A suspected drug lord who is on the run seemed to have run rings around the country’s money regulators, according to Sen. Juan Miguel Zubiri.
Zubiri on Thursday said he was “baffled” by how P500-million worth of checks paid out by Rolando ”Kerwin” Espinosa Jr. had not been detected by the regulators.
He advised the Anti-Money Laundering Council (AMLC) and other law enforcement agencies to attack the financial infrastructure of drug trafficking syndicates to suppress their supply and distribution operations.
“We are counting on the AMLC in particular to quickly spot and seize suspected drug money flowing through our banks, and to forcefully prosecute cases of money laundering by traffickers,” Zubiri said.
“Regulators should disabuse the perception that they have been inadequate in thwarting the criminal use of banks by drug traffickers,” he added.
Zubiri said Espinosa was supposedly able to pay out more than P500 million worth of checks from eight bank accounts between 2014 and June 2016, with the bulk of the money apparently going to his alleged “protectors” in the criminal justice system, according to the Philippine National Police (PNP).
“We are stumped that a ‘high-risk’ individual can issue so many checks unobstructed, in amounts of up to P20 million per check, without the AMLC acting on suspicious transaction reports that should have been diligently filed by the banks involved,” the senator pointed out.
From the start, the fact that Espinosa is the son of an incumbent mayor should have been a “red flag” or warning for the banks and the AMLC, Zubiri said, referring to Rolando Espinosa Sr., mayor of Albuera town in Leyte province.
The elder Espinosa had surrendered to authorities after he was named as a “narco politician” by President Rodrigo Duterte.
The mayor would later rat on his son even as he asked him to surrender to the police.
The instant the younger Espinosa opened his bank accounts, according to Zubiri, he should have been correctly tagged as a “politically exposed person,” or PEP, by the branch manager based on the know-your-customer rule.
Under the law, PEPs, including family members of politicians, are considered “high risk” because of their exposure to potential bribery and corruption, the senator said.
Thus, he added, the bank and other financial accounts of PEPs are supposed to be subject to stronger anti-money laundering due diligence checks by banks and the AMLC.
“Our sense is, this is a glaring case of inadequate enforcement of controls by regulators begetting poor compliance by banks,” Zubiri said.
“Regulators should also put an end to the practice of bank branch managers simply vouching for a depositor’s unusually large transactions, even if the account owner does not have a lawfully registered business or a legally established trade or profession,” he added.
Under the Anti-Money Laundering Law, banks are supposed to report every “covered transaction” or any transaction involving a total amount in excess of P500,000 per day.
The banks are also supposed to report every “suspicious transaction,” regardless of amount, that could not be properly justified by the account owner.
Zubiri said Philippine banks should be doing what their counterparts in the United States have been doing for a long time to fight money laundering.
“In America, if the amount of more than $10,000 gets deposited into your bank account and the sum deviates from your past transactions, the money is automatically withheld. You will have to show up at the bank to provide a convincing underlying legal or trade obligation, purpose or economic justification for the amount, before you may withdraw the money. Otherwise, the money is sequestered,” he noted.
“If the amount in excess of $10,000 happens to come from abroad by wire, your US bank account is instantly closed. You may still get the money, but only after personally going to the bank and providing a satisfactory explanation for the amount. Otherwise, the money gets confiscated,” Zubiri said.
The senator urged the council “to henceforth exercise greater due diligence in thoroughly scrutinizing ‘suspicious’ as well as ‘covered’ transaction reports filed by banks.”
Addressing the AMLC, the PNP and the Philippine Drug Enforcement Agency, Zubiri said, “If you find the money, you find the syndicates.”