By Melissa Luz T. Lopez, March 4 2019; Business World
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THE CENTRAL BANK will seek further amendments to its charter to relax deposit secrecy rules and look into conglomerates that own banks to further boost their regulatory powers.
Bangko Sentral ng Pilipinas (BSP) General Counsel Elmore O. Capule said these two key reforms were left out by Congress when it approved what is now Republic Act (RA) 11211, which installed numerous changes to the central bank’s charter.
“We were not granted that authority, so perhaps at some future time we will again try to amend the remaining provisions which we think can enhance our powers better,” Mr. Capule told reporters during a recent press chat.
RA 11211 was signed into law on Feb. 14.
A key provision removed from the regulator’s original proposal was a clause that eases the secrecy rules covering bank deposits, which was a power bestowed upon the BSP’s predecessor, the Central Bank of the Philippines.
The BSP wants to have the power to peer into bank deposits to better guard against illegal fund flows.
The Bureau of Internal Revenue was likewise counting on this reform so it can go after more tax evaders, but the same power was not given by Congress when it approved the Tax Amnesty Act. In turn, President Rodrigo R. Duterte had to veto the general tax amnesty program as it could not be carried out without this authority.
Mr. Capule added that the BSP wants to have the ability to look into conglomerates that own banks and similar financial firms, saying this would enhance its oversight over the banking system.
“You have to know what is happening. Conglomerates can play around with subsidiaries,” the BSP’s top lawyer added, noting that parent corporations could be using their subsidiary banks to borrow and simply rotate the money within their group.
“We want to look at contracts — where does the money go? And when you implement a contract, you can only see half. What really happens upstairs? If you want to have a holistic approach, especially with the authority over financial stability, you have to have a bigger picture.”
Mr. Capule said they will considering asking Congress for these amendments.
Bills seeking to update the New Central Bank Act have been pending before Congress for roughly 20 years since its passage in 1993. The changes, which take effect tomorrow, are touted to strengthen the BSP’s monetary and regulatory functions.
Among the key reforms include higher penalties and fines for errant banks and financial entities, legal protection for BSP officials and staff when performing their official duties, a P150-billion capital boost, the restoration of the BSP’s authority to issue its own debt papers, and the creation of a reserve fund for foreign exchange fluctuations, to name a few. — Melissa Luz T. Lopez