I agree with Sen. Recto that the laws should be responsive to the “changing times and changing crimes.” With the way Republic Act 6426, it would be attractive for corrupt officials, criminal elements, money launderers, gambling lords, and foreign drug cartels to hide their ill-gotten wealth in dollar accounts in Philippine banks and nobody could touch them including the U.S. Drug Enforcement Agency (DEA), which is tasked with tracing where drug cartels deposit their money. This could lead the Philippine banking community to be branded as pariahs by international banking institutions. — PERRY DIAZ
Recto seeks review of bank secrecy laws
MANILA, Philippines – As lawyers in the impeachment trial of Chief Justice Renato Corona debate on whether or not his dollar accounts should be opened, Sen. Ralph Recto, one of the senator-judges, has called for a revisit of the laws governing confidentiality of bank accounts in the country.
Recto has filed Senate Resolution 711 seeking a review of Republic Act 6426 or the Foreign Currency Deposits Act and Republic Act 1405 or the Bank Secrecy Act.
Recto said the laws should be responsive to the “changing times and changing crimes.”
“With FCDU (foreign currency deposit unit) and the Bank Secrecy Act taking center stage in the ongoing impeachment trial, we deem it imperative to call a review of these laws,” Recto, who is chair of the Senate ways and means committee, said.
“The review is not meant to de-fang said laws but to make certain that no one gets hurt or gets special treatment when the claws of these laws start to pounce on its object of prey,” he added.
Recto said he has received admonitions from concerned members of the banking community about the ramifications of waiving or liberal application of the laws on FCDUs and the Bank Secrecy Act.
“The sum of the friendly heads-up that I have been getting is that this may result to a complete break down of confidence in the banking system,” Recto said.
“Businessmen would be pondering the question – if the current banking laws would not be able to protect us, who would?” the senator added.
Recto said the review of the laws should provide a clearer direction on what revisions may be adopted to ensure that the banking sector would be shielded from political exercises such as the impeachment process.
“We don’t want to start a fad wherein banks are called as hostile witness in every impeachment trial with its officers risking the pain of contempt should they fail to satisfy the demands of the impeachment court,” he said.
However, he said the Senate must also ensure that no public official or any individual running afoul of the law would hide under the cloak of the FCDU law or the Bank Secrecy Act.
The Senate impeachment court has allowed the opening of peso and FCDU accounts of Corona in relation to the charge of the House impeachment panel that the chief justice failed to truthfully disclose his assets, including bank deposits and investments, in his statements of assets, liabilities and net worth.
The president of Philippine Savings Bank, one of the banks subpoenaed to bring Corona’s bank accounts, however, only produced the peso bank accounts and invoked the absolute confidentiality of the FCDU accounts of the chief justice.
Section 8 of RA 6426 reads: “All foreign currency deposits authorized under this Act are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative, or any other entity whether public or private.”
Unlike the Bank Secrecy Act, which provides for several exemptions in disclosing bank account details such as “upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials,” the FCDU law provides only one exemption, which is the written consent of the depositor.
An FCDU is a banking unit authorized to transact in foreign exchange, such as accepting foreign-currency deposits and making foreign-currency loans.
Data from the central bank indicated that total resources of FCDUs in the first half of 2011 went up by 9.5% to $31.12 billion from $28.41 billion the same period in 2010 after its financial assets surged 16.9% to $16.48 billion from $14.1 billion.
Data also showed universal and commercial banks accounted for 95.9% of the total FCDU assets with $29.8 billion followed by thrift banks with 4.1% or $1.3 billion as well as rural and cooperative banks with less than 1% or $1 million.