The Bangko Sentral ng Pilipinas (BSP) is investigating several banks for their possible failure to detect irregular transactions that may have abetted the illegal activities of Janet Lim-Napoles, the alleged brains behind the P10-billion pork barrel scam.
Banks found to have committed lapses in reporting suspicious transactions to the government face financial and regulatory fines, the BSP said.
“It’s too early to say if they failed in their know-your-customer (KYC) policy, but we will look into that. They will be investigated,” said Mel Racela, deputy director of the BSP’s antimoney laundering specialist group.
In particular, the BSP said it would look into the possible failure of banks to follow their KYC procedures in which banks determine whether their customers should be tagged as high-risk individuals who need to be more closely watched.
The BSP requires that banks follow strict procedures in their KYC process, according to Racela. These include gathering the proper identification of customers and face-to-face meetings with bank representatives.
Racela said banks are also required to conduct the risk-profiling of customers. High-ranking government officials, including the BSP’s own management, and individuals who conduct business with government officials are usually considered high-risk customers.
BSP Deputy Governor Nestor A. Espenilla Jr., head of the regulator’s supervision and examination sector, declined to identify the banks under investigation, but said the BSP was looking at the information “that is coming out of public hearings.”
Based on the affidavits of various whistle-blowers, Napoles had bank accounts with state-run Land Bank of the Philippines (Landbank) and Metropolitan Bank & Trust Co. (Metrobank) of businessman George Ty.
The Bankers Association of the Philippines (BAP) said it had been working closely with authorities to ensure the compliance of its members with antimoney laundering reportorial rules.
“The BAP has been working vigorously with its members to ensure full compliance with Amla laws and regulations,” the group’s president Lorenzo Tan said. Amla refers to the Anti-Money Laundering Act.
Tan, president of the Yuchengco-led Rizal Commercial Banking Corp., said BAP would fully cooperate with the Anti-Money Laundering Council (AMLC) in its investigation of the handling of the Napoles accounts by certain banks.
One of those banks, Metrobank, said it was fully cooperating with the BSP and the AMLC investigations. In a statement sent to the Inquirer, Metrobank said it was also complying with the “freeze order issued by the Court of Appeals” on Napoles’ accounts.
Bank of the Philippine Islands (BPI) and Landbank were unable to issue comments as of press time.
344 accounts frozen
In August, the Court of Appeals ordered a freeze on 344 bank accounts, 66 insurance policies and five credit card accounts of Napoles, her relatives, her cohorts and her dubious nongovernment organization (NGO) empire on the recommendation of the AMLC.
The accounts covered by the appellate court order were with HSBC, Citibank, BPI, Landbank, Banco de Oro, Insular Bank, Metrobank, United Coconut Planters Bank and Air Materiel Wing Inc.
Probe of individuals
Investigations on individuals are done by the AMLC, an agency separate from the BSP. The BSP’s duty is to ensure that banks comply with reportorial requirements of the AMLC.
All bank transactions above P500,000 are automatically reported to the AMLC, which determines whether these transactions are part of predicate crimes to money laundering.
Napoles allegedly diverted over the past 10 years at least P10 billion of the lawmakers’ Priority Development Assistance Fund (PDAF) to bogus NGOs for nonexistent projects.
The PDAF, the official name of the pork barrel, was a lump sum fund that financed lawmakers’ pet projects and a source of kickbacks.
In his testimony before the Senate blue ribbon committee on Sept. 12, Benhur Luy, principal witness of the National Bureau of Investigation (NBI), said lawmakers got kickbacks equivalent to 50 percent of the project cost should they choose to funnel their PDAF to NGOs that Napoles had set up.
Luy, a second cousin of Napoles and her former employee, said Napoles would advance half of the kickback once the project was requested either by the House appropriations committee or the Senate finance committee.
Lawmakers would get the remainder once the Department of Budget and Management issued the special allotment release order, he said.
In the 50-50 sharing, Napoles got 40 percent of the value of a project, government “conduits” received 10 percent and the lawmakers the rest, according to the whistle-blower.
Luy said Napoles also transferred kickbacks to bank accounts of lawmakers and their chiefs of staff. He told the blue ribbon committee that he had in his possession bank account numbers.
Withdrawal of P75 million
Luy said Napoles could afford to give kickbacks in advance because she was “liquid.” There were days when Napoles would withdraw as much as P75 million from her Metrobank or Landbank accounts, he said.
The amount was way beyond the P500,000 that should have automatically set off alarm bells and prompt the bank to report the transaction to the AMLC.
In the wake of the public uproar over the scam and calls for the abolition of the pork barrel system, the NBI filed on Sept. 16 plunder, malversation and graft charges against three senators (Ramon Revilla Jr., Jinggoy Estrada and Juan Ponce Enrile), five former House members and 30 others, including Napoles, in the Office of the Ombudsman.
The NBI said Revilla received kickbacks amounting to P224.5 million; Estrada, P183.8 million; and Enrile, P172.8 million.
The public outrage pushed President Aquino to scrap the PDAF and Congress to follow suit. But the pork barrel system in which lawmakers identify projects as line items in the proposed 2014 budget remains.—With a report from Inquirer Research
Originally posted: 8:02 pm | Monday, September 23rd, 2013