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HE
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EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
'&>0<:RFPPn/Fn'
SENATE 
S. No. 1802
FILED
TIME
Introduced by Senator Grace Poe
AN ACT
AMENDING REPUBLIC ACT NOS. 1405, OTHERWISE KNOWN AS "THE 
SECRECY OF BANK DEPOSITS LAW"
Explanaton/ Note
In 1955, Republic C'Rep.") Act No. 1405 or the law prohibiting disclosure 
of or inquiry into, deposits with any banking institution, was enacted primarily 
to deter private hoarding, boost the economy, and enhance state protection of 
privacy rights. Thereafter, Rep. Act No. 1405 was amended by Presidential 
Decree ("PD") No. 1792, which expanded the exceptions to the absolute 
confidentiality rule, including instances when the examination is made in the 
course of a special or general examination of a bank and is specifically 
authorized by the Monetary Board after being satisfied that there is reasonable 
ground to believe that a bank fraud or serious irregularity has been or is being 
committed, and that it is necessary to look into the deposit to establish such 
fraud or irregularity. However, PD No. 1792 was later expressly repealed by 
Rep. Act No. 7653, otherwise known as "The New Central Bank Act,"effectively 
reinstating the version of Rep. Act No. 1405 prior to PD No. 1792.
Decades after the enactment of Rep. Act No. 1405, the financial sector 
landscape has evolved such that transactions and financial products became 
more complex. Financial technology made transactions easier to execute at the 
shortest possible time and capital flowed freely into the Philippine economy. 
These innovations and ease of transactions enabled, necessitated and 
encouraged Filipinos to place their money in the banks, and spurred the 
economy to some extent. Somehow, the objectives of Rep. Act No. 1405 to 
deter private hoarding and boost the economy are achieved. However, with 
Rep. Act No. 1405, there are depositors who hide behind the cloak of deposit 
secrecy to perpetuate their ingenious ways of defrauding counterparties, 
regulators or the government.
It is recognized that the existing secrecy of bank deposit laws of the 
Philippines are more constraining for prudential supervision than similar laws In


other jurisdictions.1 A review of 49 countries assessed against the Basei Core 
Principies (BCP) since 20122 shows that oniy one other country - Lebanon3- 
has simiiar limitations for prudential supervision as the Philippines.4 This 
limitation impedes transparent governance and anti-corruption mechanisms.
For example, in the recent incident involving Wirecard, Bangko Sentra! 
ng Pilipinas C'BSP"), in the exercise of its supervisory powers, is unable to direct 
the banks Involved to submit to BSP specific deposit or account information 
aboutthe parties involved. This hinders the conduct of a swifter, more focused 
and more direct investigation that will result in more timely and conclusive 
decisions. In the said case, BSP relied on reports and representations of the 
banks involved and other available information surrounding the incident.
Meanwhile, other jurisdictions with strong bank secrecy arrangements 
have provided their prudential authority with unrestricted access to all bank 
records.5 In well-known international financial centres like Switzerland, 
Singapore and Hong Kong, the prudential supervisors have the power to access 
all bank records, including depositor information.6 This power is, however, 
combined with clear and strong professional secrecy arrangements.7
The International Monetary Fund notes that prudential supervision is 
aligned with the interest of depositors and, therefore, should not be seen as 
conflicting with the objectives of bank secrecy; that the objective of prudential 
supervision is to see after the safety and soundness of banks and the banking 
sector as a whole; that prudential authorities work towards this objective in 
order to protect depositors from losses due the failure of banks and to promote 
the stability and soundness of the banking sector as a whole; and that not being 
able to properly fulfill their mandate as a result of bank secrecy laws might 
actually be detrimental to depositors.8
Thus, to address the unintended consequences of the secrecy of bank 
deposit laws, and heed the call of the global community for a more transparent 
financial system environment. Rep. Act No. 1405 should be amended, which 
will be limited only within the very narrow confines of banking supervision. This 
will effectively restore the authority of BSP to examine bank deposits under PD 
No. 1792.
1 International Monetary Fund Financial Sector Assessment Program, Background Note 
(Draft), Bank Secrecy Impediments to Financial Sector Supervision. March 2020. p. 15.
2 When the revised BCP framework was published.
3 According to the Lebanon Law on Banking Secrecy (1956), banks are subjected to bank 
secrecy. Bank managers and employees who by virtue of their position have access to bank 
books and operation may not disclose information on client names funds or personal matter 
to any party. Violation of the secrecy provision Is punishable by three to twelve months 
imprisonment.
4 Supra, note 1. 
s Id.
6 Id.
1 Id
8 Supra, note 1.


One of the significant amendments proposed in the bili is the inciusion 
of the inquiry or examination made by BSP, in the exercise of its supervisory 
powers, as one of the exceptions to the prohibition to examine, inquire or iook 
into deposits, provided that: (i) there is reasonable ground to believe that a 
fraud, serious irregularity or unlawful activity has been oris being committed; 
(ii) it is necessary to look into the deposit to establish such fraud. Irregularity 
or unlawful activity; (Hi) the results of such examination shall be for the 
exclusive use of BSP and shall not be made available to any person or entity, 
whether public or private, except under such conditions as may be prescribed 
by the Governor or the Monetary Board of BSP; (iv) no deposit shall be 
examined, inquired or looked Into by BSP during an election period to the 
prejudice of a candidate for an electoral office; and (v) the authority of BSP to 
examine, inquire or look into deposits in the exercise of its supervisory powers 
shall not apply to funds deposited and placed in a deposit account prior to the 
effectivity of this Act, as secrecy of deposits may be considered a form of vested 
right, which cannot be impaired. The foregoing exemptions are recommended 
to also apply to foreign currency deposits in banks operating in the Philippines 
including off-shore branches of domestic banks.
Notably, as safeguard against using the Act for political motives during 
the election period, it is proposed that no deposit shall be examined, inquired 
or looked into by BSP during said period to the prejudice of a candidate for an 
electoral office. In addition, the bill proposes to consider the use of the Act for 
political persecution or harassment as one of the unlawful acts under the Act. 
It Is believed that the amendment to Rep. Act No. 1405 should not be used to 
facilitate political harassment or malicious prosecution. Such will prevent to a 
great extent the indiscriminate disclosure by any person who may have 
obtained any information on deposits, thereby adversely affecting the privacy 
of a depositor.
In view of the foregoing, the early passage of this bill is earnestly 
recommended.
* y GRACE Poe


BGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE 
S. No. 1802
1
& RECEIVED
15 n.rr- Sept01 202^1
itP
Tu.m:, 9:50 a.m.
IWDEX,
Introduced by Senator Grace Poe
AN ACT
AMENDING REPUBLIC ACT NOS. 1405, OTHERWISE KNOWN AS "THE 
SECRECY OF BANK DEPOSITS LAW"
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled:
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Section 1. Section 2 of Republic Act No. 1405, otherwise known as
2 
"The Secrecy of Bank Deposits Law" is hereby amended to read, as follows:
3 
SECTION 2. All deposits, of whatever nature AS DEFINED
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UNDER REPUBLIC ACT NO. 3591, AS AMENDED, with bonks
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or-bankH'ng-institutiens in thc-Philippines including-investmonts-ln-
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bonds-issued by-the Government of the Philippines, its-politieal
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subdivisions-and-its-instrumcntalities7 are hereby considered as of
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an absolutely confidential nature and may not be examined, inquired
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or looked into by any person, government official, bureau or office,
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except upon written permission of the depositor, or in cases of
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impeachment, or upon order of a competent court in cases of
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bribery or dereliction of duty of public officials, or in cases where
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the money deposited or invested is the subject matter of the
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litigation, OR IN CASES WHERE THE INQUIRY OR


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EXAMINATION IS MADE BY THE BANGKO SENTRAL NG 
PILIPINAS IN THE EXERCISE OF ITS SUPERVISORY 
POWERS: PROVIDED, THAT THERE IS REASONABLE 
GROUND TO BELIEVE THAT A FRAUD, SERIOUS 
IRREGULARITY OR UNLAWFUL ACTIVITY HAS BEEN OR IS 
BEING COMMITTED AND THAT IT IS NECESSARY TO LOOK 
INTO THE DEPOSIT TO ESTABLISH SUCH FRAUD, 
IRREGULARITY OR UNLAWFUL ACTIVITY: PROVIDED 
FURTHER, THAT THE RESULTS OF SUCH EXAMINATION 
SHALL BE FOR THE EXCLUSIVE USE OF THE BANGKO 
SENTRAL NG PILIPINAS AND SHALL NOT BE MADE 
AVAILABLE TO ANY PERSON OR ENTITY, WHETHER PUBLIC 
OR PRIVATE, EXCEPT UNDER SUCH CONDITIONS AS MAY 
BE PRESCRIBED BY THE GOVERNOR OR THE MONETARY 
BOARD OF THE BANGKO SENTRAL NG PILIPINAS'. 
PROVIDED FURTHERMORE, THAT NO DEPOSIT SHALL BE 
EXAMINED, INQUIRED OR LOOKED INTO BY THE BANGKO 
SENTRAL NG PILIPINAS DURING AN ELECTION PERIOD TO 
THE PREJUDICE OF A CANDIDATE FOR AN ELECTORAL 
OFFICE: PROVIDED FINALLY, THAT THE AUTHORITY OF 
BANGKO SENTRAL NG PILIPINAS 10 INQUIRE, EXAMINE 
OR LOOK INTO DEPOSITS IN THE EXERCISE OF ITS 
SUPERVISORY POWERS SHALL NOT APPLY TO FUNDS


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DEPOSITED AND PLACED IN A DEPOSIT ACCOUNT PRIOR
TO THE EFFECTWITY OFTHIS ACT.
THE FOREGOING EXEMPTIONS SHALL APPLY TO FOREIGN 
CURRENCY DEPOSITS IN BANKS OPERATING IN THE 
PHILIPPINES INCLUDING OFF-SHORE BRANCHES OF
DOMESTIC BANKS.
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Sec. 2. Section 3 of Republic Act No. 1405, is hereby amended to read
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as follows:
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SECTION 3. It shall be unlawful for any official, employee, of a
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banking institution OR THE BANGKO SENTRAL NGPILIPINAS,
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to disclose to any person other than those mentioned AND UNDER
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SUCH CONDITIONS PROVIDED in Section 2 hereof, information
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concerning said deposits. IT SHALL ALSO BE UNLAWFUL FOR
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ANY PERSON TO USE THIS ACT FOR POLITICAL
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PERSECUTION OR HARASSMENT OR AS AN INSTRUMENTTO
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HAMPER COMPETITION IN TRADE 
AND COMMERCE.
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Sec. 3. Repealing Clause. - The following are hereby repealed subject
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to the provisions of this Act:
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a. Sections 2,3, 4 and 6 of Republic Act No. 1405, as amended, also known
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as the "Secrecy of Bank Deposits Act";
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b. Sections 8 and 12-A of Republic Act No. 6426, as amended, also known
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as the "Foreign Currency Deposit Act of the Philippines," with respect to
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foreign currency deposits;


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c. Section 6 Republic Act No. 8367, also known as the "Revised Non-Stock
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Savings and Loan Association act of 1997," with respect to ail deposits
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of whatever nature with a Non-Stock Savings and Loan Associations as
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provided under Republic Act No. 8367;
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d. Section 33 of Republic Act No. 6848, also known as the "Charter of the
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Al-Amanah Islamic Investment Bank of the Philippines," with respect to
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banking transactions relating to all deposits of whatever nature as
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provided under Republic Act No. 6848;
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e. Section 26(a)(2) of Republic Act No. 7353, also known as the Rural
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Banks Act of 1992, as amended; and
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f. Section 21(a)(2) of Republic Act No. 7906, also known as the Thrift
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Banks Act of 1995.
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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. 4. SepambiUty Clause. - If any provision or section of this Act Is
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held to be unconstitutional or invalid, the other provisions or sections hereof,
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which are not affected thereby shall continue to be in full force and effect.
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Sec. 5. Effectivity. - This Act shall take effect fifteen (15) days following
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Its publication in the Official Gazette or in a newspaper of general circulation
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in the Philippines