• Bautista’s multiple bank accounts: Glaring red flag for money laundering


    Have BSP and AMLC been sleeping on the job?



    BANKERS, or even just wealthy people, who are familiar with the vastly stricter banking regulations since the Anti-Money Laundering Act was passed in 2001 are convinced that Commission on Elections Chairman Andres Bautista is guilty as hell of amassing ill-gotten wealth for one particular reason:

    Bautista has had 35 multiple accounts in a small thrift bank Luzon Development Bank, for no clear legitimate business reason. Three days after his wife Patricia presented the actual passbooks to the public, Bautista has not denied that he had or has these accounts in one bank. He gave only lame excuses that “a few of those accounts” had been closed and that “these are not all mine.”

    The use of multiple accounts is one of the glaring red flags for money- laundering activities. In the trial of Sen. Ramon Revilla for stealing pork-barrel money, for instance, the prosecution presented an Anti-Money Laundering Council (AMLC) lawyer who testified: “The maintenance of quite a number of bank accounts is an indication of a money-laundering scheme.”

    Comelec chief Bautista, left. Right, BSP governor Espenilla, who was in charge of bank supervision and who could have detected, but didn’t, the suspicious deposits.

    Anti-money laundering manuals all over the world in fact list such multiple accounts as one of the major red flags for money laundering. For instance, the US Federal Financial Institutions Examination Council (FFIEC) in its manual “Money Laundering Red Flags: Deposit Accounts” listed as top warning signs of such criminal schemes:

    • “4. Customers with multiple accounts. A customer maintains multiple accounts at a bank or at different banks for no apparent legitimate reason. The accounts may be in the same names or in different names with different signature authorities. Inter-account transfers are evidence of common control.

    • 5. Frequent deposits or withdrawals with no apparent business source. The customer frequently deposits or withdraws large amounts of currency with no apparent business source, or the business is of a type not known to generate substantial amounts of currency.”

    Bautista’s accounts clearly fall under these two red flags, unless one believes that the Presidential Commission on Good Government which he headed, or the Comelec which he still chairs, are “businesses known to generate substantial amounts of currency.”

    As I discussed last Monday, these red flags  even had flashing neon signs, as the Bangko Sentral ng Pilipinas (BSP)requires banks to put such a ranking government official like Bautista in the category of “Politically Exposed Persons” (PEP) whose deposits must be more strictly scrutinized to make sure they aren’t from corruption.

    Why multiple accounts

    There are four main reasons why money launderers use multiple accounts.

    The first is that multiple accounts allow a money launderer to deposit daily his loot in a bank in increments, in the case of the Philippines, less than P500,000, the minimum amount the BSP under Circular No. 706 defines as “covered transactions,” or those the bank must monitor and eventually investigate as suspicious accounts for reporting to regulators. Most of Bautista’s deposits in his accounts were in amounts of P400,000 or less, according to Patricia, citing the entries in his bankbooks.

    The second reason is that with the use of multiple accounts, a money launderer’s loot won’t stick out in the bank’s reports to banking regulators as held by one individual, which obviously would raise alarms. For instance, the amounts in Bautista’s accounts (see image) in two branches of Luzon Bank range from just P37,000 to P29 million. A central bank examiner perusing the bank’s books won’t find anything unusual in its list of accounts, even as they all belong to only one person totaling P329 million.

    A third reason is that if somebody alleges that Bautista is a crook and has hundreds of millions of pesos more than he has declared, he could simply show in a press conference one or two of his passbooks showing just P50 million or so, which he would claim he earned from being an international lawyer. Will the accuser or the public ever find out that he has 33 other accounts containing his loot? No, unless a court issues an order to all 800 commercial, thrift, and rural banks in the country to search and disclose his accounts, a process which would take years, and which I think has never happened in this country. We will never know, do we, if Bautista has multiple accounts in another thrift bank, will we?

    Bautista obviously never thought – stupidly, I think, given that he had a falling-out with his wife four years ago – that Patricia would be able to get hold of all his 35 bank passbooks.

    A fourth reason is that the money launderer can move his money out of the bank, especially to overseas accounts, in small increments that regulators won’t notice. Bankers speculated that the role of three foreign enterprises Patricia claimed her husband had investments in would be to receive gradually Bautista’s moneys contained in his 35 accounts at Luzon Bank.

    Offshore jurisdictions

    It’s obviously for a major reason that these companies—Bauman Enterprises in the British Virgin Islands, Montova International in Brunei Darussalam, and Mega Achieve in Anguilla—are in tax-haven and “offshore-jurisdiction” centers, where despite pressure by the multinational Financial Action Task Force, are still known to be able to keep ill-gotten wealth from other countries.

    But won’t the BSP find out that all of the 35 accounts were under one individual?

    The answer to this points to the likely the reason why Bautista put all his accounts in a small thrift bank, the Luzon Development Bank, whose owners, the Limcaoco family, he said were his close friends.

    Under the BSP’s Circular No. 760, only universal and commercial banks are required to have an electronic and reporting system to detect money laundering. This is linked to the Anti-Money Laundering Council’s (AMLC) data center, so that if these banks fail to alert it of a suspicious account, the AMLC secretariat could on its own detect it. Since it is only a thrift bank, Luzon Bank is not required to have such electronic reporting system.

    It could simply not report such suspicious accounts to AMLC as the 35 different accounts owned by one high-profile government official, if the owners choose not to do so.

    Bautista’s multiple accounts: ‘Classic’ money-laundering sign.

    Bautista’s deposits at Luzon Bank, if proven to be ill-gotten, could have very adverse consequences to the country.

    If indeed ill-gotten, one conclusion would be that the BSP and the AMLC – both headed by the BSP governor – have been sleeping on the job, and it seems ill-advised that the new BSP governor is Nestor Espenilla since he was deputy governor in charge of supervising banks for those years that Bautista was allegedly depositing these sums.

    The other conclusion would be that the BSP and the AMLC’s current system for detecting money laundering is inutile. Even if Bautista’s money in Luzon Bank were ill-gotten, I don’t think he is a professional money launderer, definitely not in the league of global terrorists and drug lords that have had to study how to move their illegal money.

    If the BSP/AMLC couldn’t detect the scheme of an amateur money launderer, then it couldn’t have discovered those by professional money-launderers. Who knows if we’ve become the center for money laundering in Asia?

    Indeed, why did the syndicate that hacked $951 million from the Bangladesh central bank choose a Philippine bank, the Rizal Commercial Banking Corp., one of the biggest hereabouts, to transfer their loot to?

    And if the BSP remains quiet about why it couldn’t detect money laundering in our banking system, the global Financial Action Task Force could black-list us as a center for such criminal schemes, which would be disastrous for our country’s image and eventually, its economy.

    Email: tiglao.manilatimes@gmail.com
    Facebook: Rigoberto Tiglao
    Twitter: @bobitiglao


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    1 Comment

    1. The Comelec chair knows all of these. He has been careless in his interviews. The more he talks, the more he is exposing himself.