Easing bank secrecy law likely to boost Philippines’ efforts vs financial crimes

By Katherine K. Chan, Reporter

THE PROPOSED AMENDMENTS to the country’s decades-old bank secrecy law would be a sensible preemptive measure against illicit financial activities, despite being limited to bank officers and employees.

“The Philippines is one the very few countries with this, so (it is) a welcome development to align with global best practices (and) to help improve governance standards,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort told BusinessWorld in a Viber message.

In December, the House of Representatives approved on third and final reading a bill introducing amendments to the Philippine bank secrecy law.

Under House Bill (HB) No. 6707, the Bangko Sentral ng Pilipinas (BSP) will be granted the authority to access bank accounts owned by bank officers and employees linked to financial crimes.

The measure consolidated eight similar House bills under the 20^th Congress, including HB Nos. 7, 1674, 1786, 1918, 3026, 3196, 4388 and 5152.

If the proposal is signed into law, the BSP will be allowed to examine the bank deposits of officials, employees, or any related parties of entities under any BSP-supervised institution.

BSP-supervised institutions are banks, nonbank financial institutions with quasi-banking functions, and other entities that are engaged in financial activities like pawnshops, electronic money issuers, money service businesses, and trust corporations.

The bill, which is included in the Legislative-Executive Development Advisory Council’s priority measures for the 20^th Congress, likewise seeks to permit the BSP to exercise the same authority in investigating closed banks.

Asked if limiting the scope to bank officers and employees is sufficient, Mr. Ricafort said: “Better to align banking standards with other ASEAN (Association of Southeast Asian Nations) or Asian countries and with other developed countries, based on global banking best practices.”

Meanwhile, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said despite the limitations, the proposal is still a “sensible first step” to combat financial crimes involving banking officials.

“It is a sensible first step because it targets areas of highest risk and accountability without undermining depositor confidence,” he told BusinessWorld in a Viber message. “Many financial crimes involve insiders who facilitate or ignore suspicious transactions, so tighter scrutiny here can meaningfully strengthen enforcement while preserving the principle of bank secrecy for the general public.”

The central bank has been pushing for amendments to the Philippines’ tight bank secrecy laws to boost its oversight of the financial sector by preventing cases of insider abuse, citing cases where bankers themselves borrow from their own banks or hide proceeds of fraudulent activities in their banks, which endanger depositors.

Mr. Rivera said introducing further amendments to require ordinary account holders suspected of ties to illegal financial activities to waive bank deposit secrecy could potentially undermine public confidence.

“Allowing BSP to look into accounts of the general public would be far more sensitive and could raise serious privacy and confidence concerns if not narrowly defined,” he said.

“Any broader access should be strictly risk-based, court-authorized, and tied to specific investigations, not blanket powers. Otherwise, it risks capital flight, weaker trust in banks, and reputational damage to the financial system,” he added.

Meanwhile, analysts said easing the bank secrecy law could boost investor confidence in the Philippines.

“Easing bank secrecy is a game-changer,” Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said via Viber. “It strengthens BSP’s ability to fight fraud and money laundering, keeps us off global gray lists, and signals that the Philippines is serious about transparency.”

“That builds investor confidence and makes us more attractive for foreign capital — because trust is the currency that drives investment,” he added.

Mr. Rivera noted that investors appreciate clear rules, strong governance and transparent financial channels, all of which are reflected in the rationale behind the proposed amendments to the bank secrecy law.

“Clear, risk-based access paired with due process signals lower regulatory and reputational risk, which can ultimately make (the Philippines) a more attractive and trustworthy investment destination,” he added.

In a report for its Article IV Consultation with the Philippines released last month, the International Monetary Fund (IMF) said the Philippines should continue to prioritize advancing efforts to combat money laundering and terrorist financing.

“Amendments to the Bank Deposits Secrecy laws in line with international good practices should be pursued to enhance the BSP’s supervisory powers and strengthen AML/CFT (anti-money laundering and combating the financing of terrorism) supervisory effectiveness,” the IMF said.

“Strengthening the AML/CFT frameworks is also important to support broader anti-corruption efforts and effectively combat the laundering of proceeds of corruption,” it added.

In February 2025, the Philippines exited the Financial Action Task Force’s (FATF) “gray list” or the list of jurisdictions under increased monitoring for money laundering.

The FATF is set to reassess the country in 2027, when it will verify whether the country’s anti-money laundering measures are being sustained and still in place.