HomeSecrecy of Bank Deposits Law R.A. 1405 Enacted: 1955 1st amendment: 1981 2nd amendment: 1993 What is the Secrecy of Bank Deposits Law? An act PROHIBITING The examination, inquiry, or LOOKING into deposits by persons, government, officials, bureaus, or offices and/or The DISCLOSURE by bank institutions, officials or employees to unauthorized persons regarding information about covered courts. (General Rule) General rule: Banks are not allowed to disclose the account balance of any of its depositors. However, banks are allowed to confirm that an account exists without disclosing its balance. Purpose of the law (R.A. 1405) Encourage people to deposit money in banks Discourage private hoarding of money Protect the confidentiality of bank deposits Covered by law Deposits All deposits of whatever nature with banks or banking institutions. Investment in bonds Issued by the Government of the Philippines Absolutely confidential in nature and may not be examined, inquired or looked into by any person, government official, bureau or office. Definition of Terms Deposits - refer to money or funds placed with a bank that can be withdrawn on the depositor's order or demand, such as deposit accounts in the form of savings, current and time deposits. Characterized as a simple loan. Creates a creditor-debtor relationship between the depositor and the bank. Investment in Government Bonds - refers to investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities. An unconditional obligation of the State, and backed by its full taxing power Include treasury bills, treasury notes, retail treasury bonds, dollar linked peso note, and other risk-free bonds. The following are LIABLE under this law: Any person or government official who, or any government bureau or office that, examines, inquires or looks into a bank deposit or government bond investment in any of the instances not allowed in Sec. 2; Any official or employee of a banking institution who makes a disclosure concerning bank deposits to another in any instance not allowed by law (Sec. 3, Rep. Act No.1405); and Any person who commits a violation of any of the provisions of the law (Sec. 5, Rep. Act No. 1405). Other laws that prohibits the same disclosure: General Banking Law Thrift Banks Act Rural banks Liable parties under these laws: Any bank official, director, employee or agent who discloses information relative to funds or properties in the custody of the bank. SUMMARY OF EXCEPTIONS 4 Exceptions* under the Law on Secrecy of Bank Deposits Exceptions under OTHER LAWS Authorized Disclosures Foreign Currency Deposits Act (RA 6426) Human Security Act of 2007 (RA 9372) Terrorism Financing and Prevention and Suppresion Act (RA 10168) 4 Exceptions* under the Law on Secrecy of Bank Deposits Upon written permission or consent in writing by the depositor. In case of impeachment of the President, Vice President, members of the Supreme Court, members of the Constitutional Commission, and the Ombudsman. Upon order of a competent court in cases of bribery or dereliction of duty of public officials. In cases where the money deposited or invested is the subject matter of the litigation. The money deposited should be the very thing in dispute. Exceptions under Other Laws The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in any investigation or inquiry, as well as examine and access bank accounts and records. The bank deposits of a public official, their spouse, and unmarried children can be examined when enforcing Section 8 of the Anti-Graft and Corrupt Practices Act. Loans by DOSRI – Directors, Officers, Stockholders, and Related Interests (DOSRI) must sign a waiver of bank secrecy when taking out loans from their bank (New Central Bank Act). Commissioner of Internal Revenue (CIR) Access – Allowed in these cases: When a taxpayer applies for a tax compromise due to financial incapacity. To determine a deceased person’s total estate for tax purposes. When a foreign tax authority requests taxpayer information under a tax treaty (Exchange of Information on Tax Matters Act of 2009). Bangko Sentral ng Pilipinas is allowed to check bank deposits in there situations: To Enforce Anti-Money Laundering Laws (AMLA) - BSP can examine accounts during regular or special audits to ensure banks follow the law. To Verify Numbered Accounts – BSP conducts yearly checks to confirm if numbered accounts exist and to identify their real owners. To Investigate Fraud – If the Monetary Board finds strong evidence of fraud or serious wrongdoing in a bank, it can authorize an investigation into deposits to uncover the issue. The Philippine Deposit Insurance Corporation (PDIC) and the Bangko Sentral may inquire into bank deposits when there is a finding of unsafe or unsound banking practices.* Anti-terrorism case - The Court of Appeals can allow law enforcement to check bank accounts, investments, trust funds, and financial records if they are linked to a terrorism case. This helps authorities track and prevent the financing of terrorist activities. Commission on Audit (COA) - is authorized to examine and audit government deposits. The Presidential Commission on Good Government - is allowed to access bank records when investigating and recovering ill-gotten wealth – money or assets illegally acquired, usually by government officials. Examined by Independent Auditor, hired by the Bank and for the Bank’s exclusive use. Coup d’etat Law (RA 6968, Oct 24, 1990) - penalizes individuals who attempt to overthrow the government. This is an exception to RA 1405 to immediately gain access to financial records to track illegal funding. Government exercises and invokes Police Power Judiciary Branch Supreme Court Head: Chief Justice Compositions: 15 Justices Appellate Courts (Courts that review decisions from lower courts) Court of Appeals Sandiganbayan (Handles corruption cases of government officials) Court of Tax Appeals (Handles tax-related disputes) Trial Courts (Courts that handle cases in the first instance) Regional Trial Courts (RTC) - High-level trial courts Shari’a District Courts - Special courts for Muslim personal laws Lower Trial Courts Metropolitan Trial Courts (For Metro Manila) Municipal Trial Courts (For smaller municipalities) Municipal Circuit Trial Courts (For multiple small municipalities) Shari’a Circuit Courts (For Islamic laws in Muslim communities)

Secrecy of Bank Deposits Law R.A. 1405 Enacted: 1955 1st amendment: 1981 2nd amendment: 1993 What is the Secrecy of Bank Deposits Law? An act PROHIBITING The examination, inquiry, or LOOKING into deposits by persons, government, officials, bureaus, or offices and/or The DISCLOSURE by bank institutions, officials or employees to unauthorized persons regarding information about covered courts. (General Rule) General rule: Banks are not allowed to disclose the account balance of any of its depositors. However, banks are allowed to confirm that an account exists without disclosing its balance. Purpose of the law (R.A. 1405) Encourage people to deposit money in banks Discourage private hoarding of money Protect the confidentiality of bank deposits Covered by law Deposits All deposits of whatever nature with banks or banking institutions. Investment in bonds Issued by the Government of the Philippines Absolutely confidential in nature and may not be examined, inquired or looked into by any person, government official, bureau or office. Definition of Terms Deposits - refer to money or funds placed with a bank that can be withdrawn on the depositor's order or demand, such as deposit accounts in the form of savings, current and time deposits. Characterized as a simple loan. Creates a creditor-debtor relationship between the depositor and the bank. Investment in Government Bonds - refers to investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities. An unconditional obligation of the State, and backed by its full taxing power Include treasury bills, treasury notes, retail treasury bonds, dollar linked peso note, and other risk-free bonds. The following are LIABLE under this law: Any person or government official who, or any government bureau or office that, examines, inquires or looks into a bank deposit or government bond investment in any of the instances not allowed in Sec. 2; Any official or employee of a banking institution who makes a disclosure concerning bank deposits to another in any instance not allowed by law (Sec. 3, Rep. Act No.1405); and Any person who commits a violation of any of the provisions of the law (Sec. 5, Rep. Act No. 1405). Other laws that prohibits the same disclosure: General Banking Law Thrift Banks Act Rural banks Liable parties under these laws: Any bank official, director, employee or agent who discloses information relative to funds or properties in the custody of the bank. SUMMARY OF EXCEPTIONS 4 Exceptions* under the Law on Secrecy of Bank Deposits Exceptions under OTHER LAWS Authorized Disclosures Foreign Currency Deposits Act (RA 6426) Human Security Act of 2007 (RA 9372) Terrorism Financing and Prevention and Suppresion Act (RA 10168) 4 Exceptions* under the Law on Secrecy of Bank Deposits Upon written permission or consent in writing by the depositor. In case of impeachment of the President, Vice President, members of the Supreme Court, members of the Constitutional Commission, and the Ombudsman. Upon order of a competent court in cases of bribery or dereliction of duty of public officials. In cases where the money deposited or invested is the subject matter of the litigation. The money deposited should be the very thing in dispute. Exceptions under Other Laws The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in any investigation or inquiry, as well as examine and access bank accounts and records. The bank deposits of a public official, their spouse, and unmarried children can be examined when enforcing Section 8 of the Anti-Graft and Corrupt Practices Act. Loans by DOSRI – Directors, Officers, Stockholders, and Related Interests (DOSRI) must sign a waiver of bank secrecy when taking out loans from their bank (New Central Bank Act). Commissioner of Internal Revenue (CIR) Access – Allowed in these cases: When a taxpayer applies for a tax compromise due to financial incapacity. To determine a deceased person’s total estate for tax purposes. When a foreign tax authority requests taxpayer information under a tax treaty (Exchange of Information on Tax Matters Act of 2009). Bangko Sentral ng Pilipinas is allowed to check bank deposits in there situations: To Enforce Anti-Money Laundering Laws (AMLA) - BSP can examine accounts during regular or special audits to ensure banks follow the law. To Verify Numbered Accounts – BSP conducts yearly checks to confirm if numbered accounts exist and to identify their real owners. To Investigate Fraud – If the Monetary Board finds strong evidence of fraud or serious wrongdoing in a bank, it can authorize an investigation into deposits to uncover the issue. The Philippine Deposit Insurance Corporation (PDIC) and the Bangko Sentral may inquire into bank deposits when there is a finding of unsafe or unsound banking practices.* Anti-terrorism case - The Court of Appeals can allow law enforcement to check bank accounts, investments, trust funds, and financial records if they are linked to a terrorism case. This helps authorities track and prevent the financing of terrorist activities. Commission on Audit (COA) - is authorized to examine and audit government deposits. The Presidential Commission on Good Government - is allowed to access bank records when investigating and recovering ill-gotten wealth – money or assets illegally acquired, usually by government officials. Examined by Independent Auditor, hired by the Bank and for the Bank’s exclusive use. Coup d’etat Law (RA 6968, Oct 24, 1990) - penalizes individuals who attempt to overthrow the government. This is an exception to RA 1405 to immediately gain access to financial records to track illegal funding. Government exercises and invokes Police Power Judiciary Branch Supreme Court Head: Chief Justice Compositions: 15 Justices Appellate Courts (Courts that review decisions from lower courts) Court of Appeals Sandiganbayan (Handles corruption cases of government officials) Court of Tax Appeals (Handles tax-related disputes) Trial Courts (Courts that handle cases in the first instance) Regional Trial Courts (RTC) - High-level trial courts Shari’a District Courts - Special courts for Muslim personal laws Lower Trial Courts Metropolitan Trial Courts (For Metro Manila) Municipal Trial Courts (For smaller municipalities) Municipal Circuit Trial Courts (For multiple small municipalities) Shari’a Circuit Courts (For Islamic laws in Muslim communities)