A two-pronged attack on corruption
Corruption in the Philippines is not merely a crime of opportunity; it is a general ailment sustained by legal frameworks that actively protect the corrupt. For decades, ill-gotten wealth has been shielded behind two formidable fortresses: the impenetrable privacy of bank accounts and the anonymous mask of corporate entities. To win the fight against corruption, the Philippines must launch a decisive assault on both fronts simultaneously. Repealing the outdated bank secrecy law and mandating beneficial ownership disclosure for government contractors are not just isolated reforms but complementary, essential strategies to dismantle the infrastructure of graft and reclaim public trust.
The first and most critical fortress to breach is the financial one, protected by the bank secrecy law. This law, originally intended to safeguard financial privacy, has been weaponized into a primary shield for corruption. It creates an incapacitating “chicken and egg” problem for investigators: to obtain a court order to look at an account, they must already possess strong evidence of illicit funds, yet such evidence is often impossible to gather without examining the accounts themselves. This legal barrier forces agencies like the Office of the Ombudsman and the Anti-Money Laundering Council to stand idle while corrupt officials freely move and hide stolen public money across a web of accounts. Repealing this law would transform the anticorruption landscape. It would empower investigators to “follow the money in real time,” swiftly act on suspicions before funds vanish, and build stronger court cases with undeniable transaction trails. This repeal would also act as a “force multiplier,” making laws against plunder and tax evasion enforceable by directly exposing the accumulation of illicit wealth.
The second fortress is the corporate veil, which allows anonymous entities gorging on public funds. Government contracts, funded by taxpayers, are a major instrument for corruption, yet the current system permits companies to win lucrative deals while hiding their true owners. This anonymity is a fertile ground for conflicts of interest, as it becomes impossible to screen for officials awarding contracts to their own shell companies or to businesses owned by relatives and associates. Mandatory beneficial ownership disclosure—revealing the real people who ultimately own or control a company—is the necessary tool to pierce this veil. It transforms intangible corporate entities into accountable individuals, deterring misconduct by ensuring that every entity profiting from public funds has a “human face” that can be scrutinized. Furthermore, this disclosure is indispensable for investigating fraud, as it provides law enforcement with a starting point—a person to question and a network to map—unlocking the corporate maze used to launder money and hide assets.
Skeptics may raise concerns about financial privacy and undue burdens on businesses. However, these worries are manageable and are vastly outweighed by the monumental scale of public theft. A repeal of the bank secrecy law can be crafted with strong judicial safeguards, limiting access to specific, serious crimes and preventing “fishing expeditions.” The argument that financial secrecy attracts investment is outdated; modern capital is drawn to stability and the rule of law, not to havens for dirty money. Similarly, the burden of disclosing beneficial owners—typically those with a 25 percent or more stake—is a minor inconvenience for legitimate businesses when balanced against the state’s interest to prevent systemic corruption. The true burden lies with the public, who bears the cost of investigating fraud enabled by anonymity.
The fight against corruption in the Philippines has long been an uphill battle because the most powerful tools for hiding wealth—secret bank accounts and anonymous corporate structures—have been legally protected. Repealing the bank secrecy law and mandating beneficial ownership disclosure are targeted, pragmatic, and powerful reforms that strike at the heart of this problem. One unlocks the flow of illicit money, while the other exposes the true beneficiaries of suspicious contracts. Together, they create a powerful environment of transparency and accountability. By dismantling these twin fortresses, the Philippines can shift from a reactive stance to a proactive one, creating a powerful deterrent, recovering stolen assets, and building a future where integrity, not corruption, is the foundation of governance. The path to a more just and transparent nation demands no less.
—————-
Manny Ilao is a former chief financial officer who draws on his experience in finance and familiarity with Philippine banking laws to share informed opinions on good governance.
