A.

SECRECY OF BANK DEPOSITS

1. What guarantees on confidentiality do depositors enjoy under the law?

2. How do banks respond to an order of a competent court?
3. What is the liability of the banks and/or its officers and employees for violating the laws
against disclosure?

B. USE OF ALIAS OR NUMBER IN OPENING DEPOSIT ACCOUNTS

1. Are banks allowed to open accounts using an alias or a number?

2. Are there other laws governing the use of pseudonyms or aliases?
3. How does Circular No. 251 apply to existing numbered accounts?
4. What penalties/sanctions are applicable for violating the laws/regulations?

C. CONTINUED CONFIDENTIALITY/SECRECY OF DEPOSIT TRANSACTIONS

1. Is confidentiality/secrecy of deposit accounts compromised with the issuance of Circular

251?
2. Why are the BSP and the BAP advocating the amendment to bank secrecy laws?

A. SECRECY OF BANK DEPOSITS

1.Q. What guarantees on confidentiality do depositors enjoy under the law?

A. For peso deposits, Republic Act No.1405 (Bank Deposits’ Secrecy Law) declares all
deposits of whatever nature with banks in the Philippines, including investments in
government bonds, as of an absolutely confidential nature and prohibits the
examination or inquiry into such deposits or investments by any person, government
official, bureau or office, as well as the disclosure by any official or employee of a
bank of any information concerning said deposits.

There are only four (4) instances under the law where bank deposits or
investment in government bonds may be disclosed or looked into, namely: (1) upon
written permission of the depositor; or (2) in cases of impeachment; or (3) upon order
of a competent court in cases of bribery or dereliction of duty; or (4) in cases where
the money deposited or invested is the subject matter of the litigation.

It may be noted that R.A. 1405 covers not only bank deposits but also
investments in government bonds.

For foreign currency deposits, Republic Act No. 6426 (The Foreign Currency
Deposit Act) similarly declares that these deposits are of an absolutely confidential
nature and cannot be examined, inquired or looked into by any person, government
official, bureau or office whether judicial or administrative or legislative or any other
entity whether public or private. There is only one instance for disclosure under said
law and, that is, upon the written permission of the depositor. RA 6426 also exempts
foreign currency deposits from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body
whatsoever.

For investments in trust accounts or in deposit substitutes, if these are in the form
of investments in government bonds or deposits, the protection under RA 1405 and
 RA 6426 extends thereto accordingly. If these are in other forms of investments, the
disclosure of information related thereto is covered by Section 55 of the General
Banking Law of 2000 (Republic Act No. 8791) which prohibits, unless there is an order
of a court of competent jurisdiction, the disclosure by any director, official, employee
or agent of any bank any information relative to the funds or properties in the custody
of the bank belonging to private individuals, corporations or any other entity.

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2.Q. How do banks respond to an order of a competent court?

A. For peso deposits, banks comply with orders for disclosure in court cases subject to
these requirements: (a) there must be a court order; (b) the order must be issued by a
competent court specifically directing the bank concerned to disclose the required
information; and (c) the bank should check and satisfy itself that the deposits or
investment in government bonds being inquired into are either the subject of a case of
bribery or dereliction of duty of public officials, or of a case where the deposit or
investment itself is the subject matter of the litigation. If these requirements are not
met, there would be basis for the bank to request the court to excuse compliance with
the court order.

In impeachment cases, it is necessary that there be an order issued by the

impeachment court or by its authorized officer. For foreign currency deposits, the law
does not provide an instance for disclosure upon a court order. As mentioned above,
there is only a single instance for disclosure under RA 6426 and, that is, upon written
permission of the depositor. Thus, for foreign currency deposit accounts subject of a
court order, the bank can invoke RA 6426 to excuse compliance.

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3.Q. What is the liability of the banks and/or its officers and employees for violating the laws
against disclosure?

A. Violations of the prohibitions against disclosures under RA 1405, RA 6426 and under
the General Banking Law of 2000 are subject to stiff criminal penalties.

Under RA 1405, the offender is subject to imprisonment of not more than 5 years
or a fine of not more than P20,000, or both, in the discretion of the court. Under RA
6426, the penalty is imprisonment of not less than 1year not more than 5 years or a
fine of not less than P5,000 nor more than P25,000, or both, in the discretion of the
court. The violation of Sec.55 of the General Banking Law of 2000, the penalty is
imprisonment of not less than 2 years nor more than 10 years or a fine of not less
than P50,000 nor more than P200,000, or both, in the discretion of the court; and in
addition, if the offender is a director or officer of a bank, he is subject to suspension or
removal by the Monetary Board.

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B. USE OF ALIAS OR NUMBER IN OPENING DEPOSIT ACCOUNTS

1. Q. Are banks allowed to open accounts using an alias or a number?

A. There is no specific banking law up to the present prohibiting banks from opening
deposit accounts using an alias or a number. Prior to July 7, 2000, there is also no
 banking regulation providing for such prohibition. On July 7, 2000 and in seeking the
adoption of anti-money laundering measures, the Bangko Sentral ng Pilipinas (BSP)
issued a regulation, Circular No. 251, providing that, unless otherwise prescribed
under existing laws, anonymous accounts or accounts under fictitious names are
prohibited.

The exception referred to under Circular No. 251 was RA 6426 (The Foreign
Currency Deposit Act) which explicitly allows the keeping of numbered accounts for
the recording and servicing of deposits.

For peso accounts, when banks allow the opening of deposit accounts under
pseudonyms, it is assumed that: (1) they have exercised due diligence to ascertain
the identity of their clients; and (2) they are aware of the legal provisions and
requirements on the use of pseudonyms.

The above notwithstanding, it may be pointed out that in the Manual of Regulations
issued by BSP, or even before the issuance of Circular 251, there were already
regulations requiring the banks to: (a) adopt systems to establish the identity of their
depositors; and (b) require to set a minimum of three (3) specimen signatures from
each of their depositors subject to regular updating. Even for numbered accounts as
authorized under RA 6426, BSP has required banks, under Circular 258, to take
necessary measures to establish and record the true identity of their clients, which
identification may be based on official or other reliable documents and records.

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2.Q. Are there other laws governing the use of pseudonyms or aliases?

A. Art. 178 of the Revised Penal Code penalizes the:(a) publicly using of a fictitious name
for the purpose of concealing a crime, evading the execution of a judgment, or
causing damage; and (b) concealment by any person of his true name and other
personal circumstances.

On the other hand, there is also Commonwealth Act No. 142, as amended by
Republic Act No. 6085 (Regulating the Use of Aliases) which provides that, except
only as a pseudonym for literary purposes and athletic events, it is unlawful for any
person to use an alias, unless the same is duly recorded in the proper local civil
registry. Related thereto, Articles 379 and 380 of the Civil Code provide that no
person shall use different names and surnames except the employment of pen and
stage names provided it is done in good faith and there is no injury to third persons.

What can be noted is that the above provisions allow the use of aliases under
certain circumstances. Conversely stated, the use of aliases is not absolutely
disallowed. Moreover, the sanctions for any violation of the above provisions on
aliases are mainly directed to the one using the unauthorized alias.

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3.Q. How does Circular No. 251 apply to existing numbered accounts?

A. For peso accounts, the banks should have their respective programs of compliance
with the Circular. For foreign currency deposit accounts, they are allowed to continue
maintaining numbered accounts opened in accordance with RA 6426 subject to the
 requirement that the banks shall take necessary measures to establish and record the
true identity of their clients.

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4.Q What penalties/sanctions are applicable for violating the laws/regulations?

A. Article 178 of the Revised Penal Code is directed to the person concealing his identity
publicly or using a fictitious name and the penalty would range from 1 day up to 6
months imprisonment and/or a fine up to P500,000. For violation of Commonwealth
Act 142, which is likewise directed to the person using an unauthorized alias, the
penalty is imprisonment from 1 year to 5 years and a fine of P5,000.00 to P10,000.00.
For the violation of Circular 251, it is subject to the administrative sanction on the bank
and/or responsible directors/officers of fine up to P30,000 per transaction.

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C. CONTINUED CONFIDENTIALITY/SECRECY OF DEPOSIT TRANSACTIONS

1.Q. Is confidentiality/secrecy of deposit accounts compromised with the issuance

of Circular 251?

A. No. Circular 251 merely disallowed the opening of fictitious and anonymous accounts
and has not in any way modified nor lessened the safeguards and protection to
depositors under RA 1405. This means that, notwithstanding Circular 251, deposit
accounts cannot be examined or looked into except under the limited circumstances
provided for in RA 1405.

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2.Q. Why are the BSP and the BAP advocating the amendment to bank secrecy laws?

A. The proposal of BSP and BAP is for access to deposit accounts only under
exceptional circumstances, such as deposits only above the P50 million level and in
relation to the commission of serious offenses like racketeering and illicit drug trade.
Except for these instances, depositors and those with legitimate transactions remain
protected under RA 1405. The objective of the proposal is to institute this measure as
an anti-money laundering campaign so as to delete the Philippines as a non-
cooperative country in the list of the Financial Action Task Force against money
laundering.