De Lima sees breakdown in banking laws
A “BREAKDOWN” in the compliance of Rizal Commercial Banking Corp. (RCBC) with banking laws may have paved the way for the laundering of $81 million stolen from the Bangladesh central bank, former Justice Secretary Leila de Lima Wednesday said.
De Lima, a Liberal Party senatorial aspirant, urged RCBC branch manager Maia Santos-Deguito to come clean on her participation in the scheme to launder the huge amount.
“Undoubtedly, either she is the lone culprit or the convenient scapegoat in this crime,” De Lima said in a statement.
“But since it is highly unlikely that she was the mastermind, she remains the key in unraveling this complex hacking and money-laundering operation, and is therefore indispensable in identifying the people actually behind it,” she added.
An RCBC internal probe found that Deguito, manager of the RCBC branch on Jupiter Street in Makati City, had vouched for the transaction and facilitated its speedy withdrawal with help of fellow employees.
In a suit filed in the Department of Justice on March 11, the Anti-Money Laundering Council (AMLC) said Deguito knew that the $81 million deposited in her branch had been stolen from Bangladesh Bank but allowed the money to be withdrawn by fictitious account holders.
Article continues after this advertisementThe accounts were opened in May 2015, eight months before the hackers pulled off the caper and the money transferred to the Philippine banking system through RCBC.
Article continues after this advertisementThe RCBC bank manager has denied any wrongdoing, saying she is being used as a scapegoat.
De Lima said what could be the biggest money-laundering scandal in the country, should be a “serious cause of concern” since a large amount of dirty money entered the country’s financial system despite the safeguards provided by the Anti-Money Laundering Act (Amla) and the Bangko Sentral ng Pilipinas (BSP).
Breakdown
“This indicates a breakdown in RCBC’s compliance with regulatory policies of the BSP and AMLC,” she said.
“Banks and other financial institutions should hold the highest level of integrity to continue earning the trust of depositors and investors. As front-liners, these institutions have the responsibility to make sure [that the] money cycled into the local financial system remains legitimate,” she added.
The money, hacked from the account of Bangladesh Bank in the US Federal Reserve Bank of New York, slipped into four RCBC bank accounts, consolidated into a single US dollar account, hastily withdrawn, converted into pesos and transferred to other banks before Bangladesh Bank even realized the breach of its computer system and report the money transfer as “fraudulent.”
Cash deliveries
More than $30 million was handed over in cash to an ethnic Chinese man in Manila, according to Sen. Teofisto Guingona III, chair of the Senate blue ribbon committee investigating the money-laundering scheme.
Guingona said 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.
The Chinese was identified as Weikang Xu, a high-roller and junket operator for casinos in Manila.
Stop-payment request
At the Senate hearing on Tuesday, Guingona said RCBC did not immediately act on a stop-payment order sought by Bangladesh Bank when it was trying to recover the stolen funds.
He said the stop-payment request from the Federal Reserve Bank of New York was made at 5 p.m. on Feb. 8, a holiday in the Philippines.
But RCBC would have seen the request the following morning and could have acted on it then, Guingona said. But on Feb. 9, all the $81 million was allowed to be 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.
Casinos
Bangladesh Bank suspects $81 million of its money was sent to the Philippines in four installments and, once here, was diverted to casinos.
Casinos in the Philippines are not covered by the Anti-Money Laundering Act.
De Lima agreed with Securities and Exchange Commission Chair Teresita Herbosa that the law against money laundering should be amended to add more teeth to it.
Herbosa also supported moves to place casinos and other similar gaming establishments under the regulatory authority of the AMLC.
The Senate investigation into the incident would allow the government to determine if there was a “need to tighten policies on financial transactions or simply enforce the law and prosecute the offenders.”
“The AMLC and Congress should sit down in reviewing the implementation of all anti-money laundering measures and draft the necessary policies to protect the country from becoming a haven for money laundering,” De Lima said.
“Hopefully, the Senate inquiry into this incident will result in a determination of whether this is a case of failed regulations, on the one hand, or simply the blatant violation of standing BSP and AMLC regulations, on the other.” Marlon Ramos
