House bill seeks to allow scrutiny of foreign currency deposit accounts

A BILL seeking to allow authorities to look into foreign currency deposits suspected to be involved in illegal activities was filed in the House of Representatives last month.

House Bill No. 6902 seeks to allow authorities to examine foreign currency deposit accounts in “exceptional” cases involving impeachment, bribery or dereliction of duty of government officials, or where the funds are the subject of court proceedings.

It also proposes to remove their exemption from governmental processes.

The bill seeks to amend the deposit secrecy provisions under Republic Act (RA) No. 6426 or the Foreign Currency Deposit Act of the Philippines as amended by Presidential Decrees Nos. 1034, 1035, and 1246.

Under the law, all foreign currency deposits are absolutely confidential, with the only exception to secrecy being when there is written permission of the depositor, preventing authorities from examining accounts that may be tied to crimes or needed in trial. These funds are also exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body.

These provisions were meant to help encourage the inflow of foreign funds into Philippine banks to boost lending and investment activity and stimulate the economy.

The bill’s proposed exemptions are already in RA 1405 or the Law on Secrecy of Bank Deposits.

The bill’s authors, Party-list Reps. Antonio L. Tinio, Sarah Jane I. Elago and Renee Louise M. Co, said in the measure’s explanatory note that the special protections provided by the Foreign Currency Deposit Act are now “obsolete” as there is no longer a lack of foreign currency in the domestic financial system amid the regular inflow of funds via remittances and other traditional sources.

“Furthermore, recent history has shown how the absolute and unqualified secrecy of foreign currency deposits, and their exemption from government orders and processes, is exploited to cloak financial transactions by individuals and entities involved in illegal activities,” they added. “For instance, government officials, including those conferred with immunity from suit during their incumbency and removable only through impeachment, may make use of foreign currency deposits to amass ill-gotten wealth.”

“If this bill is enacted into law, foreign currency deposits will, in these respects, enjoy the same level of protection as deposits in the national currency.”

Congressmen had earlier approved a bill amending the decades-old RA 1405 to provide regulators stronger oversight to monitor financial institutions and prevent cases of insider abuse or illegal funding activities.

The International Monetary Fund said in a December report that the Philippines should amend its deposit secrecy laws to enhance the BSP’s supervisory powers and support its efforts to combat money laundering and terrorist financing. — Kenneth Christiane L. Basilio