Escudero: Closed accounts not covered by Bank Secrecy law

CLOSED bank accounts can be looked into since these are no longer covered by the Bank Secrecy Law, said Senator Francis Escudero.

"A closed account is no longer covered by the bank secrecy law or by the provisions of the general banking act given the absence of funds in the custody of the bank," Escudero said after the Luzon Development Bank (LDB) refused to answer questions regarding the closed accounts of Commission on Elections (Comelec) Chairman Andres Bautista.

The Senate committee on banks, financial institutions, and currencies, chaired by Escudero, conducted a probe Wednesday on the alleged ill-gotten wealth of Bautista, which his estranged wife, Patricia, exposed early this month.

According to reports, Bautista has 35 separate accounts with LDB, a small thrift bank, 30 of which are with their branch in Fort Bonifacio, Taguig City and the remaining five accounts with the bank's Makati City branch. The funds in all these accounts allegedly amount to P329 million.

LDB declined to reveal to the Senate panel details surrounding any of the account, invoking Republic Act (RA) 1405 or the Bank Secrecy Law, which prohibits disclosure of and inquiry into bank deposits with any banking institution. The bank also mentioned Section 55 of RA8791 or the General Banking Law, which states that officials and employees of any bank are not allowed to disclose any information with respect to bank deposits without an order from a court of competent jurisdiction.

However, Escudero challenged LDB saying closed accounts did not fall under the definition of "bank deposits" as these no longer contain funds under the bank's custody.

"The law is Secrecy of Bank Deposits and deposits are defined as a fund given to you [bank] and held in trust by you in behalf of the depositor. A closed account does not contain any funds anymore. And the law does not say 'Secrecy of Bank Depositors Act.' It speaks of secrecy of bank deposits so it attaches to a particular deposit, not depositor," Escudero argued.

The new Philippine Deposit Insurance Corporation (PDIC) Charter defined the term deposit as "unpaid balance of money or its equivalent received by a bank in the usual course of business."

According to the senator, the Bank Secrecy Law poses a big hindrance in the probe, as he urges the Comelec chairman to issue a waiver on his bank accounts to give way to the ongoing investigations.

"Hinihiling ko siguro at nakikiusap ako kay Chairman Bautista na magbigay siya ng waiver para magkaroon ng malayang imbestigasyon at nang makapagbigay ng mga angkop na kasagutan at nang hindi nagmumukhang ayaw sumagot o may tinatago yung bangko," Escudero said.

Escudero also said Bautista was welcome to attend the Senate inquiry given the fact that his name was mentioned in the hearing.

However, Escudero he would be “satisfied with the submission of a waiver” so that all issues involved in the case will be ventilated without any worries of violating the Bank Secrecy Law or holding the officials of LDB accountable.

Escudero has also long been pushing for the easing of the Bank Secrecy Law, saying the Philippines is only one of two countries in the world, along with Lebanon, with this kind of banking law.

For her part, Senator Grace Poe castigated officials of LDB for not raising a "red flag" considering that the deposit of Bautista is a "politically exposed person" being the Comelec chief, LDB should have given the Anti Money Laundering Council (AMLC) a red signal that a red flag has been committed by a public servant like Bautista.

At the same time, Poe said she cannot see the point why senators cannot mention the name of Bautista in the ongoing hearing of the Senate committee on banks, financial institution and currencies.

"Why should we not mention the name of Comelec Chair Bautista and his possible violations? I suggest that he face the Senate hearing so he can explain his side on this issue personally," Poe said.

Earlier, Senate Minority Leader Franklin Drilon said the ongoing probe might compromise the position of the senators who will act as senator-judge if the impeachment complaint against Bautista reaches the Senate.

During the hearing, Drilon also reminded the National Bureau of Investigation (NBI) to follow the rules insisting that it has no authority to examine the bank account of Bautista without the approval of the court.

"The NBI cannot use the authority to harass any individual because only the court can order such. The NBI has no authority to examine the bank account of anyone without securing a court order. They should not follow the Department of Justice Secretary's order who is very partisan because we have an existing bank secrecy law," Drilon told reporters.

David Sarmiento Jr., from the LDB, said they are bound to follow the General Banking Act and do not violate the tradition of the banking system.

Lawyer Minerva Retanal from the NBI's Anti-Fraud Division Executive Officer said they examined Bautista's bank accounts based on documents provided to their office.

Escudero meanwhile expressed disagreement with Drilon's view, saying as long as they don’t cross the line or coerce the bank, they are doing their work based on what they are expected to do. (SunStar Philippines)

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