IMF urges Philippines to amend bank secrecy laws

The International Monetary Fund (IMF) is calling for stronger anti-money laundering and counter-terrorism financing (AML/CFT) measures in the Philippines, including amendments to the country’s long-standing bank secrecy laws.

In its latest country report, the IMF said maintaining alignment with evolving global AML/CFT standards is crucial ahead of the 2027 mutual evaluation by the Financial Action Task Force (FATF).

Enacted in 1955, Republic Act 1405, or the Law on Secrecy of Bank Deposits, was intended to encourage savings and strengthen public confidence in the banking system by guaranteeing the confidentiality of peso deposits.

Similar protection to foreign currency accounts

In 1974, Republic Act 6426, or the Foreign Currency Deposit Act, extended similar protections to foreign currency accounts to attract foreign investments.

While effective at the time of their passage, these laws have increasingly drawn criticism for enabling the concealment of corruption, tax evasion, and money laundering — particularly by public officials.

In February 2025, the Philippines was removed from the FATF’s so-called “grey list” after nearly four years, following reforms to address deficiencies in its AML/CFT framework.

However, the country was urged to sustain and deepen these reforms.

Grey list

The grey list identifies jurisdictions under increased monitoring due to strategic weaknesses in their AML/CFT systems, signaling heightened risk for international financial transactions.

The IMF also underscored the importance of adopting an updated national AML/CFT strategy once the ongoing National Risk Assessment is completed.

“Strengthening the AML/CFT frameworks is also important to support broader anti-corruption efforts and effectively combat the laundering of proceeds of corruption,” the IMF said.

Amending bank secrecy laws

Support for amending bank secrecy laws has also emerged from the private sector.

In a 17 October joint statement, a coalition of six of the country’s largest business groups backed the government’s push to revise the decades-old legislation, citing the need to enhance transparency, strengthen financial governance, and restore investor confidence.

“These two laws, individually and collectively, by their stringent and rigid nature, have acted and continue to act as straitjackets on regulators, preventing them from being efficient in undertaking measures, such as investigating and prosecuting people involved in corruption and money laundering,” the statement said.

The next FATF assessment is scheduled for 2027, when the Paris-based task force will evaluate whether the Philippines has effectively sustained its AML/CFT reforms.