'igm Senate
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NINETEENTH CONGRESS OF THE ] 
REPUBLIC OF THE PHILIPPINES ] 
First Regular Session 
]
SENATE
S.B. No. 1 839
23 FEB-6 P6:23
Rl'CEIViD BV
Introduced by SEN. WIN GATCHALIAN
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, OTHERWISE KNOWN AS "THE 
SECRECY OF BANK DEPOSITS LAW"
EXPLANATORY NOTE
Sixty-eight years ago, Republic Act No. (RA) 1405, otherwise known as An Act 
Prohibiting Disciosure or Inquiry Into, Deposits with any Banking Institution and 
Providing Penaity Therefor, was enacted into law to encourage people to deposit 
money in banking institutions and to discourage private hoarding so that the same 
may be properly utilized by banks in authorized loans to assist in the economic 
development of the country.1
To achieve this, the law prohibits disclosure of any information relative to funds 
or properties belonging to the depositors in the custody of banks. As it accords 
absolute confidentiality on the nature of bank deposits, the law also provides for 
certain instances when such deposits may be examined, inquired or looked into, as 
follows: 1) upon written permission of the depositor 2) in cases of impeachment 3)
1 Section 1 of RA 9405.


upon order of court in cases of bribery or dereliction of duty of public officials and 4) 
in cases where the money deposited or invested is the subject matter of the litigation.
It cannot be overemphasized that the banking sector is built on the confidence 
of its depositors. Now that the aggregate assets of the Philippine banking system grew 
to Php21.34 trillion,2 it cannot be plagued with anomalies involving depositors who 
hide behind the cloak of the absolute confidential nature of deposits. According to the 
Bangko Sentral ng Pilipinas (BSP), there are anomalies involving several bankers 
themselves, whether be a director, trustee, officer, stockholder, employee or related 
party of the bank, who commit fraud and hide the proceeds from illicit activities in 
their own banks,3 and the BSP which has the supposed supervision over the banks in 
the country4 remains powerless to inquire or examine these bank deposits. In fact, 
the Philippines is the only country in the world where the prudential regulator is not 
given authority to inquire into bank deposits.5
Accordingly, to institute anti-corruption mechanisms and promote transparent 
governance in the operations of banks and other financial institutions, this measure 
empowers the BSP to inquire or examine the deposits (including foreign currency 
deposits in banks operating in the Philippines) made by a stockholder, owner, director, 
trustee, officer or employees of an entity under BSP's supervisory or regulatory power, 
as well as the representative or agent, related party or any of the conspirators of the 
person involved when it meets the following requisites: (i) upon determination by the 
Monetary Board, there is reasonable ground to believe that fraud, serious irregularity 
or unlawful activity has been or is being committed by the aforementioned persons 
and (ii) it is necessary to look into the deposit to establish such fraud, serious 
irregularity or unlawful activity. The measure also extends BSP's power to inquire and 
examine deposits during its investigation of closed banks.
2 As of June 2022. "Bank assets rise to P21.3 trillion in HI." Philstar Global. Available at
https;//www.philstar.com/business/2022/ll/06/2221745/bank-assets-rise-p213-trillion-hl.Accessed 5 January 2023 (citing 
BSP)
3 Pages 20-21. Senate Committee on Banks, Financial Institutions and Currencies hearing. August 23, 2022.
^ Section 3 of RA 7653 or the New Central Bank Act.
5 Page 19. Senate Committee on Banks, Financial Institutions and Currencies hearing. August 23, 2022.


Moreover, the measure provides safeguards to ensure that the results of the 
inquiry or examination \n\W be used only for its intended purpose. It also provides for 
the exclusive use by BSP of the results of the inquiry or examination, except when 
sharing of the results of the inquiry or examination is necessary to prevent or 
prosecute any offense or crime. In case of such exception, the results may be shared 
only to certain government entities and bodies, namely, the Securities and Exchange 
Commission, Philippine Deposit Insurance Corporation, Anti-Money Laundering 
Council, Department of Justice and the courts.
In view of the foregoing, the passage of this measure is'earnestly sought.


N^sV,©ffifr of tlio 5^ : ftar^-
NINETEENTH CONGRESS OF THE ] 
REPUBLIC OF THE PHILIPPINES ] 
First Regular Session
23 FEB “6 P6:23
SENATE OF THE PHILIPPINES mCEiVLOL
Introduced by SEN. WIN GATCHALIAN
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, OTHERWISE KNOWN AS 
"THE SECRECY OF BANK DEPOSITS LAW"
Be it enacted by the Senate and House of Representatives of the Phiiippines 
in Congress assembied:
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SECTION 1. Section 2 of Republic Act No. 1405, otherwise known as "The 
Secrecy of Bank Deposits Law" is hereby amended to read, as follows:
"SECTION 2. All deposits ef—whatever—nature, with—banks—er—banking 
mstitutions in the Philippines including invcstmcnts-in- bonds issued by the 
Government of the Philippines, its political subdivisions and its instrumentalities,
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 er 
invested is the subject matter of the litigation, OR IN CASES WHERE THE 
INQUIRY OR EXAMINATION IS MADE BY THE BANGKO SENTRAL NG 
PILIPINAS (BSP), IN THE EXERCISE OF ITS SUPERVISORY POWERS, 
ON THE DEPOSIT OF THE STOCKHOLDER, OWNER, DIRECTOR, 
TRUSTEE, OFFICER OR EMPLOYEE OF AN ENTITY THAT IS SUBJECT TO


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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 BSPIO 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,


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THAT THESE EXEMPTIONS 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 2 hereof, (information concerning said 
deposits). IT SHALL ALSO BE UNLAWFUL FOR ANY PERSON TO USE 
THIS ACT FOR PERSECUTION OR HARASSMENT OR AS AN 
INSTRUMENT TO HAMPER COMPETITION IN 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 five
TEN (10) YEARS or a fine of not LESS THAN FIFTY THOUSAND PESOS 
(P50,000) NOR MORE THAN twenty—thousand TWO MILLION 
PESOS (P2,000,000), or both, m AT the discretion of the court.
SEC. 4. Separability Clause. If any proviaon or section of this Act is held to be 
unconstitutional or Invalid, the other provisions or sections hereof, which are not 
affected thereby shall continue to be in full force and effect.


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SEC. 5. Repealing Clause.
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a. Sections 2, 3 and 5 of Republic Act No. 1405, as amended, also known as the
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"Secrecy of Bank Deposits Act", are hereby amended;
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b. Sections 8 and 12-A of Republic Act No. 6426, as amended, also known as the
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"Foreign Currency Deposit Act of the Philippines," with respect to foreign
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currency deposits, are hereby amended;
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c. Section 33 of Republic Act No. 6848, also known as the "Charter of the Al-
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Amanah Islamic Investment Bank of the Philippines", is hereby amended;
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d. Section 26(a)(2) of Republic Act No. 7353, also known as the Rural Banks
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Act of 1992, is hereby amended; and
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e. Section 21(a)(2) of Republic Act No. 7906, also known as the Thrift Banks Act
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of 1995, is hereby amended.
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All other Acts or parts of Acts, Special Charters, Executive Order, Rules and
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Regulations, which are inconsistent with the provisions of this Act, are hereby
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repealed.
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SEC. 6. Effectivity. This Act shall take effect fifteen (15) days following its
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publication in the Official Gazette or in a newspaper of general circulation in the
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Philippines.
Approved,