MORE than $30 million of the money that hackers stole from the Bangladesh central bank’s account at the Federal Bank of New York was handed over in cash to an ethnic Chinese man in Manila, according to a senator looking into the suspected laundering scheme.
The cash deliveries over several days from a foreign exchange remittance firm were made up of P600 million ($12.87 million) and around $18 million.
“Obviously this is not one bang. It was done in installments,” Sen. Teofisto Guingona III, chair of the Senate blue ribbon committee, said ahead of a panel hearing on the case that was due to open on Tuesday afternoon.
At the Senate hearing, the Chinese was identified as Weikang Xu, a high roller and junket operator for casinos in Manila.
Typo error
The details that Guingona shed light on the money trail after last month’s cyberheist of Bangladesh Bank’s current account at the Federal Reserve Bank of New York, which netted hackers more than $80 million.
The hackers tried to withdraw about $951 million from the account but the other transactions were blocked after a typo error in one of the instructions raised red flags.
Bangladesh Bank suspects $81 million of the money was sent to the Philippines in four installments and, once here, was diverted to casinos.
The Bangladesh central bank has said it is working with the antimoney laundering authorities in the Philippines to recover the funds.
Bangladesh Bank officials say the money may have ended up in Hong Kong, but have not given any details.
Sen. Teofisto Guingona III INQUIRER PHOTO/LYN RILLON
Rizal Commercial Banking Corp. (RCBC) said last week it was investigating an $81-million deposit at one of its branches.
Guingona said the transfers into RCBC were consolidated into one account and some of the money was converted to pesos.
Manager’s instructions
At the hearing, the president of a foreign exchange remittance firm told senators that RCBC manager Maia Santos-Deguito directed Philrem Service Corp. to deliver P600 million in cash to Xu and to remit the rest of the $81 million to other accounts.
Philrem president Salud Bautista said she met Xu once, and got in touch with him through a cell phone number provided by the bank. She also took a picture of his ID.
Philrem also sent $29 million to the Solaire casino and $21 million to Eastern Hawaii Leisure Co. in several tranches and with the amounts converted into pesos, upon Deguito’s instructions.
“We were instructed to remit the funds to the other bank and to deliver the cash to the beneficiary,” Bautista told the Senate blue ribbon committee looking into the laundering of $81 million.
Executive session
But Deguito denied knowing Xu or that she provided his cell phone number to Bautista.
The bank manager said “there were instructions” with regard to the delivery, but said she would rather talk about the matter in an executive session.
She refused to answer questions in the Senate pertaining to specific transactions involving the $81 million that went to the RCBC branch on Jupiter Street in Makati City, and, to the senators’ frustration, repeatedly invoked her right against self-incrimination.
She also repeatedly made her request to speak in an executive session, and cited the case that the Anti-Money Laundering Council (AMLC) filed against her.
Sen. Sergio Osmeña noted that Deguito apparently instructed someone to deliver P600 million to someone she did not know.
“Can you deliver it to me next time?” Osmeña joked, eliciting laughter from the audience.
Stop-payment order
Guingona also took to task RCBC for not immediately acting on a stop-payment order sought by the Bangladesh Bank when it was trying to recover the funds stolen from it.
Guingona pointed out that the stop-payment request from the Federal Reserve Bank of New York was made at 5 p.m. on Feb. 8, which was a holiday in the Philippines.
But RCBC would have seen the request the following morning and could have acted on it then, he said.
But on Feb. 9, all the $81 million was withdrawn.
“On the morning of Feb. 9, the first banking day, you should have seen the stop-payment request, but apparently, it was not honored because the funds were withdrawn. All the funds were withdrawn,” Guingona said.
Bank president mum
He cited documents showing that RCBC responded to the stop-payment request at 7:45 p.m. on Feb. 9, when the banking day had already ended.
RCBC president/CEO Lorenzo Tan said he could not confirm or deny the request or discuss the specific transaction, invoking the bank secrecy law.
“Sorry, you’re honor. I cannot confirm or deny this request specific to this transaction,” Tan told Guingona. “But as a general rule, when there’s a freeze order on an account, the branch manager involved should comply with such an order.”
“As a general policy of the bank, these orders are sent by head office to the branch,” he said.
Frustrated by Tan and Deguito’s invocation of the bank secrecy law, Guingona said the inaction of the bank on the request by its New York counterpart to hold the transaction allowed the funds to be withdrawn by still unknown parties.
The Inquirer broke the story about the laundering of funds through the local financial system on Feb. 29. On that day—20 days after the bulk of the funds was withdrawn from fictitious accounts created at RCBC’s Jupiter branch—regulators asked the Court of Appeals to freeze seven bank accounts suspected to be involved in the laundering activity.
The next day—three weeks after the funds were withdrawn from the bank and converted into pesos, with some being moved to local casinos—the Court of Appeals issued a freeze order. A report from Bangladesh quoted a government official as saying that only $68,000 had been frozen.
The Senate will resume its probe on the issue today, with an eye on amending the Anti-Money Laundering Act to strengthen it against future laundering attempts.
