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By Melissa Luz T. Lopez, Reporter

SEC seeks to ease bank secrecy law

Posted on November 16, 2015

THE PHILIPPINES’ efforts to become a full member of an international body linking regional bourses continue to be hampered by the delay in easing the country’s bank secrecy laws, the Securities and Exchange Commission (SEC) chairperson said last week.

SEC Chairperson Teresita J. Herbosa said the country has yet to achieve full membership to the International Organization for Securities Commissions (IOSCO) pending reforms that would relax bank secrecy rules to allow for a data-sharing scheme with other countries in investigating securities violations.

“We already have drafted some proposals but we’ll have to see to it that internationally, that will already be a sufficient help for SEC here in the Philippines to be able to make use of the bank records in terms of information sharing,” Ms. Herbosa told reporters last week on the sidelines of an event in Makati City.

Despite this, the SEC official is still hopeful the Philippines would be able to become an active member of IOSCO by March.

“The next IOSCO meeting is in March, so we’re still targeting that and we’ll see, once we file for amendment for the Securities Regulation Code (SRC), they will just take that already as a full-pledged commitment,” she added.

Ms. Herbosa noted one of IOSCO’s suggestions is for the Philippines to ease its bank secrecy laws, which the SEC is proposing to do via an amendment of the SRC.

“They gave us suggestions on how we can really push for our application forward and the very strong suggestion is you just have to propose to your legislature to relax the bank secrecy law in terms of being able to investigate or exchange information with our counterparts regarding securities fraud,” she said.

The IOSCO, which is composed of 124 national securities commissions, sets the global standards for the sale and regulation of securities across member countries. It also allows for the integration of securities markets through a Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information since 2002, which the Philippines has yet to sign.

“The IOSCO requirement is really information sharing. It’s something like: a country outside is doing an investigation and they would like information from us. What if that information is concerning a bank, they cannot (access that). That also prevents us from asking their help, because how will they help us if we don’t help them?,” Ms. Herbosa said.

Full membership to the IOSCO is also required for the country to take part in the Asia Region Funds Passport eyed next year, Ms. Herbosa said, which would allow Filipinos to buy financial products from the bourses of other member-economies in the Asia-Pacific Economic Cooperation (APEC) region.

Ms. Herbosa, however, admitted that the regulator has yet to submit to Congress their proposed amendments to the SRC, with only three months left for legislative work.

“We haven’t really plotted that out yet at this point. We’d like it to have the proper wording. We’d like it to be as restrictive as possible so that it’s really just for the purpose of our investigation,” Ms. Herbosa said when asked if the SEC has already endorsed their proposal to Congress.

“If we cannot [have it passed] because of the time constraints now and it’s election year, I think the very first Congress under the new president should really try.”

But Sen. Sergio R. Osmeña III, who chairs the Senate Committee on Banks, Financial Institutions, and Currencies, said any bill on the matter is unlikely to prosper.

“That will not get to first base in the House. And [it] would have a very difficult time in the Senate,” Mr. Osmeña said via text, citing his experience. “I already tried three times in 2001, 2003, and 2012.”

Separately, the Bureau of Internal Revenue (BIR) has asked Congress to ease bank secrecy rules to improve the agency’s probe in going after tax evaders, but this has not been taken up even at the committee level. Lawmakers have frowned upon the BIR’s suggestion after the Finance department said this should be approved prior to the passage of a measure lowering income taxes.

Congress is in its few weeks of sessions for the year, but will take up the P3.002-trillion national budget, the proposed Bangsamoro law, and the Salary Standardization Law 4 as their priorities before taking a break on Dec. 18.

Congress will resume sessions from Jan. 19 to Feb. 5 before again closing for the campaign season for the upcoming May polls.