Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

Twentieth Congress
First Regular Session

HOUSE BILL NO.__7

Introduced by Representative Ferdinand Martin G. Romualdez,
Andrew Julian K. Romualdez and Jude A. Acidre

EXPLANATORY NOTE

This bill seeks to promote transparent governance and institute anti-corruption
mechanisms in the operation of banks and other financial institutions amendifig for
the purpose the Republic Act No. 1405, entitled “An Act Prohibiting Disclosure of
or Inquiry Into, Deposits With Any Banking Institution and Providing Penalty
Therefor.”

Republic Act No. 1405, also known as the “law on Secrecy of Bank
Deposits”, was enacted to encourage the banking habit by ensuring the
confidentiality of bank deposits. However, its absolute secrecy provisions have
created barriers to the effective investigation and prosecution of corrupt or illegal
financial acts. These provisions have been exploited to conceal unlawful activities
such as money laundering and tax evasion, impeding the fight against financial
crimes and weakening institutional oversight.

This measure seeks to lift these barriers by empowering the Bangko Sentral
ng Pilipinas (BSP) under its regulatory authority to inquire into or examine bank
deposits in the Philippines, including foreign currency deposits, in specific
circumstances. These include investigations of closed banks, or instances as
determined or upon the determination by the Monetary Board, that there is
reasonable ground to believe that fraud, serious irregularity, or unlawful activity has
been committed by a stockholder, owner, director, trustee, officer, or employee of
entities under BSP supervision, or by their representatives, agents, related parties, or
conspirators.


The bill also aligns Philippine banking regulations with international
standards on transparency in financial transactions. It addresses the unintended
consequences of overly restrictive bank secrecy laws by facilitating efforts to combat
corruption, tax evasion, money laundering, and other financial crimes.

The results of BSP inquiries and examinations may only be shared with
specified government agencies, including the Securities and Exchange Commission
(SEC), Philippine Deposit Insurance Corporation (PDIC), Anti-Money Laundering
Council (AMLC), Department of Justice (DOJ), and the courts, and only when
necessary to prevent or prosecute an offense.

To protect good-faith compliance with regulatory processes, this bill includes
a safe harbor provision exempting banks and financial institutions, as well as their
directors, officers, and employees, from any action, claim, or liability arising from
their compliance with lawful BSP orders of inquiry or examination. At the same
time, it penalizes the unauthorized disclosure of deposit information by BSP or
banking personnel.

By balancing the need for depositor privacy with the imperative of
transparency and accountability, this bill modernizes the country’s bank secrecy
framework while strengthening institutional efforts to detect and deter financial
misconduct. It reinforces the State’s commitment to fight corruption and uphold
public trust in financial institutions and regulatory agencies.

The principal author of the proposed bill to amend Republic Act No. 1405, or
the Bank Secrecy Law, was Rep. Irwin Tieng of the Fifth District of Manila. He
authored House Bill No. 7446, which sought to promote transparent governance and
strengthen anti-corruption mechanisms by allowing the BSP to examine bank
deposits under specific conditions.

In view of the foregoing, the immediate passage of this bill is earnestly

recommended.
wn OM Mason


JUDE # ACIDRE ANDREW JULIAN K. ROMUALDEZ


Republic of the Philippines

House of Representatives
Queson City, Metro flanila

Twentieth Congress
First Regular Session

7

HOUSE BILL NO. _

Introduced by Representatives Ferdinand Martin G, Romualdez,
‘Andrew Julian K. Romualdez and Jude A. Acidre

AN ACT

PROMOTING TRANSPARENT GOVERNANCE AND INSTITUTING
ANTI-CORRUPTION MECHANISMS IN THE OPERATION OF BANKS.
AND OTHER FINANCIAL INSTITUTIONS, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 1405, ENTITLED “AN ACT
PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH
ANY BANKING INSTITUTION AND PROVIDING PENALTY
THEREFOR”

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Section 2 of Republic Act No. 1405, entitled: “An Act Prohibiting
Disclosure of or Inquiry Into, Deposits With Any Banking Institution And
Providing Penalty Therefor” is hereby amended to read, as follows:

“SECTION 2. All deposits are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any
person, government official, bureau or office, except 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, or in cases
where the money deposited is the subject matter of the litigation, OR IN
CASES WHERE THE INQUIRY OR EXAMINATION IS MADE BY
THE BANGKO SENTRAL NG PILIPINAS (BSP), 1N THE EXERCISE
OF ITS SUPERVISORY POWERS, ON THE DEPOSIT OF THE
STOCKHOLDER, OWNER, DIRECTOR, TRUSTEE, OFFICER OR


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EMPLOYEE OF AN ENTITY THAT IS SUBJECT TO THE
SUPERVISION OR REGULATORY POWER OF THE BSP, THE
REPRESENTATIVE OR AGENT, THE RELATED PARTY, OR ANY
OF THE CONSPIRATORS, OF THE PERSON INVOLVED:
PROVIDED, THAT, UPON DETERMINATION BY THE MONETARY
BOARD, THERE IS A REASONABLE GROUND TO BELIEVE THAT
FRAUD, SERIOUS IRREGULARITY OR UNLAWFUL ACTIVITY
HAS BEEN OR IS'- BEING COMMITTED BY THE
ABOVEMENTIONED PERSONS, AND THAT IT IS NECESSARY TO
LOOK INTO THE DEPOSIT TO ESTABLISH SUCH FRAUD,
SERIOUS IRREGULARITY OR UNLAWFUL ACTIVITY. THE
AUTHORITY OF THE BSP TO INQUIRE AND EXAMINE
DEPOSITS SHALL ALSO APPLY IN THE COURSE OF ITS
INVESTIGATION OF CLOSED BANKS.

AS USED IN THIS ACT, DEPOSITS SHALL REFER TO MONEY OR
ITS EQUIVALENT RECEIVED BY A BANK IN THE USUAL
COURSE OF BUSINESS, AND FOR WHICH IT HAS GIVEN OR IS.
OBLIGED TO GIVE CREDIT TO A COMMERCIAL, CHECKING,
SAVINGS, TIME OR THRIFT ACCOUNT, EVIDENCED BY A
PASSBOOK, CERTIFICATE OF DEPOSIT, OR OTHER EVIDENCE
OF DEPOSIT, ISSUED IN ACCORDANCE WITH BSP RULES AND
REGULATIONS AND OTHER APPLICABLE LAWS, AS WELL AS
SUCH OTHER OBLIGATION OF A BANK THAT FORMS PART OF
ITS DEPOSIT LIABILITIES PURSUANT TO BSP RULES AND
REGULATIONS.

THE RESULTS OF THE INQUIRY OR EXAMINATION
CONDUCTED BY THE BSP SHALL BE FOR ITS EXCLUSIVE USE
AND SHALL NOT BE MADE AVAILABLE TO ANY PERSON OR
ENTITY, WHETHER PUBLIC OR PRIVATE, EXCEPT TO THE
SECURITIES AND EXCHANGE COMMISSION, PHILIPPINE
DEPOSIT INSURANCE CORPORATION, ANTI-MONEY
LAUNDERING COUNCIL, DEPARTMENT OF JUSTICE, AND THE
COURTS: PROVIDED, THAT THE SHARING OF THE RESULTS OF
THE ABOVEMENTIONED INQUIRY OR EXAMINATION IS
NECESSARY TO PREVENT OR PROSECUTE ANY OFFENSE OR
CRIME.

THE EXEMPTIONS UNDER THIS SECTION SHALL APPLY TO
FOREIGN CURRENCY DEPOSITS IN BANKS OPERATING IN THE
PHILIPPINES INCLUDING OFF-SHORE BRANCHES OF
DOMESTIC BANKS: PROVIDED, THAT THESE EXEMPTIONS

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SHALL NOT APPLY TO NON-STOCK SAVINGS & LOAN
ASSOCIATIONS (NSSLAS) THAT ARE CATERING ONLY TO
THEIR MEMBERS.”

SEC. 2. Section 3 of the same Act, is hereby amended to read as follows:

“SECTION 3. NO BANK OR FINANCIAL INSTITUTION, OR ANY
OF ITS DIRECTORS, OFFICERS OR EMPLOYEES, SHALL BE
SUBJECT TO ANY ACTION, CLAIM OR DEMAND IN
CONNECTION WITH, AND SHALL BE HELD FREE AND
HARMLESS FROM LIABILITY FOR, ANY ACT DONE IN
COMPLIANCE WITH AN ORDER FOR INQUIRY OR
EXAMINATION OF DEPOSITS FROM THE BSP.

HOWEVER, it shall be unlawful for any official OR employee, of a
banking institution OR THE BSP, to disclose ANY INFORMATION
CONCERNING SAID DEPOSITS to any person AND UNDER SUCH
CONDITIONS other than those mentioned in Section twe 2 hereof. IT
SHALL ALSO BE UNLAWFUL FOR ANY PERSON TO USE THIS
ACT FOR PERSECUTION OR HARASSMENT OR AS AN
INSTRUMENT TO HAMPER COMPETITION TRADE AND
COMMERCE.”

SEC. 3. Section 5 of the same Act, is hereby amended to read as follows:

“SECTION 5. Any violation of this law will subject THE offender upon
conviction, to imprisonment of not LESS THAN TWO (2) YEARS NOR
more than f¥e TEN (10) YEARS or a fine of not LESS THAN FIFTY
THOUSAND PESOS (P50,000) NOR MORE THAN ¢wenty-thousend
TWO MILLION PESOS (P2,000,000), or both, ## AT the discretion of the
court.”

SEC. 4. Separability Clause. — If any provision or section of this Act is held to be
unconstitutional or invalid, the other provisions or sections hereof, which are not
affected hereby shall continue to be in full force and effect.

SEC. 5. Repealing Clause.

(a) Sections 2, 3 and 5 of Republic Act No. 1405 are hereby amended;

(b) Sections 8 and 12-A of Republic Act No. 6426, as amended, also known as

the “Foreign Currency Deposit Act of the Philippines,” with respect to
foreign currency deposits, are hereby amended;


(c) Section 33 of Republic Act No. 6848, also known as “The Charter of the Al-
Amanah Islamic Investment Bank of the Philippines”, is hereby amended;

(d)Section 26(a)(2) of Republic Act No. 7353, also known as the “Rural
Act of 1992” is hereby amended; and

(e) Section 21(a\(2) of Republic Act No. 7906, also known as the “Thrift Banks
Act of 1995” is hereby amended.

All other Acts or parts of Acts, Special Charters, Executive Order, Rules and
Regulations, which are inconsistent with the provisions of this Act, are hereby
repealed.

SEC. 6. Effectivity. — This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in a newspaper of general circulation in
the Philippines.

Approved,