(Photo courtesy of House of Representatives)

MANILA – A measure promoting transparent governance and instituting anti-corruption mechanisms in the operation of banks and other financial institutions hurdled second reading approval at the House of Representatives.

During the plenary session on Monday, the chamber passed through voice voting House Bill 7446, which seeks to amend the country's bank secrecy law or Republic Act 1405.

Manila Representative Irwin Tieng, author of the measure, said the law must be amended to address the unintended consequences of bank deposit laws.

"Existing secrecy of bank deposit laws of the Philippines are more constraining for prudential supervision than similar laws in other jurisdictions. A review of 49 countries assessed against the Basel Core Principles (BCP) since 2012 shows that only one other country--Lebanon--has similar limitations for prudential supervision as the Philippines. This limitation impedes transparent governance and anti-corruption mechanisms," Tieng said.

The measure aims to lift the barriers in the effective investigation and prosecution of corrupt or illegal financial actions of stockholders, owners, directors, trustees, officers or employees of entities supervised and regulated by the Bangko Sentral ng Pilipinas.

The bill also seeks to effectively combat tax evasion, money laundering and other financial crimes, as well as comply with international standards on transparency in financial transactions.

The proposal shall empower the Bangko Sentral ng Pilipinas (BSP) to inquire into or examine deposits in the course of its investigation of closed banks, or when there is reasonable ground to believe that fraud, serious irregularity or unlawful activity has been committed by the stockholder, owner, director, trustee, officer, or employee of BSP-supervised institutions, representative, agent, related party or conspirators.

The use of the results of bank examinations shall be limited exclusively to the BSP, Securities and Exchange Commission, Philippine Deposit Insurance Corporation, Anti-Money Laundering Council, Department of Justice, and the courts.

There is a safe harbor clause provided that shall exempt banks or financial institutions, their directors, officers, or employees from any action, claim, demand, or liability for acts done in compliance with an order of inquiry or examination of deposits from the BSP.

It shall prohibit officials or employees of the BSP and banking institutions from disclosing any information concerning deposits to any person other than those authorized under the law.

The use of the Bank Secrecy Law for purposes of persecution or harassment, or as an instrument to hamper competition in trade and commerce shall be forbidden.

Any person or entity found guilty of violating the law shall be punished with imprisonment of not less than two years but not more than 10 years, or a fine of not less than PHP50,000 or more than PHP2 million or both, at the discretion of the court. (PNA)