bank secrecy

• Secrecy of Bank Deposits (RA 1405, as amended)


  Law that aims to discourage private hoarding and encourage people to deposit money in banks to assist in economic development
• Prohibited acts under the Secrecy of Bank Deposits law


  • Bank (any official or employee or independent auditor) - to disclose deposit information to any person other than authorized bank personnel
  • Any person, including the government - to inquire, examine or look into bank deposits or bonds issued by the government
• Deposits covered under the Secrecy of Bank Deposits law


  • All deposits of whatever nature with banks or banking institutions in the Philippines, including Trust Accounts
  • Investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities
• Exceptions to the Secrecy of Bank Deposits law for Peso Deposits (WIOBMU CARO TEA)


  • Written permission of the depositor or investor
  • Impeachment cases
  • Order of a competent court in cases of bribery, dereliction of duty, money laundering, or litigation involving the deposit
  • Inquiry by the BIR Commissioner to determine the net estate of a deceased depositor
  • Order of a competent court or AMLC in cases of money laundering
  • Disclosure to the Treasurer of the Philippines for unclaimed balances
  • Report of banks to AMLC of covered and/or suspicious transactions
  • Subpoena by the Ombudsman in a pending case, with certain conditions
  • Order of the CA, examination by law enforcement in terrorism cases
  • Examination by the BSP, PDIC, COA, or PCGG
• Exceptions to the Secrecy of Bank Deposits law for Foreign Currency Deposits

  • Written consent of depositor
  • Order under the Anti-Money Laundering Act
  • Order under the Human Security Act
  • Examination by the BSP, PDIC, PCGG and COA
• Bank accounts may be garnished by the creditors of the depositor without violating the bank secrecy law
• Deposits exempt from garnishment

  • Foreign currency deposits
  • Those exempt under Rules of Court
• Penalties for violation of the Secrecy of Bank Deposits law

  Peso Deposits: Imprisonment not to exceed 5 years, Fine not to exceed P20,000

  Foreign Currency Deposits: Imprisonment 1 to 5 years, Fine P5,000 to P25,000
• PDIC (Philippine Deposit Insurance Corporation)

  • Acts as deposit insurer, co-regulator of banks, and receiver/liquidator of closed banks
• Insured Deposits


  Amount due to any bona fide depositor for legitimate deposits in an insured bank, net of any obligation of the depositor to the bank, up to a maximum of P500,000
• Adjustment of maximum deposit insurance coverage

  1. Monetary Board determines a condition threatening monetary/financial stability

  2. Unanimous vote of PDIC Board of Directors

  3. Approval of the President of the Philippines
• Deposit accounts not entitled to PDIC payment

  • Deposit products from splitting of deposits
  • Deposit products or money placements by a foreign bank's head office in its Philippine branch
  • Deposits determined to be proceeds of unlawful activity
  • Deposits payable outside the Philippines
  • Unfunded, fictitious or fraudulent deposits
  • Deposits from unsafe and unsound banking practices
  • Investment products like bonds, trust accounts, etc.
• Determination of insured deposit amount

  Per bank: Depositor entitled to P500,000 coverage per bank

  Per depositor, per capacity: All deposits in the same right and capacity added together, up to P500,000

  Accounts "By", "In Trust For", "For the Account of": Depositor is the person named

  Joint accounts: Maximum P500,000 coverage divided equally among co-owners, unless stipulated otherwise
• PDIC procedure for determining insured deposits

  1. PDIC commences determination upon takeover of closed bank

  2. PDIC gives notice to depositors of insured deposits due them

  3. PDIC publishes notice in newspaper for at least 3 weeks
• Certificate of Deposit


  Owner/holder must be registered in the bank's books to be recognized as a depositor entitled to PDIC rights
• Periods for depositor to file and enforce PDIC claim

  2 years from PDIC takeover to file claim

  2 years after filing period to enforce claim
• Effects of non-filing or non-enforcement of PDIC claim within the periods
• PDIC modes of payment

  Cash

  Transferred deposit in another insured bank
• PDIC may withhold payment to offset depositor's liability to the closed bank
• PDIC is subrogated to the depositor's rights against the closed bank to the extent of the insured deposit payment
• Subrogation


  PDIC shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment
• Payment of an insured deposit to any person by PDIC shall discharge the PDIC, and payment of transferred deposit to any person by the new bank or by an insured bank in which a transferred deposit has been made available shall discharge PDIC and such new bank or other insured bank, to the same extent that payment to such person by the closed bank would have discharged it from liability for the insured deposit
• Preference


  All payments by PDIC of insured deposits in closed banks partake of the nature of public funds, and as such, must be considered a preferred credit similar to taxes due to the National Government in the order of preference under Article 2244(9) of NCC
• Period for the PDIC to settle claim

  1. 6 months from the date of filing of the claim

  2. Failure to settle the claim within 6 months from the date of filing of claim for insured deposit, where such failure was due to grave abuse of discretion, gross negligence, bad faith or malice, shall upon conviction, subject the directors, officers or employees of PDIC responsible for the delay, to imprisonment from 6 months to one year

  3. Except: that the period shall not apply if the validity of the claim requires the resolution of issues of facts and/or law by another office, body or agency
• Declaration of Policy of the Truth in Lending Act: It is hereby declared to be the policy of the State to protect its citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy
• The objective of transparent pricing is not to set limits on rates, but rather to make such rates more understandable, comparable and known to the client. Transparent pricing will facilitate healthy competition among credit providers as clients are better able to compare products and services
• Required Information under the Truth in Lending Act

  • the cash price or delivered price of the property or service to be acquired
  • the amounts, if any, to be credited as down payment and/or trade-in
  • the difference between the amounts set forth under clauses (1) and (2)
  • the charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit
  • the total amount to be financed
  • the finance charge expressed in terms of pesos and centavos
  • the percentage that the finance charge bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation
• Required Information under BSP Circular No. 755, Series of 2012


  • the total amount to be financed
  • the finance charge expressed in terms of pesos and centavos
  • the net proceeds of the loan
  • the percentage that the finance charge bears to the total amount to be financed expressed as a simple annual rate or an effective annual interest rate (EIR)
• All registered CGEs shall furnish each borrower with a copy of the disclosure statement, prior to the consummation of the transaction
• The disclosure statement shall be a required attachment to the loan contract and the customer has a right to demand a copy of such disclosure
• All loan-related documents shall show repayment schedules in a manner consistent with BSP Circular No. 755, Series of 2012. Marketing materials and presentations shall likewise be consistent with the said circular
• Banks shall post in conspicuous places in their principal place of business and branches, the information contained in the revised format of disclosure statement. The posters shall include an explicit notification that the disclosure statement is a required attachment to the loan contract and the customer has a right to demand a copy of such disclosure
• Manner of computing interest

  All registered CGEs shall charge interest based on the outstanding balance of a loan at the beginning of an interest period. For a loan where principal is payable in installments, interest per installment period shall be calculated based on the outstanding balance of the loan at the beginning of each installment period
• Registration of CGEs with BSP


  1. Submit the following minimum information to the BSP: Business Name, Directors, Key Officers and Substantial Stakeholders, Principal Place of Business and Contact Details, Notarized Deed of Undertaking to strictly and continuously comply with the requirements of all relevant laws, rules and regulations, signed either by the owner, partner, president or officer of equivalent rank and such other information or documents that may be required by the BSP

  2. After due registration and payment of registration fee, an electronically generated serially numbered Acknowledge of Registration (AoR) shall be issued and shall be valid for a period of 3 years from the date of issuance and renewable thereafter on the anniversary month when it was originally registered

  3. The entity shall be allowed to post the BSP-issued AOR and certified true copies thereof in its place of business and branches, if any

  4. The list of registered CGEs shall be published in the BSP website in order to enable the public, its clients/consumers to determine if their counterparty is registered with the BSP, for purposes of determining compliance with the Act and its IRRs
• Penalties under the Truth in Lending Act


  • Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of this Act or any regulation issued thereunder shall be liable to such person whichever is greater between: in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, upto a maximum of P2,000 on any credit transaction
  • Any person who willfully violates any provision of this Act or any regulation issued thereunder shall be subject to a Fine of not less than P1,00 or more than P5,000 or Imprisonment for not less than 6 months, nor more than one year or both
• Money Laundering


  A crime committed by any person knowing that any monetary instrument or property represents, involves or relates to, the proceeds of any unlawful activity
• Acts constituting Money Laundering

  • Transacts or attempts to transact said monetary instrument or property
  • Converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property
  • Conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property
  • Attempts or conspires to commit money laundering offenses referred to above
  • Aids, abets, assists in or counsels the commission of the money laundering offenses referred to above
  • Performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above
  • Those committed by failure to report to the Anti-Money Laundering Council (AMLC) by any covered person knowing that a covered or suspicious transaction is required under the Anti-Money Laundering Law to be reported thereto
• Stages of Money Laundering

  • Placement - The launderer inserts dirty money into a legitimate financial institution
  • Layering - Involves sending money through various financial transactions to change its form and make it more difficult to follow
  • Integration - At this stage the money re-enters mainstream economy in legitimate-looking form, appearing to have come from legitimate transaction
• Unlawful Activities under the Anti-Money Laundering Act

  • Kidnapping for ransom under Article 267 of RPC
  • Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16 of Comprehensive Dangerous Drugs Act (RA 9165)
  • Section 3, paragraphs B, C E, G, H and I of RA 3019, or the Anti-Graft and Corrupt Practices Act
  • Plunder under RA 7080
  • Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of RPC
• Robbery under Articles 294, 295, 296, 299, 300, 301 and 302 of RPC


  • Robbery with violence or intimidation of persons
  • Robbery with physical injuries, committed in an uninhabited place and by a band, or with use of firearms on a street, road, or alley
  • Robbery in an uninhabited house or public building or edifice devoted to worship