Many folks from the business community are wondering why the Bangko Sentral ng Pilipinas (BSP)’s Monetary Board – the public sector counterpart of the Board of Directors in private companies – gave Rizal Commercial Banking Corporation (RCBC) a mere slap on the wrist despite the BSP’s findings that the bank committed serious violations of banking and anti-money laundering laws.
In the case of RCBC, central bank regulators sanctioned the Yuchengco-led financial institution with an administrative fine of P1-billion, which the BSP quickly touted before media as “the largest amount ever approved as part of its supervisory enforcement actions on a BSP-supervised financial institution.”
“This affirms the BSP’s strong commitment to ensure the stability of the country’s financial system through strong and effective regulations of BSP-supervised financial institutions,” the central bank crowed.
But if the BSP really wants to prevent similar money laundering schemes from happening again, and to show that banking regulators will not tolerate Philippine banks being used as a conduit for “dirty money,” wittingly or unwittingly, it will take more than monetary penalties to put that message across.
The BSP, together with the Anti-Money Laundering Council (AMLC) and the Department of Justice (DOJ), should file criminal cases against RCBC officials implicated or involved in laundering the $81-million stolen from Bangladesh Bank’s account with the Federal Reserve Bank of New York.
As Bangladesh Ambassador to the Philippines John Gomes said during a press conference at their embassy in Manila recently: “This fine and the resignation of RCBC president and treasurer indicate that they (i.e. RCBC) are definitely responsible.”
Gomes and officials from the Bangladesh Bank stressed RCBC’s accountability in the scheme for processing the transactions and allowing the wired stolen funds to be withdrawn despite the urgent stop payment request of Bangladesh Bank officials after they learned of the heist. “If they have stopped it, then nothing would have happened,” Gomes added.
Indeed, we find it illogical that while the Monetary Board found RCBC guilty of wrongdoing supposedly “for noncompliance with the New Central Bank Act, in connection with the incidents following the $81-million Bangladesh Bank cyberheist,” no bank officials (aside from the branch manager who admitted her involvement in moving the stolen funds) were held accountable for such wrongdoing.
By simply imposing a hefty fine on RCBC, the BSP is saying in effect that an offense was committed and punishment was meted out but that the identity of the perpetrator is either unknown or of no importance. That, of course, is absurd. How can you have an offense without an offender?!
As it is, the P1-billion fine is a pittance for RCBC. It won’t have much of an impact on the Yuchengo-led bank’s bottom line, especially since the monetary penalty is going to be paid in installment, anyways. Perhaps this is why RCBC readily agreed to comply with the fine imposed under Monetary Board Resolution No. 1392.
“This amount shall be paid in two equal tranches over a one-year period,” RCBC said, explaining that the first P500 million would be paid upon approval by the Monetary Board and the balance of P500 million one year after.
Going by RCBC’s solid financial performance in the past three years, the installment payment of the fine won’t significantly affect the bank’s net income. In 2015, the bank’s unaudited consolidated net income was P5.1 billion, or 15.2 percent higher than its unaudited consolidated net income of P4.41 billion in 2014. The year before (i.e. 2013), RCBC’s earnings hit P5.31-billion. So each P500-million tranche is roughly just 10 to 15 percent of the bank’s annual profit – a revenue shortfall that can be chalked up to a “bad year.”
Some quarters point out, however, that the BSP’s treatment of RCBC stands in stark contrast to that of the “supporting cast” in the $81-million money laundering scheme.
For instance, the Monetary Board quickly cancelled the certificates of registration of Philrem Service Corporation (Philrem) as a remittance agent, as well as Werquick Inc. and Peso Remittance Express, Inc., both previously registered as foreign exchange dealers/money changers/remittance agents, allegedly “due to significant violations of Section 4511N of the Manual of Regulations for Non-Bank Financial Institutions and Circular No. 706 dated 5 January 2011.”
The BSP said the three establishments committed “significant violations” of the rules governing non-bank financial institutions, particularly, on the requirement to submit to the Anti-Money Laundering Council (AMLC) a report on covered transactions and suspicious transactions under the Anti-Money Laundering Act (AMLA) and to comply with updated anti-money laundering rules and regulations.
The central bank also announced that it “will also be working closely with other relevant government agencies, such as the AMLC and the Department of Justice (DOJ), in their investigation of possible criminal and administrative violations under the AMLA and its implementing rules and regulations, of the [three]entities, including their directors and officers.” In fact, as early as April, AMLC already filed before the DOJ, a complaint for violation of AMLA against top officials of Philrem.
So why hasn’t any criminal complaint been filed against the principal players in the money laundering scheme, particularly, the officers of RCBC who were primarily responsible under AMLA for reporting and stopping the transfer of funds to Philrem and other account holders in the first place?
That is the 64-dollar question.
More on the saga of the stolen Bangladeshi funds in future columns.