REPUBLIC ACT No.
1405 and may not be examined, inquired or looked into by any person, government
official, bureau or office, except upon written per-mission of the depositor, or in
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY cases of impeachment, or upon order of a competent court in cases of bribery or
BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR. dereliction of duty of public officials. or in cases where the money deposited or
invested is the subject matter of the litigation," "Sec. 3. It shall be unlawful for any
Section 1. It is hereby declared to be the policy of the Government to give
official or employee of a banking institution to disclose to any person other than
encouragement to the people to deposit their money in banking institutions and
those mentioned in Section two hereof any information concerning said
to discourage private hoarding so that the same may be properly utilized by banks
deposits."
in authorized loans to assist in the economic development of the country.
Exceptions from Coverage | Secrecy of Bank Deposits (R.A. No.1405 and R.A.
Section 2. 1 All deposits of whatever nature with banks or banking institutions in
No.6426, as amended) | BANKING
the Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby SECRECY OF BANK DEPOSITS UNDER PHILIPPINE LAW AND ITS EXCEPTIONS
considered as of an absolutely confidential nature and may not be examined,
inquired or looked into by any person, government official, bureau or office, In the Philippines, the Secrecy of Bank Deposits is governed primarily by two
except upon written permission of the depositor, or in cases of impeachment, or major statutes: Republic Act No. 1405 (RA 1405), or the "Law on the Secrecy of
upon order of a competent court in cases of bribery or dereliction of duty of Bank Deposits," and Republic Act No. 6426 (RA 6426), or the "Foreign Currency
public officials, or in cases where the money deposited or invested is the subject Deposit Act of the Philippines." These laws protect the confidentiality of bank
matter of the litigation. deposits, with RA 1405 covering peso deposits and RA 6426 covering foreign
currency deposits. However, these statutes also provide specific exceptions to
Section 3. It shall be unlawful for any official or employee of a banking institution their coverage, under which disclosure of bank deposit information may be legally
to disclose to any person other than those mentioned in Section two hereof any permitted.
information concerning said deposits.
1. Republic Act No. 1405 (Law on the Secrecy of Bank Deposits)
Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and
Regulations which are inconsistent with the provisions of this Act are hereby RA 1405 declares that all deposits of whatever nature with banks or banking
repealed. institutions in the Philippines, including investments in government bonds, are
considered absolutely confidential and may not be examined, inquired, or looked
Section 5. Any violation of this law will subject offender upon conviction, to an into by any person, government official, bureau, or office, except as provided by
imprisonment of not more than five years or a fine of not more than twenty law. The purpose is to encourage individuals to deposit their money in banks by
thousand pesos or both, in the discretion of the court. ensuring that such deposits are protected from inquiry, inspection, or exposure.
Section 6. This Act shall take effect upon its approval. Exceptions under RA 1405
Footnote RA 1405 provides for specific instances where disclosure of bank deposits is
1
permitted, despite the law's confidentiality provisions. These exceptions are:
This Section and Section 3 were both amended by PD No. 1792 issued January
16, 1981, PD 1792 was expressly repealed by Sec 135 of R.A. No. 7653, approved 1. Written Consent of the Depositor:
June 14, 1993. The original sections 2 and 3 of R.A. No.1405 are hereby
reproduced for reference, as follows; "Sec 2 All deposits of whatever nature with o Disclosure of bank deposit information is permitted when
banks or banking institutions in the Philippines including investments in bonds there is explicit written permission from the depositor,
issued by the Government of the Philippines, its political subdivisions and its authorizing such disclosure. The consent must be clear,
instrumentalities, are hereby considered as of an absolutely confidential nature voluntary, and specific to be valid.
2. In Cases of Impeachment: to increase foreign exchange reserves by incentivizing foreign investments in the
local banking system.
o Disclosure is allowed if required in an impeachment
proceeding. This was notably invoked during the impeachment Exceptions under RA 6426
trials of government officials, where bank records were
relevant to proving allegations of corruption or undeclared RA 6426’s confidentiality provisions differ from RA 1405’s in that they are
wealth. considered stricter. However, there are still recognized exceptions under this law,
primarily:
3. Upon Order of a Competent Court in Cases of Bribery or Dereliction of
Duty of Public Officials: 1. Written Consent of the Depositor:
o Disclosure of bank deposits can be ordered by a competent o Like in RA 1405, RA 6426 allows disclosure if the depositor
court in cases involving bribery or dereliction of duty by public provides express written consent.
officials. This is relevant in criminal cases where a public official
2. Examination in Cases of Anti-Money Laundering (Indirect Exception):
is suspected of corruption or abuse of public office, and bank
records are critical in investigating the crime. o Although not explicitly stated in RA 6426, the Anti-Money
Laundering Act (AMLA) and related laws indirectly affect
4. In Cases Where the Money Deposited is the Subject of Litigation:
foreign currency deposits by requiring banks to report
o Bank secrecy does not apply when the deposited funds suspicious activities that could indicate money laundering.
themselves are directly involved in litigation. For example, in Under AMLA, the Anti-Money Laundering Council (AMLC) may
civil cases where ownership of a specific bank deposit is inquire into and examine deposits if there is probable cause
disputed, the court may order the examination of the deposit related to offenses specified in the AMLA. However, the
to resolve the case. examination requires prior court approval to be valid under RA
6426.
5. Compliance with Anti-Money Laundering Laws (Indirect Exception):
3. Anti-Money Laundering Act (AMLA) as an Overarching Statute Affecting Both
o RA 1405 does not explicitly include the Anti-Money Laundering RA 1405 and RA 6426
Act (AMLA) as an exception; however, later jurisprudence and
amendments to AMLA have expanded reporting requirements The Anti-Money Laundering Act of 2001 (RA 9160), as amended, introduced
for suspicious transactions, including freezing accounts additional grounds for the disclosure of bank deposits to combat money
suspected to be linked to money laundering or terrorism laundering and terrorism financing. AMLA applies to both peso and foreign
financing, with prior approval from the court. Compliance with currency deposits.
AMLA is now recognized as an implicit exception to RA 1405's
Exceptions under AMLA Affecting Bank Secrecy
secrecy provisions.
Under AMLA, bank deposit confidentiality is lifted in certain situations:
2. Republic Act No. 6426 (Foreign Currency Deposit Act of the Philippines)
1. Suspicious Transaction Reports (STRs):
RA 6426 provides for absolute confidentiality of foreign currency deposits in
Philippine banks. The law is designed to encourage foreign currency deposits by o Banks are required to report suspicious transactions to the
offering strict confidentiality to depositors, especially foreigners who might AMLC without notifying the depositor, even if this might
otherwise refrain from bringing currency into the country. The law initially aimed
disclose details of bank deposits that would otherwise be o Deposits may be examined in cases of perjury, particularly
confidential. when a public official is being investigated for submitting a
false Statement of Assets, Liabilities, and Net Worth (SALN)
2. Examination of Bank Deposits upon Court Order: under oath. This can result in a waiver of bank secrecy
protections.
o If the AMLC establishes probable cause that deposits are
related to money laundering or other predicate crimes, it can Summary of Exceptions to Bank Secrecy Laws in the Philippines
petition the Court of Appeals for authorization to examine
specific accounts. The Court of Appeals’ approval effectively 1. RA 1405 (Law on the Secrecy of Bank Deposits): Written consent,
lifts the bank secrecy protection for the targeted account(s). impeachment proceedings, court order in bribery cases or dereliction of
duty, litigation involving the deposit.
3. Freezing of Accounts Related to Terrorism Financing or Money
Laundering: 2. RA 6426 (Foreign Currency Deposit Act): Written consent, AMLA cases
with probable cause and court order.
o The AMLC may issue a freeze order on accounts that it
reasonably believes are related to money laundering or 3. AMLA (Anti-Money Laundering Act): STRs, court-approved examination
terrorism financing, even before securing a court order. The for money laundering, freeze orders.
initial freeze is effective for 20 days, and the AMLC must obtain
a court order to extend this period. 4. Tax Code: Court-authorized access in tax fraud cases.
Other Statutes with Implications on Bank Secrecy 5. Other Relevant Laws: Exceptions in Sandiganbayan proceedings, SALN-
related perjury cases, and related court orders.
Certain other laws interact with bank secrecy laws, adding further exceptions
under particular circumstances: In conclusion, while RA 1405 and RA 6426 establish a high standard of
confidentiality, the increasing emphasis on anti-corruption, anti-fraud, and anti-
1. The Tax Code (National Internal Revenue Code of the Philippines): money laundering initiatives in the Philippines has led to a progressive expansion
of these exceptions. This ensures a balance between protecting individual
o The Tax Reform for Acceleration and Inclusion Act depositors' rights and upholding public interest in combating financial crimes.
(TRAIN) amended the Tax Code, giving the Bureau of Internal
Revenue (BIR) the authority to access bank deposits in cases
involving tax fraud. Under the Tax Code, the BIR Commissioner
may inquire into bank accounts if it is in connection with tax
fraud cases, but only upon issuance of a court order.
2. The Sandiganbayan Act (RA 8249):
o In cases before the Sandiganbayan (the special court for cases
involving graft and corruption), access to bank records may be
granted if relevant to cases under its jurisdiction, especially
when prosecuting public officials for offenses under anti-
corruption laws.
3. The Perjury Law:
You may ask, why is there a need to protect the secrecy of bank deposits? matter of the pending case; and the bank personnel and the depositor must
Technically speaking, the law prefers that money be deposited in banks so be notified to be present during the inspection;
they may be properly utilized to assist in the economic development of the
country. However, it is more relevant on a practical matter. Let’s use you 6. The BIR can inquire into bank deposits in an application for compromise of
dear reader as an example. Suppose that you only have P1,000 in your bank tax liability or determination of a decedent’s gross estate;
account. Surely, you do not want any person (such as your friend, employer or
7. The Anti-Money Laundering Council (“AMLC”) can examine bank accounts
any stranger) to find that out. Either you do not want others to know that
pursuant to a court order, where there is probable cause that the deposits are
you do not have sufficient money or you simply do not feel comfortable in
related to an unlawful activity or money laundering offense;
people prying in your financial affairs. On the other hand, if you have
P100,000,000.00 in your bank account, you also do not want others to find 8. The AMLC can examine bank accounts, WITHOUT a court order, where
that out for fear that you might be kidnapped, or relatives might borrow from there is probable cause that the deposits are related to certain crimes such as
you, or simply, it’s your personal affair. In all these cases, one’s financial status kidnapping for ransom, violation of the Dangerous Drugs Act, hijacking,
is a private matter. Transactions happening in your bank account are not just destructive arson, murder and violations of RA 6235 (acts inimical to civil
empty figures. There are stories affixed to such transactions. Thus, these aviation);
financial transactions are akin to your personal activities which should not be
easily accessible to anyone. 9. The Bangko Sentral can examine bank accounts in the course of its periodic
or special examination regarding compliance with Anti-Money Laundering
The Bank Secrecy Law protects all deposits of whatever nature in banks or Law.
banking institutions in the Philippines as well as investments in government
bond. This law prohibits any person, subject to the exceptions below, from As you can see, although there are many exceptions, securing such exceptions
disclosing to any person any information, relative to the funds or properties is not an easy task. The easiest way to waive the secrecy of bank deposits is
belonging to the depositors in the custody of the bank. Simply put, no one through a written waiver. Although there is no prescribed form for a waiver, it
can just go to your bank and ask for your bank balance. is necessary that the waiver be made voluntarily, knowingly and with
sufficient awareness of relevant circumstances and consequences. Thus, as a
However, the rule is not absolute. The following are the exceptions to the matter of practice, banks will require the depositor to state in his waiver the
bank secrecy law: specific bank account, bank branch, name of depositor, period covered by the
transactions and the name of the person authorized to access the bank
1. Written permission or consent in writing by the depositor;
account.
2. In cases of impeachment;
How about dollar deposits? Now, foreign currency deposits are governed by a
3. Upon order of the court in cases of bribery or dereliction of duty of public different law, namely Republic Act No. 6426 and has fewer exceptions. This
officials; will be discussed in a separate article.
4. Upon order of the court in cases where the money deposited or invested is You may be curious if there is any criminal liability for violating the bank
the subject matter of the litigation; secrecy law. Yes, there is criminal liability. Any person violating this law may
be imprisoned for not more than five (5) years, or meted a fine not exceeding
5. Upon a subpoena issued by the Ombudsman concerning an investigation it P20,000.00 or both.
is conducting, provided that there must already be a case pending in court,
the account be clearly identified, the inspection be limited to the subject
