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Secrecy of Bank Deposit Act ( Rep. Act 1405)

- is the statutory enforcement of the Govts policy to discourage hoarding and to encourage people to

deposit their money in banking institutions, so that the same may properly be utilized by banking

institutions in authorized loans to assist in the economic development of the country.

PURPOSES

1. To encourage people to deposit in banking institutions; and2. To discourage private hoarding so that banks may lend such funds and assist in the economic

development of the country.

Coverage:

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.

- MONEY-market placement is NOT covered by RA 1405 because it is not deposited in the bank

GNL RULE

- The deposits covered by law are considered as of an absolutely confidential nature and may

not be examined, inquired or looked into by any person, governmental bureau, or office.

EXCEPT:

a.) Upon the debtors written permission;b.) In cases of impeachment;c.) Upon a competent courts order in cases of bribery of, or dereliction of duty by, public

officials;

d.) In cases where money deposited or invested is the subject matter of litigation.PROHIBITED ACTS

1. Examination and inquiry or looking into all deposits, of whatever nature, with the banksin the Philippines including investments in bonds issued by the Government.

2. Any disclosure by any official or employee of any banking institution to anyunauthorized person of any information concerning the said deposits.

Other Statutory Provision Cross-referring to the Secrecy of Bank Deposits

a.) Under the Foreign Currency Deposit Act, the secrecy of deposits under this actshall be governed in accordance with the provisions of the Secrecy of Bank Deposit

b.) Under the General Banking Law of 2000, in line with the Secrecy of Bank DepositAct, no bank shall employ casual or non regular personnel or too lengthy

probationary personnel in the conduct of its business involving bank deposits.

ADDITIONAL GROUNDS FOR EXAMINING BANK ACCOUNTS

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1. Anti-Graft and Corrupt Practices Act- Upon the order of a competent court ortribunal in cases involving unexplained wealth under the Anti-Graft and Corrupt

Practices Act.

2. NIRC- Upon inquiry by the Commissioner of Internal Revenue into bank depositsof:

i. A decedent to determine his gross estate; andii. Any taxpayer who has filed an application for compromise of his tax

liability under Sec.204 (A) (2) by reason of financial incapacity to pay his

tax liability. He must file a written waiver of his privilege under RA 1405

or other general or special laws and such waiver shall constitute the

authority of the Commissioner to inquire into the bank deposits of the

taxpayer.

3. AMLA- Inquiry or examination by the Anti-Money Laundering Council (AMLC)upon order of any competent court in cases of violation of the AMLA, if there is

probable cause that the deposits or investments are related to an unlawful

activity or a money laundering offense, EXCEPT that no court order shall be

required in the following unlawful activities:

a. Kidnapping for ransom under A.267 RPC;b. Violations of the Comprehensive Dangerous Drugs Act of 2002c. Hijacking and other violations under RA 6235d. Destructive arson and murder under RPC. Including those non-perpetrated

by terrorists against non-combatant persons and similar targets.

4. Disclosure to the Treasurer of the Phils. Of dormant deposits for at least 10years under the Unclaimed Balances Act.