THE ALLEGED money laundering involving a local bank and casinos is becoming a huge embarrassment to the Philippines, it being just a part of what is described as the biggest modern cybertheft in the world, worth $1 billion. The elaborate global coverage of the illegal operation also underscores the growing threat posed by cybercrime even to the most secure computer networks—in this case, those of the Federal Reserve Bank of New York, a number of American financial institutions, and the central bank of Bangladesh.
This will likely set back Philippine efforts to prevent the use of the country in cleaning dirty money from the illegal drugs trade, human trafficking, and other transnational crimes. Locally, the case shows that the banking system remains vulnerable to international cybercriminals. The actual amount of illegal funds that entered a branch of Rizal Commercial Banking Corp. (RCBC) was $81 million. But there was an earlier attempt to launder through the Philippine banking system an additional $870 million in funds reportedly stolen by Chinese computer hackers from the account of the Bangladesh central bank, but this was foiled after international banks recalled an order to transfer the money to the Philippines.
Various sources and confidential documents obtained by the Inquirer indicate that the money, worth almost P3.7 billion at the prevailing exchange rate, was channeled to a foreign exchange dealer named Philrem and then transferred to casinos—$26 million to the account of Solaire Resort and Casino and $20 million to the account of Eastern Hawaii Casino and Resort in the Cagayan Economic Zone Authority—where it was converted into chips for betting, then converted back to cash, and soon after remitted to accounts in Hong Kong. It’s a classic case of money laundering done through casinos, which were excluded from the list of entities required to report suspicious fund transfers to authorities when the Philippines’ Anti-Money Laundering Law was strengthened in 2013.
The foreign media will naturally pick up the big story, which was first published by the Inquirer, given its international scope. This is indeed a “black eye” on the local banking system, as Sen. Serge Osmeña, head of the oversight committee on the Anti-Money Laundering Law, describes it. And a lot of questions will be begging for answers when the Senate starts its probe tomorrow. Foremost among these is whether the banking industry’s know-your-customer rule was followed to the letter. Within RCBC, management seems to be putting the blame for the mess squarely on the manager of its branch on Jupiter Street in Makati, although the latter has answered all accusations against her, claiming that her actions were known to the bank’s top officials, including its president.
This cannot be a “he said, she said” case either because there are documents—a paper trail—and a digital footprint of what actually transpired. A lot of other officials are involved in the entire process, some of them from the RCBC head office. For instance, it appears that the branch manager does not have authority to clear the remittances involved, which should be a job in a separate department in the bank’s head office.
In countries like Japan or South Korea, financial scandals of this nature immediately result in the resignation—or, at the minimum, the forced leave—of top officials, not because they are involved or are guilty, but because they take responsibility for the actions of their subordinates or want the investigation to proceed without any doubt of a whitewash. But in the Philippines, hardly anyone seems to take responsibility for anything, and finger-pointing is the norm. On many occasions, the guilty points to everyone else but himself/herself.
Definitely, so much is at stake here. The government should get to the bottom of this money laundering issue that puts the Philippines under the glare of world scrutiny. The Anti-Money Laundering Council in particular should determine what loopholes, if any, were used to launder the money through the Philippine banking system, and propose measures to plug these once and for all. The Senate inquiry can also help bolster the case for including other entities—casinos in particular—in the coverage of the Anti-Money Laundering Law, which has been described as one of the weakest on the planet.
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