Tighter enforcement sought for financial fraud cases

MANILA, Philippines – The government should tighten its enforcement measures and strengthen its legal backbone to prevent more cases of fraud in the Philippine financial system,  according to the Department of Finance (DOF).

In a text message to reporters, Finance Secretary Carlos Dominguez said concerned government authorities must improve their law enforcement efforts against perpetrators of financial fraud.

“(We should) focus on enforcement--detection, prosecution and conviction,” Dominguez said.

The finance chief noted that the Securities and Exchange Commission (SEC), for instance, is still lacking in this area.

“I have discussed with SEC their poor record of law enforcement of financial fraud perpetrators--for example,  no convictions of pyramid scheme operators,” he said.

Dominguez also renewed his call for the passage of amendments to ease the Bank Secrecy Law in cases of predicate crime, such as money laundering and tax evasion, in accordance with international standards.

The Philippines and Lebanon are currently the only remaining countries in the world that continue to implement stringent bank secrecy laws.

In recent years, the Philippine banking industry has been put under the spotlight after local institutions have been involved or dragged into international controversies.

In 2016, $81 million in funds were stolen from the Bangladesh Bank and were transferred to a branch of the Rizal Commercial Banking Corp (RCBC). The funds were then laundered through several casinos in the country.

Just this June, two of the country’s largest private lenders-- BDO Unibank Inc. and Bank of the Philippine Islands (BPI)--were also dragged into the scandal involving German financial technology firm Wirecard AG.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said earlier perpetrators of the scandal were only using the names of the two banks to cover their tracks, as none of the missing $2.1 million entered the Philippine financial system.

Despite these allegations, Diokno said the reputation, as well as investor confidence in the banking system remain intact.

In light of this issue, the BSP chief reiterated the importance of amending Republic Act 1405 and 6426 pertaining to the secrecy of bank deposits.

The BSP 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.

Locally, the DOF has recently cautioned the public against schemes that are using the name of Philippine officials to promote bogus cryptocurrency investment platforms.

The SEC has also warned that investment scams are on the rise amid the coronavirus disease 2019 or COVID-19 pandemic.