Banks are in the business of attracting deposits to lend these • upon order of a competent court in case of bribery or

out at reasonable spreads to corporate clients looking to dereliction of duty of public officials;

finance their business and to individuals wanting to achieve

their aspirations of a nice car or a new home. Banks are able • where money deposited or invested is the subject matter of

to generate these deposits through their good service and the litigation; and

locations, among others, but most of all, because of trust that

these deposits are safe in the banks. Safe, in that the money • examination of a bank specifically authorized by the

will be returned whole with some interest and that Monetary Board after being satisfied that there is a

unauthorized people won’t know how much or even how little reasonable cause to believe that a bank fraud or irregularity

is in the bank account. is being committed and it is necessary to look into the

deposit to establish such fraud.

Republic Act (RA) 1405 or the Bank Secrecy Law was

passed in 1955 to encourage people to deposit their money In addition, there are many exceptions and other laws that

in banking institutions and to discourage private hoarding so effectively waives bank secrecy:

that banks can give out in loans to assist in the economic

• The Ombudsman: for government officials under
development of the country.
investigation;

The Foreign Currency Deposit Act (RA 6426) and the

• The Anti-Money Laundering Council (AMLC): With court
General Banking Act (RA 8791) also prohibit bank directors,
order — probable cause related to money laundering
officers, employees and agents to disclose any information
offenses; without court order — involving crime of
on funds in the custody of bank to any unauthorized person.
kidnapping, drug trafficking, hijacking, and terrorism.
These are meant to protect legitimate deposits of bank

clients.
• Presidential Commission on Good Government: for ill-

gotten wealth
All deposits with banks including investments in bonds

issued by the government are considered absolutely

• Court of Appeals: for anti-terrorism cases
confidential and may not be looked into, except:

• Commission on Audit: authorized to examine deposits and

• upon written consent of the depositor;
investments in government banks

• in cases of impeachment;
• Bureau of Internal Revenue: request for tax information of
specific taxpayers made by foreign tax authority pursuant to
tax treaty.
• Bank deposits of a public official, his spouse and unmarried
children may be taken in consideration in the enforcement of
the Anti-Graft and Corrupt Practices Act;
• Bangko Sentral ng Pilipinas (BSP): inquire and examine
deposits during examinations to ensure bank compliance of
AML laws.
• Philippine Deposit Insurance Corp. and BSP: inquire and
examine bank deposits and investments when there is
finding of unsound and unsafe banking practices.
It is very important for banks to have a strong know your
customer and enhanced due diligence processes to attract
and onboard only the right set of customers with acceptable
profiles.
Banks must continuously enhance monitoring tools to detect
unusual transactions and have an effective compliance
system. Banks should also work closely with regulators on
the effective implementation of new and existing regulatory
guidelines to minimize exposure to anti-money laundering
and counter financing of terrorism risks.
It is truly a balancing act for Philippine banks to ensure bank
secrecy is fully complied with and, at the same time, commit
to full adherence to other laws and regulations. Philippine
banks cooperate fully with government enforcement
agencies, provided these investigations are deemed legal
and in accordance with laws.
The Philippines is a member but not yet a signatory to the
International Organization of Securities Commission
(IOSCO) Multilateral Memorandum of Understanding
(MMOU) because of the Bank Secrecy Law. Securities &
Exchange Commission Chair Tess Herbosa said SEC can
actually look into deposits now but only by coursing it thru
AMLC. SEC needs to have the power to look into bank
deposits directly to have “teeth” to go after trading
manipulators and insider traders.
There is a pending bill in Congress to relax the Bank
Secrecy Law. According to Isabel Pastor, head of
enforcement and cooperation and senior advisor for special
projects at IOSCO, transparency will attract investors to the
Philippines and protect securities and derivatives products
from cross-border fraud risks.
The Philippines is one of the three countries that still have a
bank secrecy law, with Lebanon and Switzerland being the
other two. We want to be fully compliant with all laws and
also be consistent with international best practice.
MANILA, Philippines — The higher
fines and new set of penalties under the
revised charter of the Bangko Sentral
ng Pilipinas would deter rogue banks
from committing violations, according
to BSP Assistant Governor and general
counsel Elmore Capule.
Capule said the administrative
sanctions on supervised entities under
RA 11211 signed by President Duterte
last Feb. 14 make it more painful and
expensive for banks and financial
institutions to commit violations.
“It will be more painful on their part,”
Capule said.
The new law, Capule said, strengthened
the administrative and criminal
sanctions that can be imposed by the
regulator and is now commensurate to
the magnitude of the violations.
The BSP can impose upon any bank,
quasi-bank, including their subsidiaries
engaged in allied activities, their
directors, officers or employees any
willful violations of its charter or
bylaws, delay in the submission of
reports or publications, refusal to
permit examination, making false or
misleading statement, and willful
failure and refusal to comply with any
banking law.
The regulator can impose a fine not
exceeding P1 million for each
transactional violation or P100,000 per
calendar of violations for a continuing
nature.
The Monetary Board will take into
consideration attendant circumstances
such as the nature and gravity of the
violation or irregularity and the size of
the institution.
However, Capule said a fine of not
more than three times the profit gained
or loss avoided would be imposed in
case profit is gained or loss is avoided
as a result of the violation.
“It is not be the fine that will kill them.
What will kill them is three times the
profit
So if they profited from it, forget the P1
million or P100,000 per day. We look
at the profit and multiply it by three and
that is very expensive on their part. So I
think that will really be a deterrent. It
will no longer be feasible to commit
violations,” Capule said.
Other sanctions include suspension of
rediscounting privileges or access to
BSP credit facilities, suspension of
lending or foreign exchange operations
or authority to accept new deposits or
make new investments, suspension of
interbank clearing privileges, and
suspension or revocation of quasi-
banking or other licenses.
He said resignation or termination from
office would not exempt directors,
officers, and employees from
administrative or criminal sanctions.
Likewise, the BSP could impose
preventive suspension on directors,
officers, and employees pending
investigation.
Capule said no court other than the
Court of Appeals and the Supreme
Court could issue any temporary
restraining order, preliminary
injunction or preliminary mandatory
injunction against the BSP.
Section 1. How Initiated. – Administrative cases
may be initiated upon referral of the Report Of
Compliance or ROEvaluation to the Litigation
and Evaluation Unit.
Section 2. Preliminary Administrative
Investigation. – Upon receipt of the ROC or ROE,
the Litigation and Evaluation Unit shall conduct
a fact-finding investigation, which involves an ex
parte evaluation of documents, to determine
whether a prima facie case exists to warrant the
filing of a Formal Charge. In the absence of a
prima facie case, the ROC or ROE shall be set
aside. The Compliance Unit and the Supervising
Authorities shall be notified accordingly. Section
3. Formal Charge. – Upon determination of the
existence of a prima facie case, the Litigation
and Evaluation Unit shall file a Formal Charge
against the covered person. The Formal Charge
shall contain the following: a. Statement of
Facts; b. Statement of Attendant Circumstances;
c. Statement of Findings; d. Statement that a
prima facie case exists for a specific violation;
and e. Relevant documents. Section 4. Notice of
Formal Charge. – The Administrative
Adjudication Unit shall notify the respondent of
the filing of Formal Charge by way of personal
delivery, courier service or Page 5 of 16
registered mail; and direct the respondent to
file an Answer within ten (10) working days
from receipt thereof. Section 5. Prohibited
Pleadings. – No motions or requests for,
extension of time to file Answer, clarification,
bills of particulars, dismissal, quashal, or
reconsideration on the Formal Charge shall be
entertained. Section 6. Answer. – The Answer
shall be in writing, under oath, indicate the date
of receipt of the Notice, and contain all material
facts and certified true copies of supporting
evidence. Noncompliance with these
requirements shall render the Answer
insufficient in form and substance. An Answer
filed by personal delivery or by courier service is
deemed filed on the date stamped “Received”
thereon by the AMLC Secretariat. In case of
filing by registered mail, it shall be deemed filed
on the date shown by the postmark on the
envelope. If the respondent fails to file the
Answer within the prescribed period, files an
Answer that is insufficient in form and
substance, or files any document other than an
Answer, the respondent shall be considered to
have waived the right to file an Answer, and the
case shall be submitted for resolution based on
available records. Section 7. Clarificatory
Meeting. – The Administrative Adjudication Unit
may, at its discretion, call for a meeting for
purposes of clarification. No motion or request
for postponement or resetting shall be allowed.
Section. 8. Disposition of the Case. – After giving
all the parties the opportunity to be heard, the
Administrative Adjudication Unit may, based on
evidence presented, dismiss the case, or
recommend to the AMLC the imposition of
appropriate administrative sanctions. In case of
dismissal, the respondent shall be notified
through personal delivery, courier service or
registered mail. Section 9. Resolution. – Upon
finding of substantial evidence that the
respondent committed violations as charged,
the AMLC shall issue a Resolution imposing such
administrative sanction as may be proper,
setting forth the factual and legal basis thereof.
The respondent shall be notified through
personal delivery, courier service or registered
mail. Section 10. Motion for Reconsideration. –
The respondent may file a motion for
reconsideration on the AMLC Resolution within
ten (10) working days from receipt thereof. No
extension of time to file a motion for
reconsideration shall be allowed. Page 6 of 16 A
motion for reconsideration filed by personal
delivery or by courier service is deemed filed on
the date stamped “Received” thereon by the
AMLC Secretariat. In case of filing by registered
mail, it shall be deemed filed on the date shown
by the postmark on the envelope. The filing of a
motion for reconsideration shall stay the
execution of the Resolution sought to be
reconsidered. No second motion for
reconsideration shall be allowed. Section 11.
Grounds. – The motion for reconsideration shall
be based on any of the following grounds: a.
Newly-discovered evidence which could not
have been discovered and produced at the time
the respondent filed its Answer, and which if
presented, would materially affect the
Resolution rendered; b. Substantial mistake in
the appreciation of evidence; or c. Erroneous
computation of fines. Section 12. Finality of the
Resolution. – The Resolution shall immediately
become final and executory if no motion for
reconsideration is filed within the prescribed
period. Section 13. Notice of Execution. – If the
Resolution involves the payment of fine and
restoration, if applicable, the Administrative
Adjudication Unit shall issue a Notice of
Execution directing the respondent to make
payment and restoration, if applicable, within
ten (10) working days from receipt thereof.
Payment of fines shall be in the form of
Manager’s Check payable to the account of the
“AntiMoney Laundering Council”. In cases of
restoration, the respondent shall submit a proof
of its compliance within the same period.
Section 14. Surcharge. – A surcharge equivalent
to ten percent (10%) of the outstanding fine
shall be imposed upon the respondent for its
failure to pay the fine within the prescribed
period.