With calls for Charter change (Cha-cha) once more gaining traction, the Foundation for Economic Freedom issued this statement last Jan. 4: “Economic Cha-cha is necessary but not enough. Other conditions, such as rule of law, good infrastructure and ease of doing business, among others, must be present to compete with other countries in attracting foreign investment.”
The same position was conveyed by economist Solita Monsod at a hearing conducted last year by the House of Representatives on the matter of amending certain economic provisions of the Constitution. She enumerated similar other necessary conditions, most significant of which is the need to curb corruption.
Corruption is perhaps the biggest bane in our life as a nation and the most pernicious obstacle to achieving economic freedom. Corruption ruins the rule of law, retards needed infrastructure, and obstructs ease of doing business.
Economic Charter change and the other necessary conditions for attracting foreign direct investments involve tasks independent of one another. The easing of the 1955 bank secrecy law, or Republic Act (RA) No. 1405, ought to come first. It is vital to going after the corrupt and to shaping and ensuring transparency in governance.
Stamping out corruption requires policies directed against corruption. Amending RA 1405 can well be the nation’s biggest leap towards economic freedom.
Finance and business organizations have tried to get bank secrecy rules eased by another knot for tax purposes and predicate crimes and to allow the Philippines to comply with its international obligations.
At a hearing of the Senate committee on banks in 2016, Amando Tetangco Jr., the then governor of the Bangko Sentral ng Pilipinas (BSP), was asked if he would support the repeal of RA 1405.
Tetangco replied: “Our main concern, Mr. Chairman, with respect to the bank secrecy law, is in terms of being able to ensure that existing regulations are being complied with. That’s No. 1. And No. 2, to provide some form of deterrent for possible fraud, unlawful activity, or irregularity…”
He added: “The Philippines is one of only three remaining countries in the world with such ultra secrecy. The other two are Lebanon and North Korea.”
Speaking at a special membership meeting of the Financial Executives Institute of the Philippines in August 2022, the incumbent BSP governor, Felipe Medalla, said the central bank was requesting and needed support for more authority so it could examine suspect bank accounts, particularly those with possible links to illegal activities.
The International Monetary Fund finds a compelling rationale for amending the Philippines’ unusually strict bank secrecy regulations so that law enforcement and financial regulators can have complete and direct access to depositor information. It also says that the Philippines will be able to remove itself from the “gray list” of the Financial Action Task Force by revising its bank secrecy rules.
At present, no one can access records of bank transactions except in two instances: via a court order or by waiver of the depositor. A third exception, introduced in House Bill (HB) No. 8991 and approved by the House committee on banks and financial intermediaries of the 18th Congress, is in cases where the inquiry or examination is made by the BSP, provided that there is reasonable ground to believe that 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 results of the inquiry or examination shall be for the BSP’s exclusive use and shall not be made available except, as applicable, to the Securities and Exchange Commission, Philippine Deposit Insurance Corporation, Anti-Money Laundering Council, Department of Finance, Department of Justice, and/or the courts, provided that the sharing of the results of the inquiry or examination is necessary to prevent or prosecute any offense or crime.
The BSP is supporting HB 8991, or “An Act Promoting Transparent Governance and Instituting Anti-Corruption Mechanisms in the Operation of Banks, amending for the Purpose Republic Act No. 1405.” The bill takes note of the deliberations during the hearings conducted by the House committee on banks and financial intermediaries, in which various stakeholders—including the Bankers Association of the Philippines, Chamber of Thrift Banks, Rural Bankers Association of the Philippines, Cooperative Banks Federation of the Philippines, Alliance of Non-Stock Savings & Loan Associations, and Al-Amanah Islamic Investment Bank of the Philippines—participated and provided comments.
In this 19th Congress, HB 7446, which is similar to HB 8991, was approved by the House on third reading on May 8, 2023. In the Senate, a similar measure, Senate Bill No. 1839 filed by Sen. Sherwin Gatchalian on Feb. 6, 2023, is pending at the chamber’s committee on banks and financial institutions and currencies.
As a means of support, Kapatiran Party may file in both chambers of Congress a similar version of HB 8991 through indirect initiative.
RA 6735 defines indirect initiative as “the exercise of initiative by the people through a proposition sent to Congress or the local legislative body for action.” It adds: “The procedure to be followed on the initiative bill shall be the same as the enactment of any legislative measure before the House of Representatives except that the said initiative bill shall have precedence over the pending legislative measures on the committee.”
To give precedence means to give priority or more importance. The people’s right ingrained in the law is substantial.
Establishing a government that shall promote the general welfare of the nation is a duty not just of our leaders but, more importantly, of each Filipino, collectively. Only in working together in a cohesive manner can we influence Congress to undo corruption by passing an amended bank secrecy law. There is no better alternative.
What more can we do together to raise the importance of amending the bank secrecy law to the wider public, gather massive support, and break open the congressional walls of personal interests?
Norman V. Cabrera is president of the Kapatiran Party. —Ed.