Closed Accounts Not Covered by Bank Secrecy Law – ESCUDERO


Closed bank accounts can be looked into because these are no longer covered by the Bank Secrecy Law, according to Senator Chiz Escudero.

“A closed account is no longer covered by the bank secrecy law nor by the provisions of the general banking act given the absence of funds in the custody of the bank,” Escudero said after the Luzon Development Bank (LDB) refused to answer questions regarding the closed accounts of Commission on Elections Chairman Andy Bautista.

The Senate Committee on Banks, Financial Institutions and Currencies, chaired by the veteran legislator, conducted a probe on the alleged ill-gotten wealth of the poll chief which his estranged Patricia Bautista exposed early this month.

According to reports, Chairman Bautista has 35 separate accounts with LDB, a small thrift bank, 30 of which are with their Fort Bonificio, Taguig City branch and the remaining five accounts with the bank’s Makati City branch. The funds in all these accounts allegedly amount to P329 million.

LDB declined to reveal to the Senate panel details surrounding any of the account, invoking Republic Act No. 1405 or the Bank Secrecy Law, which prohibits disclosure of and inquiry into bank deposits with any banking institution. The bank also mentioned Section 55 of Republic Act No. 8791 or the General Banking Law, which states that officials and employees of any bank are not allowed to disclose any information with respect to bank deposits without an order from a court of competent jurisdiction.

However, the seasoned lawmaker challenged LDB saying closed accounts did not fall under the definition of “bank deposits” as these no longer contain funds under the bank’s custody.

“The law is Secrecy of Bank Deposits and deposits are defined as a fund given to you [bank] and held in trust by you in behalf of the depositor. A closed account does not contain any funds anymore. And the law does not say ‘Secrecy of Bank Depositors Act.’ It speaks of secrecy of bank deposits so it attaches to a particular deposit, not depositor,” the senator from Bicol argued.

The new Philippine Deposit Insurance Corporation Charter defined the term deposit as “unpaid balance of money or its equivalent received by a bank in the usual course of business.”

According to Esudero, the Bank Secrecy Law poses a big hindrance in the probe, as he urges the COMELEC chairman to issue a waiver on his bank accounts to give way to the ongoing investigations.

“Hinihiling ko siguro at nakikiusap ako kay Chairman Bautista na magbigay siya ng waiver para magkaroon ng malayang imbestigasyon at nang makapagbigay ng mga angkop na kasagutan at nang hindi nagmumukhang ayaw sumagot o may tinatago yung bangko,” he said.

Escudero also said Chairman Bautista was welcome to attend the Senate inquiry given the fact that his name was mentioned in the hearing. However, he said he would be “satisfied with the submission of a waiver” so that all issues involved in the case will be ventilated without any worries of violating the Bank Secrecy Law or holding the officials of LDB accountable.

Escudero has also long been pushing for the easing of the Bank Secrecy Law, saying the Philippines is only one of two countries in the world, along with Lebanon, with this kind of banking law.


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