PHILIPPINE DEPOSIT

INSURANCE
CORPORATION
 government instrumentality by virtue
of RA 3591 that insures the deposits of all
banks which are entitled to the benefits of
insurance
 help depositors have quicker access to their
insured deposits should their bank close
 resolve problem banks while still open
 hasten the liquidation process for closed banks
 mete out stiffer sanctions and penalties against
those who engage in unsafe and unsound
banking practices

=
 maximum deposit insurance coverage

The maximum deposit insurance coverage is

P500,000 per depositor. All deposit accounts
by a depositor in a closed bank maintained in
the same right and capacity shall be added
together.
* PDIC covers only the risk of a bank closure
ordered by the Monetary Board. Thus, bank
losses due to theft, fire, closure by reason of
strike or existence of public disorder,
revolution or civil war, are not covered by
PDIC.
 WHO ARE REQUIRED TO FILE DEPOSIT
INSURANCE CLAIMS?
Depositors:

 With valid deposit accounts with balances of more than

P100,000.00
 With outstanding obligations with the closed bank either as
borrower, co-maker, or as spouse of borrower;
 With incomplete mailing address found in the bank records, or
failed to update them through the MAUF issued by the PDIC;
 With accounts maintained under the name of
business entities;
 With accounts not eligible for early payment,
regardless of type of account and account balance
per advice of PDIC
 Who are deceased whose filing of claim is thru the
legal heirs.
 Who should sign the Claim form

 Depositor of the account

 Parent
 Agent
 Trustee
 Each depositor
 requirements

• Original evidence of deposits

• Two valid photo-bearing IDs with signature of the
depositor
• If the depositor is below 18 years old, a
photocopy of his birth certificate from the NSO
and valid IDs of parents
• Original copy of a notarized SPA for claimants who
are not signatories in the bank records
SECRECY OF BANK
DEPOSITS
• To give encouragement to the people to
deposit their money in banking institutions
• To discourage private hoarding so that it may
be properly utilized
This law prohibits any person from
disclosing to any person any information,
relative to the funds or properties belonging
to the depositors in the custody of the bank.
 exceptions

1. Written permission or consent in writing by

the depositor
2. In cases of impeachment
3. Upon order of the court in cases of bribery or
dereliction of duty of public officials
4. Upon order of the court in cases where the
money deposited or invested is the subject
matter of the litigation
5. Upon a subpoena issued by the Ombudsman
concerning an investigation it is conducting
6. The BIR can inquire into bank deposits in an
application for compromise of tax liability or
determination of a decedent’s gross estate;
7. The Anti-Money Laundering Council when
there is probable cause that the deposits are
related to an unlawful activity or money
laundering offense
8. The Bangko Sentral can examine bank
accounts in the course of its periodic or
special examination regarding compliance
with Anti-Money Laundering Law
UNCLAIMED BALANCE
LAW
 Elements

• There must be credit or deposit of:

– Money
– Bullion
– Security
– Other evidence of indebtedness
• Personal or real properties within the Ph with a
bank, building and loan association or trust
corporation
• The deposit is in favour of any person:
– Who is dead/dissolved
– Who has not made further deposits or
withdrawals during the preceding 10 years
or more
 Immediately and within the month of
January of every odd year, all banks, buildings
and loan associations and trust corporations
shall cede to the Treasures of the Philippines
corresponding amounts of all unclaimed
balances
GENERAL BANKING LAW
 R.A. 8791 (General Banking Law 2000)

• AN ACT PROVIDING FOR THE REGULATION OF THE

ORGANIZATION AND OPERATIONS OF BANKS, QUASI
BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES.
 BANKS

• The lending of funds.

• Obtained in the form of deposits from the public.
 Quasi-banks

• Refer to entities engaged in the borrowing of funds

through the issuance, endorsement or assignment
with recourse or acceptance of deposit substitutes of
relending or purchasing of receivables and other
obligations.
CLASSIFICATION OF BANKS
 Universal Banks

• Have a wider scope of activities than commercial

banks. In addition to commercial banking activities,
universal banks are authorized to:
– Engaged in underwriting.
– In other activities of investment houses.
– To invest in equities of non-allied institution.
 Commercial Banks

• Are smaller than UB in terms of scope of business

activities.
• Can offer various banking services, but they cannot
engage in the activities of investment houses or
investment banks such as underwriting of securities
 Rural and Cooperative Banks

• Their role is to promote and expand the rural

economy in an orderly and effective manner by
providing the people in the rural communities with
basic financial services.
• Rural banks are privately owned and managed while
the and Cooperative banks are organized/owned by
cooperatives or federation of cooperatives.
 Thrift Banks

• Banks that include:

– Savings and mortgage banks.
– Private development banks.
– Stock savings and loan associations.
 Islamic Banks

• Charter of Al Amanah Islamic Investment of the

Philippines.
• Authorized to offer Islamic banking with the mandate
to provide alternative banking services that shall
cater to the emerging global Islamic markets
FUNCTIONS OF BANKS
 Deposit Function

• Simple loan.
• Fixed, savings and current deposits of money in
banks and similar institutions shall be governed by
the provisions concerning simple loan.
 Kinds of Deposit

• Demand Deposits
• Savings Account
• Time Deposits
• Negotiable Order of Withdrawal Account
• Other Account
 Loan Function

• Basic Rules and Restrictions

• Risk-Based Capital Ratio
• Single Borrower’s Limit
• DORSI Restrictions
 Other Functions

• UB and CB may also exercise any of the following

functions:
– Receive in custody funds, documents and valuable
objects.
– Act as financial agent and buy and sell, by order of
and for the account of their customers, shares,
evidences of indebtedness and all types of
securities.
– Make collections and payments for the account of
others and perform such other services for their
customers as are not incompatible with banking.
Ownership of Banks
 Foreign Ownership

• Foreign Stockholdings
– Up to 40% of the voting of stock of domestics
banks.
– Foreigners – total equity participation
– Corporate stockholders- citizenship is determined
by citizenship of controlling stockholders.
 Filipino Ownership

• Filipino Stockholdings
– Section 11 of the GBL applies to Filipinos and
domestic non-bank corporations.
– Individual equity participation should not exceed
40% of the voting shares.
 Family Group and Related Interest

• No prohibition
• Full disclosure
SINGLE BORROWER’S LIMIT
 Single Borrower’s Limit

• Consistent with national interest, the total amount

of loans, credit accommodations and guarantees that
may be extended by a bank to any person,
partnership, association, corporation or other entity
shall at no time exceed twenty five percent (25%) of
the net worth of such bank.
 Single Borrower’s Limit

• The total amount of loans, credit accommodations

and guarantees prescribed may be increased by an
additional ten percent (10%) of the net worth of such
bank.
 Exclusions (NON-RISK LOANS)

• Loans secured by obligations of the Bangko Sentral or

the Philippine Governement.
• Loans fully gruaranteed by the government.
• Loans covered by assignment of deposits maintained
in the lending bank and held in the Philippines.
 Exclusions (NON-RISK LOANS)

• Loans, credit accommodayions and acceptances

under letters of credit to the extent covered by
margin deposits;and
• Other loans or credit accommodations which the MB
may specify as non-risk items.
 DOSRI ( Directors, Officers ,Stockholders , and
Related Interest) Accounts
• It limits the loans and guarantees that can be granted
by a bank to a single director, officer, stockholder or
related interest to an amount equivalent to his
unencumbered deposits or the book value of his
paid-in capital contribution to the bank.
 Requisites

A. The borrower is director, officer, or any stockholder

of a bank and related interest.

B. He contracts a loan or any form of financial

accommodation.
 Requisites

C. The loan or financial accommodation is from:

1. his bank or
2. a bank that is a subsidiary of a bank holding
company of which both his bank and lending bank are
subsidiaries,
 Requisites

3. A bank in which a controlling proportion of the

shares is owned by the same interest that owns a
controlling proportion of the shares of his bank; and
D. The loan of DOS, singly or with that of his related
interest, is in excess of 15% of the capital and surplus of
the lending bank or in the maximum amount
permitted by law, whichever is lower.
 Who are covered

1. Directors – Directors of the lending bank.

2. Officers – either identified in the by-laws or are
generally known as such
3. Stockholders – those stockholdings, individually
and/or together with any of the following persons,
amount to 2% or more of the total subscribed
capital stock of the bank.
 Who are covered

• A. His spouse or relative within the first degree of

affinity or relative by legal adoption , partnership
wherein any of the foregoing is a general partner;
and
• B. A co-owner, with the stockholder or the
stockholder’s spouse, or relative mentioned above,
of property/right/interest.
 Who are covered

4. Related Interest –
A. His spouse or relative within the first degree of affinity or relative
by legal adoption , partnership wherein any of the foregoing is a
general partner.
B. A co-owner, with the stockholder or the stockholder’s spouse, or
relative mentioned above, of property/right/interest.
C. hold or own at least twenty percent (20%) of the subscribed
capital of such corporation, or of the equity of such association or
firm;
 Transactions covered

• Any advance by means of incidental or temporary

overdraft, cash item, “vale”, etc
• Any advance of unearned salary or other unearned
compensation for periods in excess of 30 days
• Any advance by means of Drawings Against Uncollected
Deposits (DAUDs)
• Outstanding availments under an established credit line
 Transactions covered
• Drawings against an existing letter of credit
• Acquisition of any note, draft, bill of exchange or other
evidence of indebtedness upon which the bank’s DOSRIs may
be liable as makers, drawers, acceptors, endorsers, guarantors
or sureties.
• Indirect lending such as loans or other credit accommodations
granted by another financial intermediary to said DOSRIs from
funds of the bank invested in the other institution’s trust or
the department when there is a clear relationship between
the transactions.
Anti-Money Laundering Act of 2001
 AMLA

• Money laundering as a scheme whereby proceeds of

an unlawful activity are transacted or attempted to
be transacted, thereby making them appear to have
originated from legitimate sources.
 Unlawful activities or predicate crimes covered
by the AMLA
• Kidnapping for ransom
• Drug offenses
• Graft and corrupt practices
• Plunder
• Robbery and extortion
• Jueteng and masiao
• Piracy on the high seas
 Unlawful activities or predicate crimes covered
by the AMLA
• Qualified theft
• Swindling
• Smuggling
• Electronic Commerce crimes
• Hijacking, destructive arson and murder (terrorist acts)
• Securities fraud
• Felonies or offenses of a similar nature punishable under
penal laws of other countries
 How is money being laundered through the
financial system?
• Placement – involves initial placement or introduction of the
illegal funds into the financial system.
• Layering – involves a series of financial transactions during
which the dirty money is passed through a series of
procedures, putting layer upon layer of persons and financial
activities into the laundering process.
• Integration – the money is once again made available to the
criminal with the occupational and geographic origin obscured
or concealed. The laundered funds are now integrated back
into the legitimate economy through the purchase of
properties, businesses and other investments.
 Anti-Money Laundering Council

• The AMLC is the Philippines’ financial intelligence

unit, which is tasked to implement the AMLA. It is
composed of the Governor of the Bangko Sentral ng
Pilipinas (BSP) as Chairman & the Commissioner of
the Insurance Commission (IC) and the Chairman of
the Securities and Exchange Commission (SEC) as
members.
 The AMLC is authorized to:
• Require and receive covered or suspicious transaction reports from
covered institutions.
• Issue orders to determine the true identity of the owner of any
monetary instrument or property that is the subject of a covered or
suspicious transaction report, and to request the assistance of a
foreign country if the Council believes it is necessary.
• Institute civil forfeiture and all other remedial proceedings through
the Office of the Solicitor General.
• Cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses.
 The AMLC is authorized to:
• Investigate suspicious transactions, covered transactions
deemed suspicious, money laundering activities and other
violations of the AMLA.
• Secure the order of the Court of Appeals to freeze any
monetary instrument or property alleged to be the proceeds
of unlawful activity.
• Implement such measures as may be necessary and justified
to counteract money laundering.
• Receive and take action on any request from foreign countries
for assistance in their own anti-money laundering operations.
 The AMLC is authorized to:
• Develop educational programs to make the public aware of the
pernicious effects of money laundering and how they can
participate in bringing the offenders to the fold of the law.
• Enlist the assistance of any branch of government for the
prevention, detection and investigation of money laundering
offenses and the prosecution of offenders. In this connection, the
AMLC can require intelligence agencies of the government to
divulge any information that will facilitate the work of the Council in
going after money launderers.
• Impose administrative sanctions on those who violate the law, and
the rules, regulations, orders and resolutions issued in connection
with the enforcement of the law.
 Covered Transaction

• Transaction in cash or other equivalent monetary

instruments involving a total amount in excess of
P500,000.00 within one business day.
 Suspicious Transaction

Transactions, regardless of the amount involved, where

the following circumstances exist:
• a. there is no underlying legal or trade obligation,
purpose or economic justification;
• b. the client is not properly identified;
• c. the amount involved is not commensurate with the
business or financial capacity of the client;
 Suspicious Transaction
• d. taking into account all known circumstances, it may be perceived
that the client’s transaction is structured in order to avoid being
the subject of reporting requirements under the Act;
• e. any circumstance relating to the transaction which is observed to
deviate from the profile of the client and/or the client’s past
transactions with the covered institution;
• f. the transaction is in any way related to an unlawful activity or
offense under this Act that is about to be, is being or has been
committed; or
• g. any transaction that is similar or analogous to the foregoing.
 Reportorial Requirements

• The reports on covered and/or suspicious transactions

shall be accomplished in the prescribed formats and
submitted within five business days from occurrence of
the transactions in a secured manner to the AMLC in
electronic form, either via diskettes, leased lines, or
through internet facilities. The corresponding hard copy
for suspicious transactions shall be sent to AMLC (EDPC
Building, Bangko Sentral ng Pilipinas)
THE NEW CENTRAL BANK ACT
(R.A NO.7653)
• The primary objective of the Bangko Sentral is to
maintain price stability conducive to a balanced and
sustainable growth of the economy. It shall also promote
and maintain monetary stability and the convertibility of
the peso.
• It may acquire and hold such assets and incur such
liabilities in connection with its operations authorized by
the provisions of this Act, or as are essential to the
proper conduct of such operations.
• The Bangko Sentral may compromise, condone or
release, in whole or in part, any claim of or settled
liability to the Bangko Sentral, regardless of the
amount involved, under such terms and conditions
as may be prescribed by the Monetary Board to
protect the interests of the Bangko Sentral.
 Conservatorship

• State of continuing inability or unwillingness to

maintain a condition of liquidity deemed adequate to
protect the interest of depositors and creditors.