RCBC fined P1 B by BSP over cyber heist

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has slapped a record P1-billion fine on Rizal Commercial Banking Corp. (RCBC) for its role in the theft of $81 million from  the account of the Bangladesh government in the Federal Reserve Bank of New York.

RCBC said it would comply with the order and pay the fine in two tranches.

The money found its way to RCBC’s Jupiter branch in Makati before ending up in Manila casinos.

In a statement, the BSP said the Monetary Board has approved the imposition of supervisory enforcement action on RCBC relating to the Bangladesh Bank cyber heist.

The fine was the largest approved against a BSP-supervised financial institution (BSFI).

“This affirms the BSP’s strong commitment to ensure the stability of the country’s financial system through strong and effective regulation of BSFIs,” the bank regulator said in a statement.

The BSP noted efforts being undertaken by the listed bank to comply with the Anti Money Laundering Act (AMLA).

“The BSP recognizes RCBC’s efforts in instituting changes to strengthen its Anti-Money Laundering and Counterterrorist Financing Risk Management System and governance culture,” the central bank added.

RCBC president and CEO Gil Buenaventura said the bank would comply with MB Resolution No. 1392 by paying the fine for non-compliance with banking laws and regulations in connection with the cyber heist. The amount would be paid in two equal tranches over a one-year period. 

“While the payment involves a large amount, RCBC believes that this is part of increasing regulatory oversight and restrictions and we will comply with the MB Resolution,” Buenaventura said.

“With this payment, RCBC affirms its continued viability and determination to fulfill its firm commitment  against money laundering, terrorism and other transnational crimes to ensure the stability of the banking system,” Buenaventura added.

“Together with the payment of this amount, RCBC is instituting changes in its AML system and processes, making it among the most prepared in terms of thwarting money laundering attempts in the Philippines and the region,” he pointed out.

“RCBC’s focus is to move forward and continue its ongoing program to put in place more robust processes, systems and checks and balances. As a result, we expect this newly strengthened RCBC to be even more profitable and efficient both in terms of operations and in serving its customers,” he said.

For the first half of this year, RCBC posted a net profit of P2.6 billion. RCBC’s total capital base as of June 2016 was at P59.9 billion. Last year, RCBC’s net profit was P5.1 billion on a gross profit of P22 billion.

The bank president pointed out the payment of the amount would not affect the operations of RCBC, and capital ratios would continue to be strong.

“We appreciate the efforts of the BSP to keep the banking sector prepared and strong. We will continue to cooperate with BSP in this endeavor,” Buenaventura said.

Hackers tried to steal close to $1 billion from the Bangladesh Bank account with the Federal Reserve Bank of New York last February. The US bank was able to stop 30 of the 35 transactions.

However, five transactions involving $81 million entered the Philippines via RCBC under fictitious accounts allegedly facilitated by dismissed RCBC Jupiter branch manager Maia Santos-Deguito and customer relations officer Angela Torres.

Deguito dragged resigned RCBC president and chief executive officer Lorenzo Tan into the issue by claiming he had instructed her to take good care of his friend, casino junket operator Kim Wong.

The Anti-Money Laundering Council headed by executive director Julia Bacay-Abad has filed cases with the Department of Justice (DOJ) against Deguito, Wong, Wei Kang Xu, businessman William Go and the supposed owners of the fictitious bank accounts.

Both Deguito and Torres were fired by RCBC while Tan tendered his resignation last May 6 after being cleared of any wrongdoing.

Buenaventura, who was president and chief executive officer of the Development Bank of the Philippines (DBP), replaced Tan.

AMLC’s Abad said authorities are still looking for around $21 million as it has already accounted for about $60 million, including the $15 million turned over by Wong representing abandoned funds of casino junket player Gao Shuhua, the $28 million with Solaire Casino and the $17 million allegedly with Philrem.

Abad said a lower court in Manila has approved the forfeiture of the $15 million turned over by Wong and which is now kept at the BSP vault.

She explained the Bangladesh Bank would have to file a third party claim before the lower court.

Unaware

Bangladesh Ambassador John Gomes said they are unaware of the BSP decision.

Gomes said there is a big gap in the investigation conducted by the BSP, AMLC and the Senate Blue Ribbon committee that centered on personalities involved and not RCBC.

“RCBC has been pointed out in this issue but we did not even see that RCBC is being held responsible,” he added.

According to him, RCBC played a major role in the bank heist as it ignored the stop payment order issued by the Federal Reserve Bank of New York as early as Feb. 5.

“RCBC should be held responsible as well because they did not abide by the urgent stop payment request,” he said.