Bank Secrecy Law Reviewer PDF

Bank Secrecy examined, inquired, or looked into by any person, Security of Bank Deposits Law government official, bureau or office. RA 1405(1955) Amended What are deposits?...

Bank Secrecy examined, inquired, or looked into by any person, Security of Bank Deposits Law government official, bureau or office. RA 1405(1955) Amended What are deposits? PD 1792; RA 7653 Deposits refer to money or funds placed with a What is the Secrecy of Bank Deposits Law? bank that can be withdrawn on the depositor's order or demand, such as deposit accounts in the The Law on Secrecy of Bank Deposits is an act form of savings, current and time deposits. PROHIBITING Deposits are characterized as being in the nature (1) the examination, inquiry, or looking into of a simple loan. The placing of deposits in a bank deposits by persons, government officials, bureaus, creates a creditor-debtor relationship between the or offices, and/or depositor and the bank. (2) the disclosure by banking institutions, officials, or employees to unauthorized persons regarding What are investment in Government Bonds? information about covered accounts (General Rule). Investments in Government Bonds refer to investments in bonds issued by the Government of the Philippines, its political subdivisions, and its G.R. Banks are not allowed to disclose the account instrumentalities. Government bonds are debt balance of any of its depositors. securities which are unconditional obligations of the State and backed by its full taxing power. However, the required " secrecy " is limited only to Government bonds include treasury bills, treasury the disclosure of whatever is the Depositor's notes, retail treasury bonds, dollar-linked peso Account balance. notes, and other risk-free bonds. The Bank can disclose the existence of the Secrecy of Bank Deposits Depositor's Account without violating the Secrecy The following are LIABLE under this law: Rule. Any person or government official who, or What are the purposes of the law? any government bureau office that, examines, inquires, or looks into a bank Purposes of the law deposit or government bond investment in - Encourage people to deposit money in any of the instances not allowed in Sec. 2; banks Any official or employee of a banking - Discourage private hoarding of money institution who makes a disclosure concerning bank deposits to another in any - Protect the confidentiality of bank deposits instance not allowed by law (Sec. 3, Rep. Act No. 1405); and What are covered by the law? Any person who commits a violation of The law covers all deposits of whatever nature any of the provisions of the law (Sec. 5, Rep. with banks or banking institutions in the Philippines, Act No. 1405). including investment in bonds issued by the Government of the Philippines, its political Are there other laws which prohibit the same subdivisions and instrumentalities, and trust funds disclosure? held by the banks, which are considered to be absolutely confidential in nature and may not be  - Any bank official, director, employee, or well as examine and access bank accounts agent who discloses information relative to and records. funds or properties in the custody of the bank may also be held liable under the Bank deposits of a public official, his spouse, applicable provisions of the General and unmarried children may be taken into Banking Law, Thrift Banks Act, and Rural consideration in the enforcement of Section Banks Act. 8 of The Anti-Graft and Corrupt Practices Act. Summary of Exceptions DOSRI* who contract a loan or any form of financial accommodation with their bank or 4 Exceptions under the Law on Secrecy of Bank related bank are required to execute a Deposits written waiver of secrecy of deposits pursuant to The New Central Bank Act. ✓ Exceptions under OTHER LAWS The CIR is authorized in relation to (1) application for compromise of tax liability by ✓ Authorized Disclosures reason of financial incapacity to pay his tax liability; (2) a determination of a decedent's ✓ Foreign Currency Deposits Act (RA 6426) gross estate under NIRC; or The CIR is authorized in relation to (1) a (3) ✓ Human Security Act of 2007 (RA 9372) request for tax information of specific taxpayers made by a foreign tax authority ✓ Terrorism Financing and Prevention and pursuant to a tax treaty under The Suppression Act (RA 10168) Exchange of Information on Tax Matters Act of 2009. Exceptions - s- no violation of the Secrecy Law in The Anti-Money Laundering Council with the following cases under Law on Secrecy of court order, when there is probable cause Bank Deposits that the deposits or investments are related to an unlawful activity or a money Upon written permission or consent in laundering offense. writing by the depositor The Anti-Money Laundering Council without need of court order, when probable cause In cases of impeachment of the President, exists that a particular deposit or investment Vice President, members of the Supreme with any banking institution is related to Court, members of the Constitutional certain predicate crimes, such as Commission, and the Ombudsman kidnapping for ransom, violation of the Upon order of a competent court in cases of Comprehensive Dangerous Drugs Act, bribery or dereliction of duty of public hijacking and other violations under officials. Republic Act No. 623510, destructive arson In cases where the money deposited or and murder invested is the subject matter of the litigation. The money deposited should be UNDER THE ANTI-MONEY LAUNDERING LAW the very thing in dispute. General Rule: AMLC may inquire into deposits Exceptions - no violation of the Secrecy Law in the upon order of the court when there is probable following cases under other laws cause that the deposits are related to the crime of unlawful activities defined in Section 3 (1) and The Ombudsman has the power to issue Section 4 of RA 9160, as amended by RA 9194. subpoena and subpoena duces tecum, take testimony in any investigation or inquiry, as Exception: no court order is required for:  The Commission on Audit is authorized to - Kidnapping for ransom under Article 267 of examine and audit government deposits RPC; pertaining to the revenue and receipts of, and expenditures or uses of funds and - 4, 5, 8, 9, 10, 12, 13, 14, 15, and 16 of RA properties, owned or held in trust by, or 9165, otherwise known as the pertaining to, the Government or any of its Comprehensive Dangerous Drugs Act of subdivisions, agencies or instrumentalities, 2002; including government-owned and controlled corporations with original charters. - Hijacking and other violations under RA The Presidential Commission on Good 6235; destructive arson and murder as Government, in the conduct of its defined under RPC, including those investigations to recover ill-gotten wealth perpetrated by terrorists against non- Examination by an independent Auditor, combatant persons and similar targets. hired by the Bank and for the Bank's exclusive use The Bangko Sentral is authorized to: Coup d'etat Law (RA 6968, Oct 24,1990) when the State exercises/invokes its Police (a) inquire into or examine bank Power deposits or investments in the course of a periodic or special examination to ensure Exceptions - AUTHORIZED DISCLOSURES compliance with The Anti-Money Laundering Law reporting of unclaimed balances to the Treasurer of the Philippines (b) conduct annual testing which is limited to the determination of the existence turn-over to the CIR of the amount in bank and true identity of the owners of numbered accounts as may be sufficient to satisfy the accounts writ of garnishment issued to collect delinquent taxes (c) an examination made in the course of special or general examination of submission of report, and turn-over to, the a bank that is specifically authorized by the court officer or executing sheriff of Monetary Board after being satisfied that garnished amounts pursuant to a writ of there is a reasonable ground to believe that garnishment in satisfaction of a judgment a bank fraud or serious irregularity has been or is being committed and that it is disclosure by a bank officer or employee necessary to look into deposit to establish upon order of the court in connection with a such fraud or irregularity deposit in a closed bank that was used in the perpetration of anomalies. The Philippine Deposit Insurance Corporation (PDIC) and the Bangko Sentral Deposits Not Covered may inquire into bank deposits when there is a finding of unsafe or unsound 1. Foreign currency deposits, which are governed banking practices.* by Foreign Currency Deposit Act The Court of Appeals may issue an order authorizing law enforcement officers to 2. Funds placed in a bank not in the nature of a examine and gather information on the deposit by private individuals or entities. deposits, placements, trust accounts, assets and records in a bank or financial institution in connection with anti-terrorism case Rules on Foreign Currency Deposits Terrorism Financing and Prevention and Suppression Act (RA 10168) General Rule: Deposits in foreign currency deposits and deposits in offshore banking units are AMLC is authorized to investigate property or funds also confidential in nature. (without a court order) that are in any way related to financing of terrorism or acts of terrorism OR the FOREIGN CURRENCY DEPOSITS ACT* (RA property or funds of any person or persons in 6426) relation to whom there is probable cause that such person is involved in the acts of terrorism (Sec. 10, The Secrecy of Bank Deposit Law does not RA 10168) apply to foreign currency deposits. AMLC, either upon its own initiative or at request of Exceptions: the Anti-Terrorism Council, further authorize to issue an ex parte order to freeze accounts Waiver / Written consent of depositor under without delay. Freeze order shall be for a period of Section 8 of the Foreign Currency Deposits 20 days, unless extended by the CA up to a period Act; not exceeding six (6) months upon petition by the AMLC. Under Section 11 of the Anti-Money Laundering Act (When the AMLC seeks to GARNISHMENT examine suspicious deposits; or upon order of the court [or even without court order in Bank accounts may be garnished by the creditors proper cases] when there is probable cause of the depositor. There is no violation on Secrecy of money laundering); of Bank Deposits. The amount of deposit is actually not disclosed and the intent of the legislature does DOSRI are required to execute a written not cover garnishment. (China Bank v. Ortega, G.R. waiver; L-34964, 1973) Under Sections 27 and 28 of the Human Garnishment (defined) Security Act. It is a court order directing that money or property Human Security Act of 2007 (RA 9372) of a third party (usually wages paid by an employer) be seized to satisfy a debt owed by a debtor to a It allows examination and sequestration of deposits plaintiff creditor. based on certain conditions. Attachment versus Garnishment The Court of Appeals designated as a special court to handle anti-terrorism* cases may A writ of attachment is generally used to freeze a authorize in writing any police or law enforcement defendant's assets pending the outcome of legal officer and the members of his/her team to examine action. A garnishment is a court order directing a or cause the examination of the deposits, third party to seize assets, such as wages or placement, trust accounts, assets, and records in a money, from a person's paycheck or bank account bank or financial institution (Section 27, HAS). to settle an unpaid debt. The written order of the Court of Appeals authorizing the examination of bank deposits, placements, trust account, assets, and records is allowed.  1.2. Anonymous accounts accounts under fictitious What are prohibited? names, and all other similar accounts shall be absolutely prohibited. The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts Section 2. Numbered Accounts. under fictitious names, and all other similar accounts shall be absolutely prohibited. 2.1. Numbered accounts, except non-checking numbered accounts, shall not be allowed. Peso and foreign currency non-checking numbered accounts shall be allowed. 2.2. CTRS (Covered Transaction Reports) and STRs (Sus involving non-checking numbered The BSP may conduct annual testing solely limited accounts shall contain the true name of the account to the determination of the existence and true holder. identity of the owners of such accounts. The General Banking Law prohibits bank Prohibited (2016 IRR) directors, officers, employees or agents from disclosing to any unauthorized person, without Prohibited Accounts. The following accounts shall order of a competent court, any information relative be prohibited and may be the subject of the to funds properties belonging to private or Supervising Authorities' annual testing for the sole individuals, corporations, or any other entity in the purpose of determining the existence and true custody of the bank. identity of their owners: The Thrift Banks Act and the Rural Banks Act likewise prohibit any bank officer, employee, or a. Anonymous Accounts and Accounts under agent from disclosing any information on such Fictitious Names. - Covered persons shall funds or properties. maintain customers' account only in the true and full name of the account owner or holder. REVISED NON-STOCK SAVINGS AND Anonymous accounts under fictitious names and all ASSOCIATION ACT OF 1997 (RA 8367) other similar accounts shall be absolutely prohibited. All deposits of whatever nature with an Association b. Numbered Accounts. Numbered accounts, in the Philippines are hereby considered as of an except nonchecking numbered accounts, shall not absolutely confidential nature and may not be be allowed. examined, inquired, or looked into by any person, government official, bureau, or office. (Sec. 6, Rep. Covered and suspicious transaction reports Act No. 8367) involving nonchecking numbered accounts shall contain the true name of the account holder. What are the penalties for the violation of the Law? Prohibited Accounts (IRR 2018) Any violation will subject the offender, upon Section 1. Anonymous Accounts and Accounts conviction, to an imprisonment of not more than five under Fictitious Names. (5) years or a fine of not more than P20,000.00 or both at the discretion of the court. (RA 1405, Sec. 5) 1.1. Covered persons shall maintain customers' account only in the true and full name of the account owner or holder.