The Rizal Commercial Banking Corporation (RCBC) allowed the
withdrawal of the bulk of the funds suspected to have been stolen by
computer hackers from the Bangladesh central bank account despite having
received an order from its counterpart banks abroad to stop the
payment.
This was revealed during the Philippines senate investigation on the
$81 million money laundering activity that has rocked several local
banks and put into question the efficacy of the country's laws to guard
against the entry of dirty funds.
During a hearing yesterday, Senator Teofisto “TG” Guingona III
revealed that, after receiving the suspicious funds on February 5, the
publicly-listed bank controlled by the wealthy Yuchengco family received
a “stop payment” order from the Federal Bank of New York at 5:00pm on
February 8 -- a banking holiday in the country because of the Chinese
New Year celebrations.
“The stop payment order was received by your bank, [on] February 8,
2016,” he told RCBC President and CEO Lorenzo Tan. “On the morning of
February 9, the first banking day, you should have seen the stop payment
request. But apparently it was not honoured because the funds were
withdrawn. All the funds were withdrawn.”
Guingona further pointed to documents filed by the Anti-Money
Laundering Council (AMLC) with the courts noting that RCBC “responded to
the Bangladesh Bank's stop payment request at 7:45pm on February 9.”
“That was the end of the day already,” Guingona said. “Would you care
to explain why the stop payment request -- which should have been
honoured at the very start of the banking day -- was not honoured?”
To this query, the RCBC chief invoked the Bank Secrecy Law and
declined to reveal specific details about the transaction, but offered
an explanation of general procedures pointing to the responsibility of
the branch manager to execute the stop payment order.
“Sorry, Your Honour. 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.”
Pressed further if RCBC's head office sent the stop payment order to
Maia Santos-Deguito, the manager of its now controversial Jupiter St.
branch in Makati City, the bank president stonewalled and again pointed
at Deguito's responsibility.
“Again, Your Honour, I'm precluded because of bank secrecy. But as a
general rule, these orders are sent by the head office to the branch
manager,” Tan said.
Just before posing the question to Tan, Guingona also asked the same
question to Deguito in an attempt to ascertain how the funds slipped
through the bank's internal control mechanisms despite indications from
its foreign counterparts that the fund transfer effected on February 5
was fraudulent.
“February 9 was a banking day. That was a Tuesday. $81 million was
still there in the accounts,” said the senator, chair of the Senate Blue
Ribbon Committee. “On February 9, all the $81 million was withdrawn.
Did you not have a stop payment request on February 9?”
At this, Deguito, too, invoked the Bank Secrecy Law, telling senators
that she was willing to answer questions only in a closed-door
executive session, because she has become the subject of a complaint
filed by the AMLC against her, and that anything she would say in public
could be held against her.
“I apologise but questions related to my actions I can only answer in an executive session,” Deguito replied.
Frustrated by both sides' invocation of the Bank Secrecy Law,
Guingona pointed at the inaction of the bank on the request by its New
York counterpart to hold the transaction and allowing the funds to be
withdrawn by still unknown parties.
“All these amounts that you mentioned were withdrawn on February 9.
And the stop payment request was already there on the morning of
February 9,” Guingona said.
“And yet all these millions of dollars were withdrawn. Had the stop
payment request been honoured, then $58 million of the $81 million would
have been preserved and would not have gone astray.”
During yesterday's hearing, AMLC officials told senators that they
received a request for assistance from Bangladesh Bank as early as
February 11, after which two Bangladeshi officials flew to the
Philippines on February 16.
AMLC then conducted its own investigation into the issue.
The Philippines daily Inquirer broke the news about the laundering of
funds through the local financial system on February 29, and 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.
On the next day -- three weeks after the funds were withdrawn from
the bank, 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 Philippines senate will resume its probe on the issue on Thursday
(March 16), with an eye on amending the Anti-Money Laundering Act to
strengthen it against future laundering attempts.
Copyright: Philippine Daily Inquirer/ Asia News Network
