BSP, AMLC to work with international regulators on Wirecard scandal

MANILA, Philippines — The Philippines is open to collaborating with international agencies and regulators in the investigation on the alleged $2.1 billion missing funds of German financial technology leader Wirecard AG.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the BSP and the Anti-Money Laundering Council (AMLC) would help in the investigation after two of the country’s largest lenders were dragged into the issue.

“The BSP and AMLC are open and eager to collaborate with international agencies and German regulators who are dealing with the matter to hold the fraudsters accountable and to give justice to those who have been harmed by their acts,” Diokno said.

Diokno, who is also chairman of the AMLC, earlier said none of the alleged missing funds entered the Philippine financial system as perpetrators only used the names of BDO Unibank Inc. and Ayala-led Bank of the Philippine Islands (BPI) to cover their tracks.

Both BDO and BPI denied Wirecard was a client and dismissed low ranking officers who allegedly issued fraudulent certifications that the banks have the missing funds of the German firm.

The BSP chief also reiterated the need for banks and financial institutions to strengthen their respective know-your-customer protocols and tighten their monitoring of their employees.

“Apart from conducting investigations, we have reminded the banks to strengthen their know-your-customers protocols and to be very strict in knowing their clients. Moreover, banks are also reminded on their obligation to know-their-employees,” Diokno added.

Furthermore, Diokno said the compliance offices and internal audit functions of banks should be able to process their employees’ behavior and financial transactions in the same manner that banks assess and monitor their customers.

The BSP chief pointed out the central bank has implemented significant reforms to protect the integrity and promote the sustained safety and soundness of the Philippine financial system.

“These include raising the bar for corporate and risk governance and internal controls, strengthening the anti-money laundering laws and regulations and establishing robust financial surveillance,” Diokno said.

Likewise, Diokno said the BSP is pushing several legislative measures particularly the amendment to Republic Act 1405 and 6426 pertaining to the secrecy of bank deposits as only the Philippines and Lebanon are the remaining two countries in the world that continue to implement the stringent bank secrecy law.

“The BSP is also working closely with the Department of Finance to help push the immediate passage of this critical piece of legislature that would finally break the doors of bank secrecy especially in fraud cases. Meantime our reform agenda for the financial sector continues, we continue to ensure the effective implementation of existing regulations,” he said.

According to the BSP, it is also pushing for the passage of the proposed amendments to RA 9510 or the Credit Information System Act, RA 10000 or the Agri-Agra law as well as the proposed Financial Consumer Protection bill.

In addition to these legislative priorities, Diokno said the BSP and the national government are actively pushing for the passage of the Financial Institutions Strategic Transfer (FIST), Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE), and the Bayanihan II or to Recover as One Act.