MANILA, Philippines – Philrem Service Corp. and two other companies linked to the laundering of $81 million electronically stolen from the Bank of Bangladesh have been stripped of their licenses by the Bangko Sentral ng Pilipinas (BSP).
In a statement, the BSP said the Monetary Board has cancelled the certificates of registration of Philrem, Werquick and Peso Remittance Express Inc. as foreign exchange dealer, money-changer and remittance agent.
The companies, the BSP said, committed significant violations of section 451N of the Manual of Regulations for non-bank financial institutions and Circular 706 dated Jan. 5, 2011. The firms were run by Michael Bautista and his wife Salud.
The BSP said it would work closely with other relevant government agencies such as the Anti Money Laundering Council (AMLC) and the Department of Justice (DOJ) in their investigation of possible criminal and administrative violations under the Anti Money Laundering Act (AMLA) or Republic Act 9160 and its implementing rules and regulations.
The bank regulator said it would run after the firms’ directors and officers.
The Bautista couple attended the hearings conducted by the Senate Blue Ribbon committee on the issue.
Both were charged by the AMLC for their role in the illegal transfer of $81 million stolen by hackers from the account of the Bangladesh Bank with the Federal Reserve Bank of New York last February.
Last April 5, the BSP said it would go hard on banks violating the rules on transactions with foreign exchange dealers, money changers and remittances companies.
The BSP issued Memorandum No. M-2016 –004 reminding banks of sound risk management practices when dealing with foreign exchange dealers, money changers and remittance agents.
Sanctions against erring directors, senior management and line officers include written reprimand, suspension or removal from office and disqualification from holding any position in any covered institution by the BSP.
The BSP said banks have the ultimate responsibility to conduct appropriate due diligence on any remittance arrangement or relationship to ensure that such would not be used as channel for money laundering or terrorist financing activities.
During the last hearing of the Senate Blue Ribbon committee last May 19, BSP deputy governor Nestor Espenilla Jr. said the bank regulator had already completed its investigation into banks and personalities involved in the money laundering scandal.
“We will submit that to the Monetary Board. There will be recommendations there on what can be done among other things to prevent this kind of situation and also to hold accountable any people who may be responsible,” he said.
The BSP regulates and monitors the operations of banks as well as non-banks, including foreign exchange dealers and money changers.
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 through the Rizal Commercial Banking Corp. using fictitious accounts and allegedly facilitated by then 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 money laundering scandal, saying he gave her instructions to take good care of his friend, casino junket operator Kim Wong.
AMLC executive director Julia Bacay-Abad has filed cases against Deguito, Wong, Wei Kang Xu, businessman William Go and the Philrem owners before the justice department.
Deguito and Torres were fired by RCBC while Tan tendered his resignation last May 6 after being cleared of wrongdoing by the bank.
Casinos, art dealers, property brokers
Meanwhile, outgoing Sen. Sergio Osmeña III has filed a resolution seeking to amend AMLA to include casinos, art dealers and real estate brokers in the covered individuals or entities that can be investigated for money-laundering activities.
Osmeña filed Senate Bill 3227, following several Senate hearings on the $81-million cyber heist.
“Next to taxes, revenues from the casino sector are among the major sources of income of the government. It must be recognized that the casino and gaming industry, under the supervision and regulation of the Philippine Amusement and Gaming Corp. (Pagcor), has been a strong and responsible partner of the government in pursuing its development plans,” he said.
“However, the casino operator is equally exposed to the raging threats of money-laundering. Its vulnerabilities to criminal exploitation can be attributed to the fact that casinos are cash incentive business with higher volumes of large cash transactions taking place very quickly,” Osmeña noted.
He said casinos offer many financial services such as remittance, cash issuance and foreign exchange, and the movement of funds – either internationally or domestically undertaken – associated with gaming-related tourism which are poorly understood and may pose money-laundering threats.
Osmeña recommended that the AMLC be authorized to issue ex parte freeze orders on suspicious transactions.
The measure would also allow the AMLC to check compliance with the AMLA by covered persons not under any supervising authority.
“The investigative function of the AMLC is greatly limited by the fact that before a court order allowing inquiry into or examination of bank accounts or deposits is granted, the AMLC needs to establish the existence of probable cause that the money instrument or property is in any way related to unlawful activity,” the senator added.
Osmeña also proposed the reduction of required quantum of evidence as basis for an authority to inquire into or examine bank accounts or investments.
“The proposed measure shall allow the Court of Appeals to issue a bank inquiry order upon determination that there exists a reasonable suspicion that an unlawful activity or money-laundering offense is being or has been committed,” the senator said.
He also seeks to redefine “covered transactions” depending on the covered persons.
In his bill, Osmeña also said he wants the BSP designated as the supervising authority for foreign exchange dealers, money changers, remittance and money transfer businesses, for the purposes of the AMLA.
The senator also recommended that unlawful activities under AMLA be expanded to include violations of firearms and ammunitions regulation act, cybercrimes, violations of Strategic Trade Management Act (regarding weapons of destruction) and tax evasion.
He recommended that AMLC be allowed to issue subpoena and administer oath in aid of its investigation and compliance checking functions; update the requirement on customer identification to include all aspects of customer due diligence.
The senator said it would be necessary to increase the monetary penalty for administrative violations to P1 million or 20 percent of the value of the money instrument or property laundered or sought to be laundered. – With Christina Mendez