The Bangko Sentral ng Pilipinas said Tuesday it launched an investigation on money transfer deals made by 10 local banks, including Bank of the Philippine Islands, with Westpac Banking Corp., the second-biggest bank in Australia which was embroiled in a money-laundering scandal with alleged links to child exploitation.
Bank of the Philippine Islands, the third-largest lender in terms of assets, earlier said it suspended its partnership with the remittance arm of Sydney-based Westpac after the latter got involved in the money laundering scandal.
BSP Deputy Governor Chuchi Fonacier said at the sidelines of an event at the BSP that other banks also became the recipients of the remittances from Westpac which was accused of breaching laws designed to hinder money laundering and terrorism financing.
The Australian Transaction Reports and Analysis Centre said Westpac failed to appropriately assess transactions to the Philippines and Southeast Asia relating to potential child exploitation risks. The regulator said Westpac failed to adequately monitor the accounts of a convicted child sex offender who had regularly sent money to the Philippines.
BPI said earlier it started its own investigation into fund transfers made using LitePay—a low-cost fund transfer system Westpac launched in 2016. It was reported that Westpac beached money-laundering laws more than 23 million times. The lender reportedly failed to check customers who repeatedly made small transfers to the Philippines and other Southeast Asian countries.
“We’re doing a review and then if there’s a need for us to go on site, then we will go on site [to check] whether banks are complying with the anti-money laundering regulations,” Fonacier said.
“What makes this different is that [they involved] small transactions. They were not required to be reported to AMLC [Anti-Money Laundering Council] because they did not reach the threshold. It’s very retail. That’s why the process to review it is very tedious,” Fonacier said.
Fonacier said BPI already submitted a partial report on the controversy to the BSP. She said the bank became the entry point here and the money was channeled to other banks. Fonacier ruled out the involvement of rural banks, saying that commercial and universal banks were mostly involved.
“We are still in the process of verifying the shared information,” she said.
When asked how many banks were involved or where the money were channeled to, Fonacier said “about 10.”
She said the BSP might recommend the lowering of the threshold of AMLC-covered transactions depending on the results of the ongoing investigations. Republic Act No. 9160 or the revised Anti-Money Laundering Act identified covered transactions as those involving P500,000 in cash or P1 million in cases of jewelry, metals and precious stones.
Fonaciers said the investigations might be finished by early January 2020, considering the limited working days during the holiday season.
When asked if the regulator already communicated its move to its Australian counterpart, Fonacier said it would depend on the findings of the investigations.
“We will of course get in touch with the counterpart in Australia after we do the review. It depends on the result—whether the banks have been complying with the money laundering regulations,” she said.
The BSP earlier intensified its anti-money laundering measures after the $81-million heist in early 2016 where cyber thieves stole the amount from the account of Bank of Bangladesh in Federal Reserve in New York.
The dirty money entered the domestic financial system through the Jupiter Makati branch of Rizal Commercial Banking Corp. using fictitious accounts of some individuals. The stolen money was later laundered in local casinos.