LAW ON SECRECY OF BANK DEPOSITS Republic Act No.

1405, as amended AN ACT

PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING
INSTITUTION AND PROVIDING PENALTY THEREFOR

Former US Ambassador to the Philippines Francis Ricciardone noted in his January 2005
cable that the bank secrecy laws of the Philippines are “among the strictest in the
world.” This means that bank accounts in the country can only be opened in cases of
violation of the Anti Money-Laundering Act.

Prior to this, there had already been a movement toward a more transparent bank law,
especially for individuals working in the public sector. This is because investigations
involving accused corrupt public officials through lifestyle check and their Statement of
Assets, Liabilities, and Net Worth (SALN) would be so much easier if we had a fair Bank
Secrecy Law.

Here are some of the things you need to know about it:

1. What is the law on Secrecy of Bank Deposits?

According to Republic Act (RA) No. 1405 Section 2, “All deposits of whatever nature with
banks or banking institutions in the Philippines including investments in bonds issued by
the Government of the Philippines, its political subdivisions and its instrumentalities, are
hereby considered as of an absolutely confidential nature and may not be examined,
inquired or looked into by any person, government official, bureau or office.”

Exceptions include “written permission of the depositor, or in cases of impeachment, or

upon order of a competent court in cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or invested is the subject matter of the
litigation.”

Deposits may only be disclosed if a bank account is being investigated in court. This is
also extended in the Foreign Currency Deposit Act of the Philippines, or FCDA, also
known as Republic Act No. 6426. Foreign currency accounts may not be disclosed,
except upon a written permission of the depositor.

Section 3 also states that, “It shall be unlawful for any official or employee of a banking
institution to disclose to any person other than those mentioned in Section two hereof
any information concerning said deposits.”

2. What will happen to any violation of the Law on Secrecy of Bank Deposits?
Section 5 of the RA states that violators will be subject to “conviction, to an imprisonment
of not more than five years or a fine of not more than P20,000, or both, in the discretion of
the court.”
3. What accounts are covered in the secrecy law?
Savings account, checking account, and other types of bank deposits are included in
the secrecy law. Money markets, trust funds, mutual funds, and the like are not covered.

4. If someone purportedly gained access to an individual’s bank account, does that

mean the bank involved isn’t safe? Should I withdraw all my money from the said
account and move it to another bank?
Bank employees are able to see some bank accounts in the system. What’s important is
that they don’t disclose the information they see to anyone.

In the event of data breach, it is best to move your deposits to a bank with stronger data
protection in place.

5. What happens when the depositor dies and the spouse or dependent requests to
withdraw the funds?
Upon knowing of the depositor’s death, Section 97 of the Tax Code allows banks to
freeze the deceased depositor’s account until the Estate Tax Clearance from the BIR is
submitted. this applies to both individual or joint accounts. The withdrawal will only be
granted if the Estate Tax has been paid.

The deposit is considered tax-exempt if it’s P200,000 or below, and the spouse or
dependent only needs to submit documents such as marriage certificate, birth
certificate, and certificate of deposit (e.g. a passbook) to withdraw the account.
However, if the amount deposited is more than P200,000, it is subject to Estate Tax, and
the spouse or dependent is mandated by law to pay a certain percentage for the
amount deposited. When it’s paid, a Certificate of Tax Clearance will be provided to the
spouse or dependent. It should be submitted along with the Deed of Extra-Judicial
Settlement of the Estate, and other document requirements stipulated by the bank.

6. What has been done toward a more transparent investigation for public officials’ bank
deposits?
At the height of the Bangladesh stolen government funds worth some $81 million, vice
presidential candidate Senator Francis Escudero urged fellow public officials to sign a
waiver or written permission to the Office of the Ombudsman to grant permission into all
bank deposits and other investments, within and outside the country.

This is in support of Senate Bill No. 16 he filed in 2016, which makes lifestyle checks
mandatory for public officials and employees. They will be required to sign a waiver for
the transparency of their bank accounts.