In the Philippine jurisdiction, the banking industry operates at the delicate intersection of two competing public interests: the individual's right to financial privacy and the state's mandate to maintain the integrity of the financial system against criminal exploitation. This balance is governed primarily by Republic Act No. 1405 (The Law on Secrecy of Bank Deposits) and Republic Act No. 9160 (The Anti-Money Laundering Act of 2001), as amended.

I. The Statutory Shield: Bank Secrecy Law (R.A. 1405)

Enacted in 1955, R.A. 1405 established the "absolute confidential nature" of all deposits with banking institutions in the Philippines. The law was designed to encourage people to deposit their money in banking institutions rather than hoarding it, thereby allowing these funds to be utilized in the nation's economic development.

Scope and Prohibitions

The law covers all deposits of whatever nature (savings, current, or time) with banks or banking institutions, including government banks. It strictly prohibits:

Examination or Inquiry: Any person, government official, bureau, or office from examining or inquiring into bank deposits.
Disclosure: Any official or employee of a banking institution from disclosing any information concerning said deposits.

The Statutory Exceptions

The "absolute" nature of the secrecy is subject to specific legal exceptions where disclosure is permitted:

Written Permission: When the depositor provides a written waiver of confidentiality.
Impeachment: In cases of impeachment of high-ranking government officials.
Court Order: Upon order of a competent court in cases of bribery or dereliction of duty by public officials.
Litigation Subject Matter: In cases where the money deposited is the actual subject matter of the litigation.
Unclaimed Balances: Under the Unclaimed Balances Act (R.A. 3936), where banks must report dormant accounts to the Treasurer of the Philippines.

II. The Statutory Sword: The Anti-Money Laundering Act (R.A. 9160)

The Anti-Money Laundering Act (AMLA), enacted in 2001 and subsequently amended (most notably by R.A. 10365, R.A. 10927, and R.A. 11521), serves as the primary tool for the state to combat the laundering of proceeds from "unlawful activities."

The Anti-Money Laundering Council (AMLC)

The AMLC is the central financial intelligence unit of the Philippines. It is composed of the Governor of the Bangko Sentral ng Pilipinas (as Chairman), the Commissioner of the Insurance Commission, and the Chairman of the Securities and Exchange Commission.

Key Compliance Obligations for Banks

Banks, as "covered persons," are mandated to perform three core duties:

Customer Identification (Know Your Customer/KYC): Banks must establish and record the true identity of their clients based on official documents. They are prohibited from maintaining anonymous accounts or accounts under fictitious names.
Record Keeping: All records of transactions must be maintained and safely stored for five (5) years from the date of the transaction.
Reporting of Transactions:

Covered Transactions (CT): Transactions in cash or other equivalent monetary instrument involving an amount in excess of PHP 500,000.00 within one banking day. For casinos, the threshold is in excess of PHP 5,000,000.00.
Suspicious Transactions (ST): Transactions, regardless of amount, where there is reasonable ground to believe that the funds involve proceeds from an unlawful activity, or where the transaction has no underlying legal or trade obligation, purpose, or economic justification.

III. Harmonizing Secrecy and Compliance: Bank Inquiry Orders

One of the most significant features of the AMLA is its power to bypass the Bank Secrecy Law. Under Section 11 of the AMLA, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution.

Modes of Inquiry

With Court Order: As a general rule, the AMLC must obtain an ex parte order from the Court of Appeals to examine bank accounts upon a finding of probable cause that the deposits are related to an unlawful activity.
Without Court Order: In exceptional cases involving specific "predicate crimes" such as Kidnapping for Ransom, Violations of the Comprehensive Dangerous Drugs Act, Hijacking, Destructive Arson, and Murder, the AMLC may examine bank accounts even without a court order. This power was further extended under the Anti-Terrorism Act of 2020 for cases involving terrorism financing.

IV. Safe Harbor and Penalties

To ensure cooperation, the legal framework provides a "Safe Harbor" provision. No administrative, criminal, or civil proceedings shall lie against any person for having made a covered or suspicious transaction report in the regular performance of their duties in good faith.

Conversely, the penalties for non-compliance are severe:

Money Laundering Offense: Imprisonment ranging from 7 to 14 years and a fine of not less than PHP 3,000,000.00.
Failure to Keep Records: Imprisonment from 6 months to 1 year or a fine of PHP 100,000.00 to PHP 500,000.00.
Malicious Reporting: Reporting a transaction knowing it to be false carries a penalty of 6 months to 4 years imprisonment.
Breach of Confidentiality: Disclosing the fact that a report was made to the AMLC is a criminal offense, ensuring the "tipping-off" of suspects does not occur.

V. Foreign Currency Deposits (R.A. 6426)

It is critical to distinguish between Philippine Peso deposits and Foreign Currency deposits. The Foreign Currency Deposit Act (R.A. 6426) provides an even higher level of protection. While R.A. 1405 has several exceptions, R.A. 6426 generally admits only one exception: the written permission of the depositor. However, the Supreme Court and subsequent amendments to the AMLA have clarified that the AMLC's authority to inquire (with a court order) extends to foreign currency deposits to prevent the law from becoming a sanctuary for illicit funds.