Banker warns vs knee-jerk moves to stop money laundering

Money turned over by casino junket operator Kim Wong to the Anti-Money Laundering Council after the $81-million money laundering scandal at the Rizal Commercial Banking Corp. erupted. INQUIRER FILE PHOTO

MANILA — A “systematic” rather than a piece-meal solution is needed by the Philippines to address cracks in the financial system that may further be exploited by prospective money launderers, according to a veteran banker.

Alberto Villarosa, chair of the Security Bank and a former president of the Bankers Association of the Philippines (BAP), has warned against “going from one extreme to another” in terms of policy-making even as the banking system assesses the consequences of the recent Bangladesh cyber-heist — proceeds from which slipped through the country.

“From my personal standpoint, not reflective of BAP’s view, we should be careful from going into one extreme to another … from (having to) tighten rules regulations so much that you choke business,” Villarosa said.

“It’s like counting, you may be too fixated on counting the beans that you forget to generate the beans in the first place,” he said.

When asked about the proposed amendments to laws to give more teeth to the Anti-Money Laundering Council, expand the coverage of the Anti-Money Laundering Legislation and ease bank secrecy laws, he called these very complex issues.  He noted that when the bank secrecy act was enacted years ago and applied to the foreign currency deposit unit (FCDU) framework, there were certain reasons for it.

The dilemma now is whether the rules of the game must be changed in reaction to recent problems, according to Villarosa.

In February, some $81 million in dirty money stolen by cyber-hackers from the central bank of Bangladesh was wired to the Jupiter branch of the Rizal Commercial Banking Corp.  This is now the subject of an ongoing probe by the Senate Blue Ribbon Committee chaired by Sen. Teofisto “TG” Guingona III.

Villarosa said easing the bank secrecy law should depend on certain circumstances that would trigger opening up of bank accounts. “It’s difficult to put in a hard rule on that,” he said. “You don’t want it to be the subject of a witch-hunt.”

At the end of the day, he said it would be all about making sure that banks would safeguard risks, processes and compliance. “But we have to balance the business needs,” he said.  Like in rearing children, if parents became too restrictive on the kids, the more they would become problematic, Villarosa said.

“It’s a systemic solution,” he said. “It’s looking at the entire financial system which includes the banks and non-banks as well.”  SFM