Bank Secrecy Law: Who Is Really Protected?

The Philippine Banking Industry is considered as a financial safe haven compared to other foreign countries. The comparatively low-interest rates, the fundamental resilience against drastic turnabouts in foreign economies (Remember Brexit?), and the privacy of banking transactions are just a few attributes an outsider would love to have in their country.

But in terms of the latter, how sure are you that you are really protected?

Republic Act 1405 (An Act Prohibiting Disclosure Or Inquiry Into, Deposits with Any Banking Institutions and Provided Penalty Therefor) or commonly known as the “Bank Secrecy Law” is the safeguard set up by our forefathers to protect our financial privacy.

It states the ABSOLUTE CONFIDENTIALITY of our bank deposit details against inquiry and examination by any person, government official, bureau, or office. Since banking is fiduciary in nature, the republic act ensures the public the safety of their deposit. And in return, it can facilitate more lending by the banks to ultimately fuel a prospering economy.

But then, with the political climate and “underground economies” present, the veil of this law is challenged. To be in the know (assuming you did not waive your right against this law), this is a list of exemptions you can watch out for.

If you are politician



If you are Politician Bank Secrecy Law: Who Is Really Protected?

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In light of infamous political corruption scandals throughout Philippine history, the need for ease of access into our public officials’ banking records is now imperative. A competent court can order the records of the accused bribed official under litigation and/or the records of their spouse and/or unmarried children by virtue of Rep. Act. No 3019 (Anti-Graft and Corrupt Practices Act). Also, in cases of impeachment for public officials, the financial records might be summoned for evidence to prove their alleged crimes.

If you are under an ongoing litigation



If you are under an ongoing litigation Bank Secrecy Law: Who Is Really Protected?

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There are a lot of cases where certain disputes between parties involve sums of money. If the very subject of the litigation is the deposited money, the record trail can be called up to court.

If you are paying taxes



If you are paying Taxes Bank Secrecy Law: Who Is Really Protected?

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There are instances where the BIR can request our financial trails. One is on compromise of tax liability. Compromise means a legally agreed upon decrease in payment for an issued tax deficiency assessment. As a ground for compromise of tax liability, the taxpayer may argue that s/he has a clear incapacity to pay the tax due. The bureau might request for your bank records to further supplement your assertion.

Two, it is required on determining the deceased gross estate for estate tax computation. This is a transfer tax you pay before you can inherit your departed one’s assets. The purpose of the waiver is to enumerate the decedent’s asset to properly assess the aforementioned payment.

If you are against money laundering



If you are against Money Laundering Bank Secrecy Law: Who Is Really Protected?

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Aside from corrupt politicians, a number of dubious individuals have chosen this country as a financial “Laundromat”.  With this predicament, various government bodies put safeguards to combat local and foreign “money cleaning”. The organizations that may invoke this exemption are the: Anti-Money Laundering Council (AMLA), Bangko Central ng Pilipinas (BSP) and Philippine Deposit Insurance Commission (PDIC), Commission on Audit (COA), Presidential Commission on Good Government, and the Court of Appeals.

To end the debacle



This controversial law might be questioned as to whom it protects. With criminals looming to “purify” their money, an untouchable account might be the perfect guise. But as shown above, the law shields everyone EXCEPT criminals. This goes to show that, amidst the historical scandals, our law is progressive. And rest assured, to answer “who is really protected?”, We all are.
Leandro Eclipse

Leandro Eclipse is an entrepreneur who loves to travel. He believes in garnering multiple Location-Independent Sources of Income. Because if you are going to work anyway, might as well do it while exploring the world. Self-proclaimed foodie and tech geek. Follow him on Twitter @MikoTheEclipse.

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