed by the creditor prior to the credit extension.

<p>False (B)</p> Signup and view all the answers

Charges that are not incident to the extension of credit must be itemized for the consumer.

<p>True (A)</p> Signup and view all the answers

The total amount to be financed includes the down payment and any trade-in value.

<p>False (B)</p> Signup and view all the answers

Bad faith on the part of PDIC personnel can result in longer imprisonment than 1 year for handling insured deposit claims.

<p>False (B)</p> Signup and view all the answers

A transaction that deviates from the client's past profile can be deemed suspicious.

<p>True (A)</p> Signup and view all the answers

The Anti-Money Laundering Council can issue orders to determine the identity of any monetary instrument involved in a covered transaction.

<p>True (A)</p> Signup and view all the answers

If a transaction is both covered and suspicious, it should only be reported as a covered transaction.

<p>False (B)</p> Signup and view all the answers

The membership of the Anti-Money Laundering Council includes the Chairman of the National Bureau of Investigation.

<p>False (B)</p> Signup and view all the answers

The AMLC can initiate investigations based on its own determination of suspicious transactions.

<p>True (A)</p> Signup and view all the answers

Communicating the fact of a covered or suspicious transaction report is allowed under bank secrecy laws.

<p>False (B)</p> Signup and view all the answers

The AMLC is responsible for conducting civil forfeiture proceedings related to money laundering.

<p>True (A)</p> Signup and view all the answers

The functions of the AMLC do not include requiring covered transaction reports from institutions.

<p>False (B)</p> Signup and view all the answers

A jewelry dealer is considered a covered institution if their trading volume exceeds P5,000,000.

<p>True (A)</p> Signup and view all the answers

A covered person is obligated to keep records for a duration of 6 years.

<p>False (B)</p> Signup and view all the answers

The AMLC requires covered and suspicious transactions to be reported within 5 working days.

<p>False (B)</p> Signup and view all the answers

Legal professionals are required to report covered transactions regardless of professional secrecy.

<p>False (B)</p> Signup and view all the answers

A suspicious transaction can simultaneously be classified as a covered transaction.

<p>True (A)</p> Signup and view all the answers

The jurisdiction for money laundering cases is entirely under the supervision of the Court of Tax Appeals.

<p>False (B)</p> Signup and view all the answers

AMLC can assign a reporting period longer than 10 working days for suspicious transactions.

<p>False (B)</p> Signup and view all the answers

A jewelry dealer trading less than P10,000,000 is defined as a covered institution.

<p>False (B)</p> Signup and view all the answers

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Flashcards

PDIC's Role in Deposit Insurance

The PDIC is responsible for ensuring that depositors in closed banks receive their insured deposits.

PDIC's Discharge of Liability

The PDIC releases itself from any liability on the insured deposit.

Depositors' Rights to Uninsured Deposits

Depositors have the right to claim their uninsured deposits, even after receiving insured deposits.

Subrogation of Rights

PDIC gains the right to collect any debts owed to the closed bank by the depositor (up to the amount of the insured deposit paid).

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Withholding of Insured Deposits

PDIC can withhold insured deposit payments if the depositor has outstanding liabilities to the closed bank.

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Preference of Payment

Payment by PDIC of insured deposits is prioritized similar to taxes due to the government.

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Claim Settlement Period

The PDIC has 6 months to process and settle claims for insured deposits after they are filed.

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Modes of Payment

The PDIC can pay insured deposits through cash or by transferring them to another insured bank.

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Purpose of the Bank Secrecy Law (RA 1405)

This law aims to encourage people to deposit their money in banks, leading to increased lending and economic growth.

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PDIC claim settlement timeframe

The period of time within which PDIC must settle a claim for insured deposits.

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Consequences for delayed PDIC claims

Failure to settle a claim within 6 months, due to negligence, bad faith or malice, can lead to imprisonment.

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Prohibited Act 1 of Bank Secrecy Law

It's illegal for bank officials, employees, or auditors to reveal deposit details to anyone except authorized bank personnel.

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Exception to PDIC claim settlement timeframe

The period of 6 months does not apply if the claim's validity requires further review by another entity.

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Prohibited Act 2 of Bank Secrecy Law

No one, including government officials, can inquire about or access bank deposits or government bonds.

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Purpose of Truth in Lending Act

The Truth in Lending Act (RA 3765) aims to protect consumers by requiring full disclosure of credit costs.

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Deposits covered by Bank Secrecy Law

This includes all types of deposits in banks and banking institutions in the Philippines, including Trust Accounts.

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Transparency in credit costs

The law emphasizes the importance of consumers understanding the real cost of credit.

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Investments covered by Bank Secrecy Law

Investments in bonds issued by the Philippine government, local governments, or government agencies.

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Exception to Bank Secrecy: Written Permission

The depositor or investor gives written permission to disclose their account information.

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Benefits of transparent pricing

Transparent pricing helps clients compare credit products and fosters healthy competition.

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Exception to Bank Secrecy: Impeachment Cases

In impeachment cases, access to bank accounts may be allowed for investigations.

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Required disclosure for credit transactions

Creditors must provide a written statement detailing credit transaction information to each borrower.

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Cash price or delivered price

The cash price or delivered price of the good or service being purchased.

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Exception to Bank Secrecy: Court Orders

Court orders allow access to bank accounts for investigations involving bribery, dereliction of duty, unexplained wealth, or money laundering.

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Conflict of Interest

A person who has personal interest in a proposed transaction or act that needs approval from a board they are a member of, even if they vote against it or do not participate.

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Robbery

Illegal and violent act of taking another person's property by force or intimidation.

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Theft

A crime involving the illegal taking of another's property without using force or intimidation. In certain cases it is considered a "Qualified Theft".

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Jueteng

An illegal activity that involves the illegal operation of a gambling game.

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Plunder

Illegal acts that result in plundering the government or public funds.

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Piracy

Illegal acts of taking another person's property by force or intimidation on the high seas or in inland waters.

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Swindling (Estafa)

The act of taking another person's property by deception or fraud.

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Smuggling

The illegal act of transporting goods into or out of a country without paying the required taxes or duties.

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Suspicious Transactions (Covered Institutions)

Transactions that differ significantly from a client's usual behavior, such as large deposits or unusual spending patterns.

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Suspicious Transactions (Criminal Activity)

A transaction that is related to illegal activities like drug trafficking, fraud, or terrorism financing.

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Covered Transaction Reports

Reports that covered institutions (banks, financial institutions) are required to file with the AMLC if they suspect a transaction might be related to money laundering or other financial crimes.

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Anti-Money Laundering Council (AMLC)

The primary governmental agency in the Philippines responsible for fighting money laundering and terrorism financing. It investigates suspicious transactions, collects information, and coordinates efforts to prevent financial crime.

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AMLC's Authority To Investigate

The AMLC can request information from covered institutions to determine the true source of funds or assets if they suspect money laundering is involved.

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Investigating Suspicious Transactions

AMLC investigates suspected money laundering activities and other financial crimes, gathers evidence, and prosecutes offenders in collaboration with law enforcement agencies.

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Civil Forfeiture

A legal process where the AMLC can seize assets that are believed to be the proceeds of money laundering or other crimes.

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Filing Complaints

AMLC can work with the Department of Justice or Ombudsman to bring criminal charges against individuals or entities involved in money laundering or other financial crimes.

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When is a jewelry dealer a covered institution?

A jewelry dealer is considered a covered institution under the AML law if their business involves trading precious metals and their annual turnover exceeds P5,000,000.

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How long are covered persons required to keep records?

A covered person is obligated to keep records related to covered and suspicious transactions for a period of five years.

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How long does a covered person have to report transactions to AMLC?

A covered person must report covered and suspicious transactions to the AMLC within five working days from the occurrence of the transaction.

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What is the maximum reporting period AMLC can set?

The Anti-Money Laundering Council (AMLC) has the authority to set a different reporting period for covered and suspicious transactions, but it cannot exceed 15 calendar days from the date of the transaction.

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Are lawyers and accountants required to report suspicious transactions?

Lawyers and accountants are not required to report suspicious transactions if they obtain information while subject to professional secrecy or legal professional privilege.

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What happens if a transaction is both covered and suspicious?

When a transaction is both covered and suspicious, the covered institution is required to report it as a suspicious transaction.

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What courts handle money laundering cases?

All cases concerning money laundering fall under the jurisdiction of the Regional Trial Courts (RTCs).

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What is a key requirement for a transaction to be considered covered?

For a transaction to be considered a covered transaction, it must be commensurate with the client's financial capacity.

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Study Notes

Banking Laws - Secrecy of Bank Deposits (RA 1405)

  • Purpose: Discourage private hoarding, encourage public deposits for economic development.
  • Prohibited Acts: Banks and individuals cannot disclose deposit information except to authorized personnel or with a depositor's written permission.
  • Covered Deposits: All deposits (including trust accounts) and government bonds.
  • Exceptions:
    • Depositor written consent
    • Impeachment cases
    • Court orders (bribery, dereliction of duty, litigation, unexplained wealth, money laundering).
    • BIR inquiry for estate value
    • Ombudsman inquiries (with specific conditions)
    • Law enforcement officers (terrorism cases, Human Security Act of 2007).
    • Special/general bank examinations (with Monetary Board authorization)
    • PDIC inquiry (unsafe/unsound banking practices).
    • COA examination/audit (government deposits)
    • PCGG investigation (ill-gotten wealth)
    • Bank's independent audit (for audit purposes only)
  • Exceptions - Foreign Currency Deposits: Absolutely confidential, except with written consent or under specific cases involving probable cause for money laundering related activities or terrorism.
  • Garnishment: Permitted without violating bank secrecy, as the amount is not revealed.
  • Deposits Exempt from Garnishment:
    • Foreign currency deposits (except for transient foreigners)
    • Those exempt under Rules of Court

Banking Laws - PDIC Act (RA 3591)

  • Functions: Deposit insurer, bank regulator, receiver/liquidator of closed banks.

  • Insured Deposits: Amount due to depositors in an insured bank (up to PHP 500,000).

  • Maximum Deposit Insurance Adjustment: Can be adjusted if banking system stability is threatened (Monetary Board approval, unanimous vote of PDIC, presidential approval).

  • Coverage: Insures deposit liabilities of banks receiving deposits.

  • Exclusions:

    • Deposit splitting
    • Foreign bank head office deposits in Philippine branches
    • Proceeds of illegal activities
    • Unfunded/fictitious deposits
    • Deposits involving unsafe/unsound practices
    • Investment products (bonds, securities, trusts)
    • Unfunded/fictitious transactions.

  • Determination of Amount:

    • On a per-bank basis, not exceeding PHP500,000 per bank.
    • Per depositor, all accounts held in the same capacity are added.

  • Accounts with "By", "In Trust For", or "For the Account of":

    • "By" account - the named person is the depositor.
    • "In Trust For" and "For the Account of" - the named person is the depositor.

  • Joint Accounts: Insured separately from individual accounts; If held by multiple natural persons, the coverage is divided equally; if held by a juridical person with natural persons, the coverage is deemed to belong entirely to the juridical person.

  • Procedure for the PDIC: • Commences determination of insured deposits after takeover. • Notifies depositors using appropriate means. • Publishes notices in newspapers.

  • Certificate of Deposit: Only registered holders are considered depositors.

  • Claim Filing Period: Two years from takeover and two more years from filing date.

  • Proof of Claim: Required; court final determination in disputed cases required before payment.

  • Non-filing/Non-enforcement: Barred rights against PDIC and closed bank.

  • Modes of Payment: Cash, or transferred deposit to another insured bank.

  • Payment Effects: PDIC assumes depositor's rights against the closed bank (dividends, etc.).

  • Preference: Considered a preferred credit.

  • Claim Settlement Period: 6 months from filing (exemptions exist for specific circumstances).

Banking Laws - Other

  • Anti-Money Laundering Act (RA 9160)
  • Unlawful Activities: Specific criminal acts (kidnapping, drug trafficking, corruption, etc.)
  • Money Laundering: Crime involving proceeds from unlawful activity.
  • Stages of Money Laundering: Placement, layering, integration.
  • Covered Entities: Banks, institutions regulated by BSP, insurance companies, securities dealers, etc.
  • Required Information: Disclosure of finance charges, interest computations, etc. Transparency requirements.
  • Penalties: Fines and imprisonment for violations.

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Description

This quiz covers the key aspects of the Banking Laws pertaining to the secrecy of bank deposits as outlined in RA 1405. It examines the purposes, prohibited acts, covered deposits, and the exceptions under which disclosure is allowed. Test your knowledge about the regulations that discourage private hoarding and promote economic development.

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