Banking secrecy, suspicious transactions, and the Duterte impeachment inquiry

As the impeachment proceedings involving Vice President Sara Duterte continue, public attention has shifted to questions surrounding her bank accounts and why a bank witness could not fully disclose the results of an internal investigation.

The answer lies in the balance between banking confidentiality and the government's duty to investigate possible wrongdoing.

Under Republic Act No. 1405, or the Bank Secrecy Law, bank deposits are generally considered confidential. Banks cannot freely reveal a customer's account information to the public or even to government agencies.

There are exceptions. One of them is "in cases of impeachment." This allows financial records relevant to an impeachment case to be examined through the proper legal process. However, it does not automatically allow a bank employee to disclose every internal report or investigation. Section 3 of the same law also prohibits bank officers and employees from disclosing deposit information except in situations authorized by law. In short, a bank witness may still be legally limited in what can be revealed, even during impeachment proceedings.

To understand why, it also helps to know how banks monitor accounts.

When opening an account, customers go through the Know Your Customer or KYC process. They declare their occupation, expected transactions, and source of funds, whether from salary, business income, investments, dividends, trusts, inheritance, or other legitimate means. This information becomes the customer's financial profile.

Government officials receive closer scrutiny because they are classified as Politically Exposed Persons, or PEPs. This is an international banking standard and does not mean a person has committed wrongdoing. Instead, banks apply enhanced due diligence because public officials are considered more exposed to bribery and corruption risks. Their transactions may receive closer monitoring than those of ordinary account holders.

Banks also learn a customer's normal banking behavior over time. They monitor account balances, deposits, withdrawals, transfers, and other financial activity. If a transaction falls outside that established pattern, it may be flagged for review.

For example, someone who usually maintains P50,000 in savings and regularly deposits part of a monthly salary suddenly receives P12 million. Even if the money came from a legitimate property sale or inheritance, the bank will likely ask for supporting documents because the transaction does not match the customer's normal profile.

The same principle applies to large account holders. Someone with P200 million in deposits who typically withdraws between P3 million and P7 million may also be questioned after requesting P60 million in cash. Aside from compliance checks, banks also need time to verify documentation and ensure the branch has sufficient cash available before releasing such a large amount.

Under Bangko Sentral ng Pilipinas regulations, banks are required to report suspicious transactions to the Anti-Money Laundering Council. A suspicious transaction is generally one that has no clear legal or business purpose, does not match a customer's usual banking behavior, or may indicate possible illegal activity such as money laundering or fraud.

When a transaction is flagged, banks may ask customers to explain the source or purpose of the funds before allowing it to proceed. Depending on the circumstances, access to funds may also be temporarily delayed while verification is completed. In more serious cases involving formal investigations or legal orders, customers may later receive written notice that their account has been placed under restriction or closed, together with instructions to coordinate with the bank's compliance or investigations unit.

It is important to note that a suspicious transaction report is not proof that a crime has been committed. It simply alerts regulators that a transaction deserves a closer look.

This explains why discussions about the Vice President's bank records have become part of the impeachment proceedings. Public officials are expected to meet a higher standard of transparency, but banks are also required to follow laws that protect customer confidentiality. Whether any financial records ultimately become evidence will depend on the legal process governing the impeachment proceedings and the authority of the impeachment court to require their disclosure.