LDB exec keeps mum when prodded on questionable bank transactions

During the Senate committee on banks hearing on LDB’s possible violations of the anti-money laundering act on Wednesday, Poe chided the LDB for not raising a red flag on questionable transactions.

The Senate committee is investigating the LDB after Commission on Elections (Comelec) chairman Andres Bautista was alleged to be keeping several accounts with the thrift bank amounting to more than P300 million.

Asked by Poe several times whether the LDB reported to the authorities the suspicious transactions it had in the bank, LDB’s banking group head Gerardo Auson Jr. declined to divulge whether they flagged certain accounts, citing “bank processes.”

Auson explained, “(We reported suspicious transactions) in the past, based on the assessment, based on our review of my people, wala kaming… May mga narereport na suspicious but at this point, hindi pwede i-divulge.”

This irked Poe who reminded that it is the bank’s responsibility to report transactions that “seemed out of the ordinary” in compliance with government regulations.

“It is your responsibility na pag may nakita kayong di tama, hindi lamang ninyo isusumite, irereport ninyo. Ngayon sa pagdinig natin, hindi ninyo inaamin, sapagkat sabi nyo may proseso kayo, dun pa lang ay may kaduda-duda na,” Poe said.

Poe stressed that LDB’s “minimum compliance” was not enough to prevent money laundering or a violation of our rule.

“It is my position that they should have reported anything that seemed out of the ordinary. A succession of deposits consistently done every other day or within a certain pattern, exceeding hundreds of millions—this should have raised a red flag,” she said.

“If you’ve been in existence that long, it will not be that difficult for you to determine if something looks suspicious. Chairman Bautista admitted he has deposits, supposedly investments of his family, he has been in government for many years. How much do we earn in government? What legitimate source of income does he have?… These things would come up every now and then, wouldn’t you want to verify the sources of deposits? Coming from a government official, those should be subject to security. Diba dapat binubusisi niyo yan?” Poe added.

Strict bank secrecy laws

In a statement from LDB, it reiterated that “strict bank secrecy laws prevented the resource persons from the LDB from confirming whether the 35 passbooks belonged to Bautista, citing the need for the bank to “follow the relevant laws.”

LDB President David Sarmiento, who was also in the hearing, maintained that LDB has complied with its duty to file suspicious transaction reports (STRs) regarding deposits, and that it strictly follows all necessary procedures when it comes to the opening of accounts by politically exposed persons, their immediate family and close associates.

Francis Lim, counsel for LDB, reiterated the bank’s commitment to upholding its fiduciary duty to its depositors and signified their intent to cooperate with the investigation.

Lim said that LDB was more than willing to provide details required by the senators should Bautista issue a waiver under of the bank secrecy law in order to release the bank from any legal liability.

Under Section 3 of Republic Act 1405, it is a criminal offense for banks or any of its employees to disclose details of a particular bank account, or even to confirm its existence, without a written waiver from the concerned depositor.