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Recto seeks review of laws on foreign currency deposits, bank secrecy

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Senator Ralph Recto on Friday called for a revisit of the laws on foreign currency deposit units (FCDUs) and the confidentiality of bank accounts to hammer out better laws responsive to “changing times and changing crimes.”

“With FCDUs and the Bank Secrecy Act taking center stage in the ongoing impeachment trial, we deem it imperative to call a review of these laws,” Recto, Senate ways and means committee chairman, said.

“The review is not meant to de-fang said laws but to make certain that no one gets hurt or gets special treatment when the claws of these laws start to pounce on its object of prey,” he added.

Recto said he has been receiving friendly admonitions from concerned members of the banking community about the ramifications of waiving or liberal application of the laws on FCDUs and the Bank Secrecy Act.

“The sum of the friendly heads-up that I have been getting is that this may result to a complete breakdown of confidence in the banking system,” Recto said.

“Businessmen would be pondering the question -- if the current banking laws would not be able to protect us, who would?” the senator from Batangas added.

Recto said the review of the laws should provide a clearer direction on what revisions may be adopted to ensure that the banking sector would be shielded from political exercises such as the impeachment process.

“We don’t want to start a fad wherein banks are called as hostile witness in every impeachment trial with its officers risking the pain of contempt should they fail to satisfy the demands of the impeachment court,” he said, in filing Senate Resolution 711.

Recto said that conversely, the Senate probe must also ensure that no public official or any individual running afoul of the law would hide under the cloak of the FCDU law or the Bank Secrecy Act.

The Senate impeachment court has allowed the opening of peso and FCDU accounts of Chief Justice Renato Corona in relation to the charge of the House impeachment panel that the chief justice failed to truthfully disclose his assets, including bank deposits and investments, in filing his SALN.

The president of Philippine Savings Bank (PSBank), one of the banks subpoenaed to bring Corona’s bank accounts, however, only produced the peso bank accounts but invoked the absolute confidentiality of FCDU or foreign currency accounts of the chief justice.

Last Thursday, the Supreme Court (SC) issued a temporary restraining order through the petition filed by PSBank, stopping the impeachment court from discussing Corona’s dollar accounts.

The Foreign Currency Deposit Act of the Philippines or Republic Act No. 6426, specifically Section 8 (Secrecy of Foreign Currency Deposits) provides that: “All foreign currency deposits authorized under this Act are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositors, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or private.”

An FCDU is a banking unit authorized to transact in foreign exchange, such as accepting foreign-currency deposits and making foreign-currency loans.
Data from the Bangko Sentral ng Pilipinas (BSP) indicated that total resources of FCDUs in the first half of 2011 went up by 9.5 percent to $ 31.12 billion from $ 28.41 billion the same period in 2010 after its financial assets surged 16.9 percent to $ 16.48 billion from $ 14.1 billion while gross loans jumped 21 percent to $ 6.45 billion from $ 5.33 billion.

Data also showed universal and commercial banks accounted for 95.9 percent of the total FCDU assets with $ 29.8 billion, followed by thrift banks with 4.1 percent or $ 1.3 billion as well as rural and cooperative banks with less than one percent or $ 1 million.

By PNA




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