• AMLC’s frustrating foot-dragging in RCBC case

    Ben D. Kritz

    Ben D. Kritz

    IF the glib way attorney Vincent Salido of the Anti-Money Laundering Council (AMLC) handled Senators’ queries this week about developments in the now-infamous RCBC money-laundering scandal is any indication, a firm and satisfying conclusion that results in a more secure and ethically reliable banking industry is probably an unrealistic expectation.

    At the beginning of February, a sophisticated cybertheft operation gained control of the Bangladesh Bank’s internal systems and interface with the supposedly secure SWIFT global bank communication network, and transferred $100 million from the bank’s account at the Federal Reserve Bank of New York. Of that amount, $19 million was sent to Sri Lanka, but was intercepted by alert central bank officials after one of the intermediate banks the money passed through noticed a spelling error on the transaction order.

    The other $81 million was sent to several US dollar accounts opened through the Jupiter St. branch of RCBC in Makati, where over a four-day period, all but about $64,000 was distributed in both dollars and pesos to a couple of shady characters, despite frantic messages from the central bank in Bangladesh to stop all transactions and hold on to the funds.

    It has since been learned that the Bangladesh heist was just one incident in a much larger web of activity being carried out by a large, well-organized, and well-funded criminal network apparently based in Russia. Whatever the exact nature of the connection to the larger operation, the local node of the theft ring evidently comprised the manager of the Jupiter St. RCBC branch, Maia Deguito; a Chinese-Filipino “businessman,” Kam Sin Wong, better known as Kim Wong; and the owners of a money transfer and exchange company called Philrem, Michael and Salud Bautista. Those four, plus Philrem’s anti-money laundering compliance officer Anthony Pelejo, were charged with violations of the Anti-Money Laundering Act by the AMLC as far back as April.

    When asked about other RCBC officials by Senator Francis Escudero, who apparently made the logical connection—as could anyone with at least a double-digit IQ—that $81 million could not possibly move through a bank several times without anyone other than a local branch manager getting involved, Salido informed the Senate committee that “in due time” the AMLC will file more cases, “more or less . . . in the next two weeks.”

    He did not, however, identify who would be charged, nor did he offer any explanation whatsoever to the most obvious question of all: Why has it taken the AMLC more than seven months to reach a point where it is only “more or less” prepared to file cases in a couple weeks’ time, five months after the first batch of suspects (whom one would think could shed some light on the bank’s involvement) was formally charged, and almost two months after the Bangko Sentral ng Pilipinas (BSP), apparently having heard enough to decide it didn’t need to wait for the AMLC, slapped a P1-billion fine against RCBC for whatever it was the bank did or didn’t do to allow the whole scandal to happen?

    The AMLC’s apparent reticence in holding RCBC generally or specific people within the bank to account for the criminal activity does not bode well for justice, either for the sake of Bangladesh, the actual robbery victim, or for the sake of the Philippines’ reputation and its own banking market.

    The reason AMLC’s foot-dragging is frustrating is that the assertion of RCBC, made in a disclosure to the Philippine Stock Exchange after Salido’s comments at the Senate, that their own “internal probe” found no wrongdoing among anyone outside of the Jupiter St. branch, is pure hogwash. The $81 million arriving from New York would have had to pass through centralized departments in RCBC multiple times; for instance, the large amount of cash that PhilRem converted from dollars and pesos was done, as far as is known, through RCBC’s foreign exchange department, since the remittance company simply did not have that much money on hand. What RCBC is trying to sell everyone is the idea that a lowly branch manager can handle multiple entries and withdrawals of millions in foreign currency in the bank’s system without the knowledge of anyone else managing parts of that system, which simply does not make sense. No bank in this country is managed so poorly, and banking regulations make it virtually impossible to do so.

    Impossible, unless of course several regulations and process steps are willfully bypassed; again, the notion that an individual branch manager could do that defies all logic. Even the best-case scenario, which the testimony of its officials in legislative hearings in the weeks after the scandal broke seemed to imply was what happened, that higher managers in RCBC simply took branch manager Deguito’s word for it that the transactions were legitimate, simply makes RCBC managers and executives look criminally incompetent.

    If the AMLC wishes to have any relevance and put some real teeth in the country’s anti-money laundering framework, it should act quickly to bring the appropriate charges against the responsible RCBC personnel. If it does not, it will make the country an outlier in a world in which financial crimes are being aggressively fought with increasingly effective methods.



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