Secrecy of Bank Deposits Act

Question 1

What is the relevant law on this topic?

Answer 1

Republic Act No. 1405 is entitled “An Act Prohibiting Disclosure Of or Inquiry Into, Deposits with Any Banking Institution and Providing Penalty Therefore”.

Question 2

What are the purposes of the Bank Secrecy Deposit Act?

Answer 2

• To encourage people to deposit their money in banking institutions
• To discourage private hoarding of money so that the same may be utilized by banks in authorized loans

Question 3

What is covered by the law on bank secrecy?

Answer 3

The law states that 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 considered absolutely confidential.

Question 4

Does the law on secrecy also apply to foreign currency deposits?

Answer 4

Yes, all foreign currency deposits are also considered of an absolutely confidential nature.

Question 5

Are there exceptions to the confidentiality rule on deposits?

Answer 5

Yes.
In the following cases, the deposits may be examined, inquired or looked into by any person, government official, bureau or office:
* With written permission of the depositor
* In cases of impeachment
* Upon order of a competent court in cases of bribery or dereliction of duty of public officials
* In cases where the money deposited or invested is the subject matter of litigation
* During special or general examination of a bank, as authorized by the Monetary Board to investigate
bank fraud or a serious irregularity

Question 6

On the part of the auditor on the audit of bank’s financial statements, does it mean that the auditor can no longer inquire into or examine bank deposits because of the law on secrecy?

Answer 6

Not necessarily, during a regular audit of a bank by an independent auditor, the auditor may inquire, examine or look into deposits, provided that the following conditions are satisfied:

• The examination is for audit purposes only
• The results of the examination shall be for the exclusive use of the bank

Question 7

What are the sanctions for violations of the Bank Secrecy Law?

Answer 7

Any violation of this law will subject offender upon conviction, to either or both of the following (upon the discretion of the court):

• Imprisonment of not more than 5 years
• Fine of not more than P20,000