Senate bill relaxes bank secrecy
By Michael Lim Ubac
Philippine Daily Inquirer
First Posted 18:22:00 12/27/2008
Filed Under: Banking, Laws, Graft & Corruption
MANILA, Philippines -- Senate Minority Leader Aquilino Pimentel Jr. said the right of banks and depositors to invoke the secrecy of bank records has been dispensed with under the Senate version of the administration bill raising the maximum amount of insurance coverage for bank deposits from the present P250,000 to P500,000.
Pimentel proposed that the right to bank secrecy be waived for depositors who are availing of the insurance money to be given by the Philippine Insurance Deposits Corporation (PDIC).
The doubling of the amount of insured bank deposits is contained in Senate Bill 2964 which was approved on second and third reading by the chamber before it adjourned last week.
The bill has been transmitted to the bicameral conference committee where it will be reconciled with a different version earlier passed by the House of Representatives.
The hike in maximum insurance for bank deposits will benefit more than 3l million deposit accounts, or about 97 percent of existing accounts.
The increased insurance amount is intended to further protect bank depositors and to allay their fears about the safety of their deposits in the wake of the global financial crisis.
President Arroyo, at one point, proposed to increase the maximum insurance coverage to P1 million to protect local depositors and investors amid the global recession, but this fell on deaf ears in both chambers of Congress.
Senators Edgardo Angara, chair of the Senate committee on banks, currencies and financial institutions, and sponsor of the measure, had accepted Pimentel’s proposal by incorporating it in SB 2964.
Angara said he had no objection at all to the Pimentel proposal because “if the bank has gone under, the regulator must be able to look into the reasons and underlying causes for its collapse.”
Angara had made it clear that the waiving of bank secrecy would apply only to the particular case where the bank was about to collapse and was being placed under liquidation by the PDIC.
Under his proposal, Pimentel said both the bank and the depositors should waive their right to bank secrecy.
In the case of the depositor, that is justified since he will benefit from the insurance proceeds, he said.
“The depositor should be made aware that availing of the insurance privilege implies that he or she waives the right to bank secrecy,” he said.
“They must be open to scrutiny by the public regarding the propriety, for example, of the coverage of their deposits,” Pimentel explained, adding: “In effect, we are moving towards that direction where the government will have a more adequate supervision even over bank deposits.”
According to Pimentel, his proposal is crucial in the light of the experience of lawmakers who always find their investigation of misappropriation of public funds or laundering of tainted or fraudulently-obtained money stalled by the invocation of bank secrecy by the respondent banks and individuals.
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