[Puso at Diwa] VP Sara Duterte trial: Going back in time or moving forward on banking reforms?

The Senate, sitting as an impeachment court, recently granted the House prosecution’s request to subpoena the bank and tax records of Vice President Sara Duterte and her husband, Manases Carpio, in connection with allegations of unexplained wealth under Article II of the impeachment complaint. In approving the request, Senate Impeachment Court Presiding Officer Francis Escudero ruled that the documents were “reasonably described, readily identifiable, and prima facie relevant and material” to the issues before the court. The decision has generated predictable debate over financial privacy and bank secrecy. Yet the larger policy question is often overlooked. The subpoena is not simply a procedural ruling in a high-profile impeachment case. It is consistent with more than two decades of reforms undertaken by Congress and the Bangko Sentral ng Pilipinas (BSP) to strengthen the integrity of the Philippine financial system and ensure that it cannot be used to conceal corruption, money laundering, terrorist financing, tax evasion, or unexplained wealth. The impeachment proceedings therefore raise a broader institutional question: should the country continue moving toward greater transparency and accountability, or should it retreat to an earlier era when bank secrecy could effectively shield public officials from meaningful financial scrutiny? Banking reforms The answer lies in understanding the direction of Philippine banking reforms. Over the years, Congress and the BSP have steadily transformed the country’s banking framework from one that emphasized confidentiality almost exclusively into one that seeks to balance legitimate financial privacy with the equally compelling public interest in accountability and financial integrity. (READ: Financial records can trace Duterte’s money trail – ex-prosecutor) The first major step was the enactment of the Anti-Money Laundering Act (AMLA), followed by successive amendments that expanded the powers of the Anti-Money Laundering Council (AMLC). These reforms aligned the Philippines with internationally accepted standards established by the Financial Action Task Force (FATF), recognizing that financial secrecy should never become a refuge for criminal activity or illicit enrichment. Complementing these legislative changes, the BSP substantially strengthened customer due diligence through enhanced Know-Your-Customer (KYC) requirements. Banks are now expected not merely to identify their clients but, where warranted, to establish the source of funds, understand the nature of business relationships, identify beneficial ownership, and monitor unusual or suspicious transactions. Anonymous banking has steadily given way to transparent banking because anonymity is fundamentally inconsistent with maintaining the integrity of the financial system. Equally significant was the BSP’s shift from a rules-based compliance approach to risk-based supervision. Rather than treating every customer identically, banks are now required to identify higher-risk clients and transactions, including politically exposed persons (PEPs), complex corporate structures, shell companies, and significant cross-border financial movements. This policy recognizes a simple reality. Public officials exercise authority over public resources. That authority inevitably creates opportunities for corruption, abuse of office, bribery, procurement irregularities, and illicit enrichment. Consequently, international banking standards require enhanced due diligence whenever financial institutions deal with politically exposed persons not because they are presumed guilty, but because the risks associated with public office are objectively greater. The BSP likewise strengthened banks’ obligations to report suspicious transactions to the AMLC even when no underlying criminal conviction has yet been secured (see image below). The reporting system is preventive rather than reactive. It aims to detect potentially illicit financial activity before it becomes deeply embedded within the financial system. Corporate transparency has likewise improved through greater disclosure of beneficial ownership, reducing opportunities to hide assets behind nominees or opaque corporate structures. Governance standards within banks have also been upgraded through stronger compliance units, independent directors, board-level risk committees, and more robust internal controls. Taken together, these reforms pursue one common objective: ensuring that the Philippine financial system serves legitimate economic activity rather than becoming a sanctuary for illicit wealth. Bank secrecy Seen from this perspective, the long-standing Bank Secrecy Law (Republic Act No. 1405) has likewise evolved. Although bank deposits continue to enjoy legal protection, that protection is no longer absolute. …denying access to lawfully obtainable financial records despite their relevance would undermine the very institutional reforms that Congress and the BSP have painstakingly built over the past two decades. It would weaken the architecture designed to prevent corruption, money laundering, tax evasion, terrorist financing, and the concealment of illicit wealth.” Successive amendments to the AMLA have gradually expanded lawful access to bank information under carefully defined circumstances and subject to judicial or statutory safeguards. Philippine law has therefore moved toward balancing two important constitutional values: the individual’s right to financial privacy and the State’s duty to uphold public accountability, enforce the law, and protect the integrity of the financial system. What Sara Duterte’s traveling BIR box says about Philippine tax secrecy 3 obstacles the prosecution must hurdle in Sara Duterte’s money trail This balance is especially important where public officials are concerned. The Constitution declares that public office is a public trust. Public servants are expected to maintain the highest standards of accountability, integrity, and responsibility. The impeachment complaint against the Vice President includes allegations involving the misuse of public funds, failure to divest business interests, bribery and procurement irregularities, and unexplained wealth. Whether these allegations are ultimately sustained remains for the impeachment court to determine after evaluating all admissible evidence. Precisely because impeachment is a constitutional process governed by due process, the subpoena should not be viewed as a finding of guilt. Rather, it is an evidentiary mechanism that enables the Senate to examine whether the Vice President’s declared assets, banking transactions, and tax records are consistent with one another and with the explanations offered in her defense. Without access to relevant financial records, the impeachment court would be deprived of evidence that may either substantiate or refute the allegations before it. More fundamentally, denying access to lawfully obtainable financial records despite their relevance would undermine the very institutional reforms that Congress and the BSP have painstakingly built over the past two decades. It would weaken the architecture designed to prevent corruption, money laundering, tax evasion, terrorist financing, and the concealment of illicit wealth. Reform trajectory The issue therefore extends beyond one impeachment trial. It concerns whether the Philippines will remain committed to the governance reforms that have gradually aligned its financial system with global standards of transparency, integrity, and accountability. The Senate’s decision to authorize the production of the Vice President’s bank and tax records, subject to constitutional safeguards and due process, is consistent with that reform trajectory. It recognizes that financial privacy remains an important right but not an impregnable shield against legitimate legal inquiry where public accountability is directly at issue. To insist otherwise would not preserve the rule of law. It would reverse years of institutional progress and return the country to a time when bank secrecy could frustrate accountability rather than coexist with it. In that sense, the question before the impeachment court is larger than the fate of one public official. It is whether the constitutional principle that public office is a public trust will continue to be reinforced by modern financial governance or whether the country will choose to go back in time. – Rappler.com Diwa C. Guinigundo is the former deputy governor for monetary policy and other aspects of central banking. He was a former alternate executive director at the IMF in Washington, DC in 2001-2003. He is the author and editor of several books on political economy, regional crisis and cooperation, debt and economic growth and public policy agenda. He serves as independent director of several corporate and financial institutions with focus on corporate governance, risk oversight and audit. He also serves as principal advisor for New York-based GlobalSourcePartners. He remains in the advisory board of ASEAN Macroeconomic Research Office and Singapore Management University’s Sim Kee Boon Institute for Financial Economics. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.