Republic of the Philippines

Polytechnic University of the Philippines

Santa Maria, Bulacan

Reaction Paper about

Republic Act No. 1405
The Law on Secrecy of Bank
Deposits

Salientes, Karl C.
BSA 4-1
Ms. Carolina Guerrero

Most of the income earners today are having their personal accounts in different banks.
The primary reason of maintaining an account in a bank is for saving money that will be
appropriated for future necessities and another reason is for earning an interest through deposits.
Keeping your accounts private is essential on the part of depositor to avoid scamming and
malicious transactions that will occur on his account. However, as I watch the news pertaining to
the issue in corruption of most government officials, I think that there are some flaws regarding
with this law. Fraudulent activities is inherent in all transactions especially those involving large
amount of money. It is easy for all scammers and greedy people to steal money and hide it from
their confidential bank accounts. Like with the issue of Janet Napoles in PDAF (Priority
Development Assistance Fund) scam, P10 Billion of our national fund have been embezzled by
these businesswomen including several senators and hundreds of congressmen. The method used
by Napoles is that they proposed several projects that will be funded by our national fund to their
fake beneficiaries (NGOs). To hide the fraudulent action, Janet Napoles create several dummy
accounts that contain millions of pesos each. The explosive revelation on the scale of the
peoples money being lost to shameless politicians made me realize that there should be a
limitation of having a confidentiality regarding the accounts of government officials.
Another issue relating with these topic is the transfer of $81 Million from the Central
Bank of Bangladesh that the stolen funds were transferred to bank accounts in the Philippines
through the Rizal Commercial Banking Corp. of the Yuchengco group of companies; and that the
money was diverted to business interests running casinos in the country. It was obviously a case
of large-scale money laundering. In this case, it is not just merely the confidentiality of bank
account of Rizal Commercial Banking Corp. is the issue, but also the fiduciary trust of the bank
and its client. The Bank Secrecy Law will be an ineffective measure in this issue due to the

reason that it should focus first with the money laundering transactions that occur in different
banking system. Knowing that there is a law that gives you the privilege to hide your personal
accounts, it also gives an idea to commit suspicious transactions.
The Law on bank secrecy deposits is enacted to provide an assurance to each depositor
that their accounts will be private and no one will know the exact amount of your deposits unless
it is necessary provided by law. 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 hereby considered as of an
absolutely confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of the depositor, or in
cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of
duty of public officials, or in cases where the money deposited or invested is the subject matter
of the litigation. It is declared by the law primarily to encourage the people to deposit their
money in banking institutions and to discourage private hoardings of money so that the money
will be properly utilized by the latter in forms of authorized loans that will assist the
development of the country. Based on my experience as a depositor of small amount of money in
Landbank of the Philippines, their banking services offers a wide variety of banking activities
and for me, it is necessary to keep confidential any amount of money in my account unless I
permit to do so. I imagine that if all of the accounts of all depositors in different banks are
publicized, no one will invest in different banking institutions causing the flow of our money will
be inefficient because private hoardings. Scams and all other criminal actions may arise if the
secrecy of bank deposits will be loosen because it is easy for those scammers to steal the money
and they will give an idea who will be their victim.

Based on my given comments and reactions, I realized that the law has its
own advantages and deficiencies especially some situations brings safety to
some depositors but it may also lead to fraud and malicious transactions. Bank
Secrecy Law must be interrelated with the process of AMLA (Anti Money
Laundering Act) not just only on the part of the government officials, but also in
all banking transactions. Personally, as I read the R.A. 1405, it has a very limited
description as to those people who are required to disclose their personal
accounts given the fact that the matter that involve in this case is money. As a
suggestion, The Bank Secrecy Law must provide an amendment pertaining to
the category of individuals or corporations that must fully disclose or only loose
the confidentiality of their bank accounts especially if these people have a
material effect in the flow of money in our economy.