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NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE 
s. NO. 1068
^enatf
of Iljc fere ft In I j)
■22 AUG-8 A10 25
RECEIVED BY:
Introduced by Senator Grace Poe
AN ACT
AMENDING REPUBLIC ACT NO. 1405f OTHERWISE KNOWN AS THE 
SECRECY OF BANK DEPOSITS LAW
EXPLANATORY 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 rt 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later expressly repealed by Rep.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 Basel Core Principles 
(BCP) since 20122 shows that only one other country-Lebanon3-has similar 
limitations for prudential supervision as the Philippines.4 This limitation impedes 
transparent governance and anti-corruption mechanisms.
For example, in the incident involving Wirecard, Bangko Sentral ng Pilipinas 
C'BSP"), in the exercise of Its supervisory powers, was unable to direct the banks 
involved to submit to BSP specific deposit or account Information about the parties 
involved. This hindered the conduct of a swifter, more focused and more direct 
investigation that would have resulted 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.
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.
5 Id.


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 to 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 to heed the call of the global community for a more transparent financial 
system environment. Rep. Act No. 1405 is proposed to be amended, 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.
One of the significant amendments proposed in the bill is the inclusion 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 look into deposits, 
provided that: (i) there is reasonable ground to believe that a fraud, serious 
irregularity or unlawful activity has been or is being committed; (ii) it is necessary to 
look Into the deposit to establish such fraud, irregularity or unlawful activity; (iii) 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
& Id.
1 Id
8 Supra, note 1.


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 info. mation on 
deposits, thereby adversely affecting the privacy of a depositor.
In view of the foregoing, the early passage of this bill is earnestly 
recommended.
GRACE


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
)
SENATE 
s. NO.'I ORB
r [ ti]0 #>! •■i;ernr(p
‘22 AUG-8 AlO '25
RECEIVED BY;
Introduced by Senator Grace Poe
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AN ACT
AMENDING REPUBLIC ACT NO. 1405, OTHERWISE KNOWN AS THE 
SECRECY OF BANK DEPOSITS LAW
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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, [of whatever nature with banks-or bonking 
institutions in-thc Philippines including investments in bonds-issued by the
Government—of—the—Phitippincs,—its—peiitieel—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 [or 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: PROVIDED THAT, UPON DETERMINATION 
BY THE MONETARY BOARD, 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. THE AUTHORITY


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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 ITS 
BUSINESS, AND FOR WHICH IT HAS GIVEN OR IS OBLIGED TO GIVE 
CREDIT TO A COMMERCIAL, CHECKING, SWINGS, TIME OR THRIFT 
ACCOUNT, EVIDENCED BY A PASSBOOK, CERTIFICATE OF DEPOSIT, 
OR OTHER EVIDENCE OF DEPOSIT, ISSUED IN ACCORDANCE WITH 
BSP RULES 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 SUCH INQUIRY OR EXAMINATION SHALL BE 
FOR THE EXCLUSIVE USE OF THE BSP AND SHALL NOT BE MADE 
AVAILABLE TO ANY PERSON OR ENTIFf, WHETHER PUBLIC OR 
PRIVATE, EXCEPT UNDER SUCH CONDITIONS AS MAY BE 
PRESCRIBED BY THE MONETARY BOARD OF BSP FOR THE 
PROSECUTION OF AN OFFENSE OR CRIME: PROVIDED, 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 TO INQUIRE, EXAMINE 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 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 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, [J]it shall be unlawful for any official, employee, of a 
banking institution OR THE BSPr to disclose to any person other than those 
mentioned AND UNDER SUCH CONDITIONS PROVIDED in Section 2 
hereof, information concerning said deposits. IT SHALL ALSO BE 
UNLAWFUL FOR ANY PERSON TO USE THIS ACT FOR POLITICAL 
PERSECUTION OR HARASSMENT OR AS AN INSTRUMENTTO HAMPER 
COMPETITION IN TRADE AND COMMERCE.
Sec. 3. Repealing Clause. - The following are hereby repealed subject to the 
provisions of this Act:
a. Sections 2,3, 4 and 6 of Republic Act No. 1405, as amended, also known 
as the "Secrecy of Bank Deposits Act";
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;
c. Section 6 Republic Act No. 8367, also known as the "Revised Non-Stock 
Savings and Loan Association act of 1997," with respect to all deposits of 
whatever nature with a Non-Stock Savings and Loan Associations as 
provided under Republic Act No. 8367;
d. Section 33 of Republic Act No. 6848, also known as the "Charter of the Al- 
Amanah Islamic Investment Bank of the Philippines," with respect to 
banking transactions relating to all deposits of whatever nature as 
provided under Republic Act No. 6848;
e. Section 26(a)(2) of Republic Act No. 7353, also known as the Rural 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 Banks 
Act of 1995.
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. 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 thereby shall continue to be in full force and effect.
Sec. 5. 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,