By Luz Wendy T. Noble, Reporter
EASING the Bank Secrecy Law will strengthen the case for the Philippines to avoid being “gray-listed” by the Financial Action Task Force (FATF), government officials said.
“The country now needs to demonstrate that our anti-money laundering and counter-terrorism financing (AML/CTF) legal and institutional framework is producing the expected results over a sustained period. Thus, at this point, all branches of government are contributing toward demonstrating tangible and positive progress, according to the roadmap set,” Anti-Money Laundering Council Executive Director Mel Georgie B. Racela said in a Viber message.
Mr. Racela made the statement after the International Monetary Fund (IMF) stressed the need for major reforms in the country’s efforts against money laundering and counter-terrorism financing.
In its the Financial System Stability Assessment for the Philippines, the IMF said the Philippines should amend the Bank Secrecy Law to strengthen the central bank’s supervision powers, boost the effectiveness of the country’s regulations against “dirty money” and terrorism financing, and further improve ties with foreign authorities. The IMF said that the country should address these gaps within the medium term.
“Without major reforms by June 2021, the country could again be included in the FATF list of jurisdictions with serious AML/CFT deficiencies and expose the financial system to significant risks,” the IMF said.
Quirino Rep. Junie E. Cua has filed House Bill (HB) 8991 which seeks to give the Bangko Sentral ng Pilipinas (BSP) the power to look into accounts of bank officials provided there is “reasonable ground” for fraud, serious irregularity, or unlawful activity committed by industry leaders. It has been approved by the House Committee on Banks and Financial Intermediaries.
The measure amending the bank secrecy law is not part of the list of priorities identified by the Legislative-Executive Development Advisory Council (LEDAC) for passage within the next few months.
Mr. Cua, chairman of the House Committee on Banks and Financial Intermediaries, said it is still “very possible” to approve the measure before 2022.
“I think by the time we resume session in May, it will not take long, we will be able to pass that on second and third reading, and the Senate still has several months to work on it,” Mr. Cua said in a phone call.
The measure can still be prioritized even if it is not endorsed by the LEDAC, according to Senate President Vicente C. Sotto III.
“We can consolidate the House bill with any filed in the Senate whether [the bill is] prioritized or not”, Mr. Sotto said in a WhatsApp message.
Senate Bill 1802 was filed by Senator Grace S. Poe-Llamanzares in September last year and is still pending at the committee level.
AMLC’s Mr. Racela said easing bank secrecy rules also means boosting regulatory powers of other agencies.
“The proposed amendments to the Bank Secrecy Law primarily aim to assist other supervisors and law enforcement agencies as the AMLC is already exempt from the effects of the bank secrecy law,” Mr. Racela said.
Meanwhile, the Chamber of Thrift Banks (CTB) expressed concern over the proposed amendments to the Bank Secrecy Law.
“We question the proposed amendment authorizing the BSP to examine and inquire into the deposits of a bank stock holder, owner, director, trustee, officer, or employee, citing the fact that present laws are already sufficient to enable to BSP and of course to examine the accounts, subject of course to existing requirements or limitations,” CTB President Cecilio Paul D. San Pedro said at their General Membership Meeting on Wednesday.
Bankers Association of the Philippines President Cezar P. Consing in February said the industry supports the amendments, saying it will making the Philippines less prone to “dirty money” flows.
However, he said there should be a safe harbor clause that will protect lenders from possible civil liability in relation to deposits examined by the BSP. This has already been addressed in the committee-approved version of HB 8991.
The IMF also recommended designating tax crimes as predicate money laundering offenses and establishing a comprehensive legal framework for targeted financial sanctions against proliferation financing. It also proposed boosting risk-based supervision by implementing sanctioning procedures for high risk sectors such as banks, casinos, and money value transfer services.
These recommendations have already been addressed by the Republic Act No. 11521 or the Anti-Money Laundering Act and the Republic Act No. 11479 or the Anti-Terror Act of 2020. Both laws were passed before a Feb. 1, 2021 deadline set by the FATF.