If not for an spelling error, the $1-billion attempt on the Central Bank of Bangladesh would have been consummated. Instead, only $81 million was successfully transferred out to the Philippines and this is now the subject of the Senate blue ribbon hearing. Why was it that of all countries, the Philippines was chosen for the money transfer instead of Hong Kong where part of the money eventually ended?
There are many reasons but the two most important ones are our bank secrecy law and the laxity of the enforcement of our anti-money laundering law. In spite of the existence of this law, money laundering is rampant in our banking system. Indeed, money laundering is a growth industry netting hundreds of billions of dollars worldwide.
To the uninitiated, money laundering is simply the process of making illegally obtained money legal through existing financial institutions. It is not however, limited to banks. Buying real estate properties is another way, or in this case, the casinos which is one of the oldest methods to launder money. Money Laundering is one of the 11 crimes designated by the United Nations as transnational because the commission of this crime does not only happen within one country. It often crosses borders.
In this case, it appears that the hack of the Bangladeshi Central Bank originated from China, then the Reserve Bank of New York which is holding the Bangladeshi funds wired the funds to the Philippines. This in itself is difficult to investigate because of the limited capabilities of our police agencies and the complexity of bank practices. Account codes transferred to offshore accounts are constantly changing, making it extremely difficult to trace where the money will eventually end. In this instance, the trail hit a dead end in Hong Kong. As the Senate hearing has shown, the RCBC resource persons took advantage of the bank secrecy law to avoid answering relevant questions from the Senate Committee. Those people should have been cited for contempt and detained until they are willing to talk. In that hearing, it was shocking to see and hear one senator talking about protecting the interest of the country by ensuring that the bank secrecy law is upheld to prevent what he termed as the collapse of our financial institutions instead of going to the bottom of the case to punish the all guilty parties including the bank. That is the best way to protect the interest of the country.
Already, our bank secrecy law has been assailed internationally as out of step with current financial practices. Yet, we persist in upholding it. It is clear that in this case, there were violations of standard banking practices. Even if one is not a financial or banking expert, it was evident that the RCBC people were lying. William Go, a depositor, for instance said that branch manager Maia Deguito confessed to him that she had opened a fictitious bank account in his name and offered him P10 million. I hope the Senate Blue Ribbon Committee is not buying this story.
I have also been informed that Deguito has been doing this for some time. Whether she has been doing this on her own or in connivance with higher officers of the bank must be the focus of the investigation. It is also obvious that the rule for opening a bank account was violated. First, four fictitious accounts were opened with $500 initial deposits which remained dormant for months. Then all of a sudden, tens of millions of dollars were deposited and immediately withdrawn over the span of about five days. If this is not a suspicious transaction, I do not know what is.
Under our laws, deposits of P500,000 or more must be reported to the Anti-Money Laundering Council right away. It is a trigger amount that should have raised concern with the bank and the AMLC. In the United States and other countries, transactions worth $10,000 or more are electronically monitored but our system does not do this. Suspicious transactions are also supposed to be reported but this is regularly disregarded by our banks. For instance, making deposits under fictitious names or aliases are prohibited under the law but is also routinely violated by our banks allowing criminals and corrupt public officials to deposit hundreds of millions if not billions of pesos in our banks.
The AMLC representatives in the Senate hearing did not inspire confidence that they are up to their jobs. These officials filed a case against Deguito only. But why only her? Why not include William Go, Tan or the RCBC? It is strange that when it comes to the biggest white collar crimes involving huge amounts of money, most if not all of those involved have Chinese names.
Remember a Dee during the waning days of martial law? He absconded with $600M to Canada and as far as I know, the guy is still there enjoying life with his money. Now, a Go and a Tan are involved in this $81-million caper. Why Congress did not include casinos in the anti-money laundering law is anybody’s guess considering that the casinos have always been used to launder dirty money not only by criminals but corrupt public officials. Senatorial candidate Ping Lacson wants to abolish the bank secrecy completely and hopefully will do this if he wins. If at all, this case has exposed the weakness and vulnerability of our banking system. Let us hope that this case will finally result in the amendment of our law in order to plug loopholes being used by enterprising criminals or corrupt public officials to hide their ill-gotten wealth.