The failure of Anti-Money Laundering Council (AMLC) to stop the entry of stolen Bangladeshi funds into the country’s banking system is nothing short of global embarrassment. That “dirty money” could easily get past AMLC’s touted money laundering firewall has become fodder for international news outfits.
It is even more embarrassing when the Philippines’ anti-money laundering agency is compared to its counterpart in Sri Lanka, a tiny island nation south of India.
According to Bangladesh central bank officials, of the $100 million hacked from its New York Federal Reserve account, some $20 million went to the account of a newly-formed non-governmental organization in Sri Lanka. But the Sri Lankan bank handling the account reported the unusual transaction to their central bank under the country’s anti-money laundering (AML) laws and authorities were able to return the money to Bangladesh.
AMLC’s executive director Julia Bacay-Abad, on the other hand, all but admitted last week that the country’s anti-money laundering agency is practically helpless at blocking the entry of dirty money into our financial system.
Stung by criticism that the AMLC was too slow to respond, Abad pointed out that the agency received over 36 million covered transaction reports as well as 146,308 suspicious transaction reports in 2015 alone. She explained that AMLC’s Information Management and Analysis Group only has 28 personnel and only nine of them were financial analysts. “We are receiving millions of transaction reports and the AMLC cannot look into all those transactions,” Abad said.
Of course, some folks find that hard to believe when AMLC quickly collated and gave out former Chief Justice Renato Corona’s bank data during the impeachment trial in 2012, and recently leaked a report detailing a presidential candidate’s alleged dubious bank transactions.
Anyway, if there is any reason for the Paris-based Financial Action Task Force (FATF) – the global watchdog against money laundering – to demote the country to the “gray list,” it is because (as AMLC’s Abad admits) the agency did not and could not do its job.
This is why it’s quite absurd that some senators are now pushing for expanding the coverage of the anti-money laundering law to include gambling centers (i.e., casinos, bingo), real-estate companies and art auctioneers. The AMLC already admitted that it can’t get the job done and our lawmakers want to give them more work?! Hello!!
Despite their obvious blunders, AMLC keeps pointing its finger at everyone else except itself.
Central Bank Gov. (and AMLC co-chair) Amando Tetangco Jr. says the “prevention of… money laundering is being hampered by the very strict bank deposit secrecy law.” Another AMLC co-chair, Insurance Commissioner Emmanuel Dooc, called for the inclusion of casinos as covered entities in order to “stop criminal elements from exploiting the deficiencies in our existing laws.”
The spin that casinos or the bank secrecy law is to blame for the $81-million is New York Fed cyber heist is merely a “smoke screen” to hide AMLC’s own failings. And many Filipinos are disappointed and appalled at how our senators seemed to treat AMLC with kid gloves during the Senate blue ribbon committee hearings.
For starters, our senators should grill Abad on why AMLC failed to “red flag” the wire transfers to the accounts of Michael Cruz ($6M), Jessie Lagrosas ($30M), Alfred Vergara ($20M), and Enrico Vasquez ($25M) with the Rizal Commercial Banking Corporation (RCBC). Who in AMLC was responsible for tracking the fund transfer to RCBC last Feb. 5?
Abad also said that AMLC got in touch with the banks involved in the alleged money laundering anomaly last Feb. 12, after which the concerned financial institutions submitted a suspicious transaction report. Clearly then, it took RCBC officials more than seven days after they received the stolen funds to file the required suspicious transaction report, in violation of the anti-money laundering law. So why has AMLC still not filed charges against RCBC officials for breaking the law? Is Abad trying to protect certain officials involved in the scandal?
The dismissal last week of branch manger Maia Deguito and assistant branch manager Angela Torres by RCBC, coupled with the statement that more bank officials may face sanctions after it completes its investigation, is a confirmation that RCBC’s anti-money laundering procedure is readily circumvented and their personnel compromised.
While RCBC put out a front-page advertisement apologizing for the money-laundering fiasco, a lot of questions remain unanswered. We all know RCBC dropped the ball on this one. The question is how far up the ladder does this scandal go? And does it go all the way back to AMLC?
Our column last week elicited a comment from a top official in a local bank who asked not to be identified. The official says it is impossible that high-ranking RCBC officials did not know of, or approve the deposit because all big banks have several approving authorities from the head office who first need to sign off on large wire transfers before it is credited to the beneficiary’s account.
The banker also says the biggest complaint of branch managers are the inquiries from the head office’s AML compliance officer, who requires them to justify inward foreign currency remittances falling under “covered transactions.” So how did this questionable remittance get past RCBC’s AML compliance officer?
In the case of the $81-million deposit, Deguito reportedly bypassed some officers in RCBC’s approval chain in order to get the “green light” to credit the funds to the accounts of Cruz, et al. This supposedly explains why Deguito was insistent that the deposit had the blessing of RCBC higher-ups.
The Senate blue ribbon committee should ask the hard questions and dig deeper into the possible complicity of RCBC (and AMLC?) personnel in the cross-country theft during today’s scheduled hearing. The public deserves nothing less.