SEC prepares bill seeking to ease bank secrecy law

MANILA, Philippines – The Securities and Exchange Commission (SEC) is preparing a bill that would ease bank secrecy rules to allow securities fraud investigation. Lifting bank secrecy is necessary for the Philippines to become a signatory to an international agreement.

“We are still in the process of application…We are already trying to lay the groundwork,” SEC chairman Teresita Herbosa told reporters last Thursday.

“This time, we really might need legislation and that would consist of lifting the bank secrecy law in the aspect of securities violations,” she added.

Herbosa was referring to the country’s signing of the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) with the International Organization of Securities Commissions (IOSCO).

Last February, Herbosa said the Philippines needs to sign the MMoU to become an “active participant” of the Asia Region Funds Passport (ARFP), an initiative that would ease cross-border fund flows among members of the Asia-Pacific Economic Cooperation (APEC).

The country initially targeted to become part of ARFP this year to mark its hosting of the APEC meetings. The week-long Economic Leaders’ Meetings to culminate the Philippines’ term begins today.

Herbosa said one of the “strongest suggestions” by the ARFP for the Philippines to be allowed entry is to have a “proposed legislation” to allow access to bank records during securities fraud investigation.

Amendments could be made then to RA 8799 or the SEC Code, which already lays out SEC powers to probe investment scams.

“It’s something like (when) a country outside is doing investigation, and they would like information from us, what if that information is concerning (a) bank account, you cannot (give them anything),” Herbosa explained.

“That also prevents us from asking their help because how will they help us if we do not help them,” she said on the sidelines of the Financial Infrastructure Development Network launch in Makati City.

The Department of Finance, which oversees SEC, has also been pushing for amendments to RA 1405 or the Bank Secrecy Law to allow tax authorities to sneak into bank records during tax investigation.

A bill submitted by the Bureau of Internal Revenue to the Senate is currently under committee discussions. The move has come under contentious opposition.

As for the SEC proposal, Herbosa said it has already tapped Sen. Sergio Osmena II, chairman of the Senate Committee on Banks, Financial Institutions and Currencies, as its sponsor. It targets to pass the law in time for the IOSCO meeting in March next year.

Osmena, however, said in a text message “there’s no more time” to pass the measure during the 16th Congress. He added “it would be near impossible” for the bill to gain support in Congress.

Herbosa, for her part, said the SEC would communicate with the lawmakers the need to pass the measure.

“We’d like to have the proper wording (for the bill). We’d like it to be as restrictive as possible so that we just use it for the purpose of our investigation,” she said.