PHILIPPINE DEPOSIT INSURANCE CORPORATION

The PDIC is a government instrumentality created in 1963 by virtue of Republic Act No. 3591 to
insure the deposits of all banks. The PDIC exists to protect depositors by providing deposit
insurance coverage for the depositing public and to help promote financial stability.

Consistent with its public policy objectives, the PDIC has the following roles:

I. Deposit Insurance. PDIC provides a maximum deposit insurance coverage of

PhP500,000 per depositor per bank. To pay claims on insured deposits, PDIC builds
up the Deposit Insurance Fund (DIF) primarily through assessments of banks at an
annual flat rate of 1/5 of 1% of their total deposit liabilities.

II. Co-Regulator of Banks. PDIC works closely with the country's financial regulators
such as the Bangko Sentral ng Pilipinas (BSP) to ensure the stability of the banking
system. Jointly with the BSP, the PDIC conducts examination of banks. The PDIC
also issues rules and regulations for compliance of banks to protect the deposit
insurance system and the depositing public.

III. Liquidation of Closed Banks. PDIC proceeds with the liquidation process upon
order of the Monetary Board of the Bangko Sentral ng Pilipinas. The assets of the
closed bank are managed and eventually disposed of to settle claims of creditors in
accordance with the preference and concurrence of credits as provided by the Civil
Code of the Philippines.

TRUTH IN LENDING

The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and
credit card practices. It requires lenders to provide you with loan cost information so that you
can comparison shop for certain types of loans.

For loans covered under TILA, you have a right of rescission, which allows you three days to
reconsider your decision and back out of the loan process without losing any money. This right
helps protect you against high-pressure sales tactics used by unscrupulous lenders.

TILA does not tell banks how much interest they may charge or whether they must grant a
consumer loan. Learn more. Read Facts for Consumers: Home Equity Credit Lines on the
Federal Trade Commission Website and OCC's Answers about Consumer Loans.

Federal law authorizes the OCC to order supervised institutions to make monetary and other
adjustments to the accounts of consumers where an annual percentage rate (APR) or finance
charge was inaccurately disclosed under certain circumstances. An interagency policy
statement (PDF) on administrative enforcement and related questions and answers (PDF)
provide additional information for consumers and institutions.
BANK SECRECY LAW

On 09 September 1955, Republic Act No. 1405, otherwise known as An Act Prohibiting
Disclosure of or Inquiry into, Deposits with any Banking Institution (“Bank Secrecy Law”), was
approved. This law was enacted to encourage individuals to deposit their money in banks
instead of hoarding them.

Why is there a need to protect the secrecy of bank deposits? The law prefers that money be
deposited in banks so they may be properly utilized to assist in the economic development of
the country. It is also relevant on a practical matter. Transactions happening in your bank
account are not just empty figures. There are stories affixed to such transactions, thus, these
financial transactions are akin to your personal activities which should not be easily accessible
to anyone.

The Bank Secrecy Law protects all deposits of whatever nature in banks or banking institutions
in the Philippines as well as investments in government bond. This law prohibits any person,
subject to the exceptions below, from disclosing to any person any information, relative to the
funds or properties belonging to the depositors in the custody of the bank.

However, the rule is not absolute. The following are the exceptions to the bank secrecy law:

1. Written permission or consent in writing by the depositor;

2. In cases of impeachment;
3. Upon order of the court in cases of bribery or dereliction of duty of public officials;
4. Upon order of the court in cases where the money deposited or invested is the subject
matter of the litigation;
5. Upon a subpoena issued by the Ombudsman concerning an investigation it is
conducting, provided that there must already be a case pending in court, the account be
clearly identified, the inspection be limited to the subject matter of the pending case; and
the bank personnel and the depositor must be notified to be present during the
inspection;
6. The BIR can inquire into bank deposits in an application for compromise of tax liability or
determination of a decedent’s gross estate;
7. The Anti-Money Laundering Council (“AMLC”) can examine bank accounts pursuant to a
court order, where there is probable cause that the deposits are related to an unlawful
activity or money laundering offense;
8. The AMLC can examine bank accounts, WITHOUT a court order, where there is
probable cause that the deposits are related to certain crimes such as kidnapping for
ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson, murder and
violations of RA 6235 (acts inimical to civil aviation);
9. The Bangko Sentral can examine bank accounts in the course of its periodic or special
examination regarding compliance with Anti-Money Laundering Law.
The easiest way to waive the secrecy of bank deposits is through a written waiver. Although
there is no prescribed form for a waiver, it is necessary that the waiver be made voluntarily,
knowingly and with sufficient awareness of relevant circumstances and consequences. Thus, as
a matter of practice, banks will require the depositor to state in his waiver the specific bank
account, bank branch, name of depositor, period covered by the transactions and the name of
the person authorized to access the bank account.

How about dollar deposits? Foreign currency deposits are governed by a different law, namely
Republic Act No. 6426 and has fewer exceptions.

Criminal liability for violating the bank secrecy law: Any person violating this law may be
imprisoned for not more than five (5) years, or meted a fine not exceeding P20,000.00 or both.

ANTI MONEY LAUNDERING ACT PHILIPPINES OVERVIEW

The Anti Money Laundering Act (AMLA). The AMLA, enacted in 2001, serves as a crucial legal
framework to counteract money laundering and other financial crimes in the country.

Money laundering can be described as making illegally-gotten money look like it's from a legal
source. The Philippines realized the importance of addressing this issue, leading to the
establishment of the Anti Money Laundering Act, commonly referred to as AMLA. The AMLA law
defines money laundering as any act involving the conversion, transfer, concealment, or
disguising of illegally obtained funds.

This act lays out what's considered money laundering in the country, and it gives clear
guidelines on how businesses, especially financial institutions, should act to prevent it.

Objective of Anti Money Laundering Policy

The main objective of the Anti Money Laundering Policy in the Philippines is to prevent
and stop the flow of illegally acquired money. This means ensuring that criminals can't
use the country's financial system to hide their ill-gotten gains. By doing so, the policy
not only keeps the economy's integrity but also makes sure that criminal activities aren't
funded using laundered money.

Reporting Requirements for Financial Institutions

Under the AMLA regulations, financial institutions must implement effective AML
measures, including customer identification, record-keeping, and reporting suspicious
transactions. These institutions must also conduct risk assessments to understand their
exposure to money laundering and terrorist financing risks and implement adequate
controls to mitigate them.

Penalties and Sanctions for Non-compliance

Non-compliance with the AMLA can result in severe penalties, including fines,
imprisonment, and even the revocation of a financial institution's license. The severity of
the penalties depends on the nature and extent of the violation. Ensuring compliance
with the AMLA is crucial for financial institutions to maintain their reputation and avoid
costly penalties.

Role of Anti Money Laundering Council (AMLC)

They are tasked with implementing the rules set by AMLA. The council's job is to monitor
financial transactions, investigate suspicious activities, and work with other international
bodies to combat global money laundering practices. They act as the bridge between
AMLA's regulations and how they are put into practice.

The AMLC is composed of the Governor of the Bangko Sentral ng Pilipinas (BSP), the
Commissioner of the Insurance Commission (IC), and the Chairman of the Securities
and Exchange Commission (SEC).