Expert Says Philippines Must Abolish Bank Secrecy Law to Effectively Fight Corruption, Money Laundering

(PCOO) — The Philippines must adopt the international standards on financial transparency and abolish its bank secrecy law to effectively fight money laundering, tax evasion and corruption, an expert said on Wednesday.

“I think the key challenge for tax administration globally, in the Philippines or everywhere in dealing with money launderers, in dealing with tax evaders, in dealing with corruption, is information,” said Richard Parry, head of the Global Relations Division of the Organization for Economic Co-operation and Development’s (OECD) Center for Tax Policy and Administration.

“First of all, having enough information to be able to detect what is going on, to detect fraudsters, to detect criminals in financial areas and in tax areas,” Parry said during a press conference here, following the Asia-Pacific Economic Cooperation (APEC) workshop session on international tax transparency and cooperation.

He noted that international standards revolve around the exchange of information on request, and the automatic exchange of information.

Parry explained that exchange of information on request means that government authorities can ask another country to provide information, for example, on a particular taxpayer with a bank account in that country.

The other country’s authorities will provide that information, which the country making the request could use for tax investigations, he added.

Parry said the automatic exchange of information significantly adds to that.

What the automatic exchange of information does is exchange information on taxpayers, who may be tax residents in the Philippines but whose respective home countries have a legal agreement with the Philippines for exchange of information.

“So the Philippines needs to be engaged in that process. You need to have legislation in place, which meets the level standards, which means the abolition of bank secrecy,” he said, noting that that is a fundamental aspect of the implementation of that standard.

The bank secrecy law is superfluous, he observed, mentioning a G20 remark in 2009 stating that bank secrecy is dead or dying.

He added that if the Philippines wants to implement that standard, it can exchange information with other countries on the basis of the things he suggested.

Implementing such policy would lead to significant gains with regard to legitimate tax charges in the Philippines, Parry said.

He pointed out that it would also provide the Philippines the revenue and resources that it needs to build its social programs and to deal with issues without relying much on Official Development Assistance (ODA) from other countries.

“So that’s a very important basis to international developments and growth and that is to have a proper tax system. You need to have an exchange of information and the abolishment of bank secrecy,” he said. PND (as)