MACTAN ISLAND, Cebu – They say prevention is better than cure. And Philippines’ monetary officials said this is what they have been doing in terms of strengthening the country’s banking system.
In the first quarter of 2016, the country was put in a bad light after bulk of the multimillion money stolen from Bangladesh central bank, Bangladesh Bank, ended in the Philippines.
Last February, some USD 81 million dollar was sent to four accounts held by a domestic universal bank, which was later discovered to be owned by fictitious individuals. The funds were sent from the dollar account of Bangladesh Bank with the Federal Reserve of San Francisco.
The funds were immediately withdrawn from the four accounts, consolidated into another account with the same bank, sent to a local remittance company to be changed into pesos, and then delivered to a local casino junket operator.
This particular money laundering activity was done in about eight days, from Feb. 5-13, 2016.
The Bangko Sentral ng Pilipinas (BSP) was informed about the theft by the Bank of Bangladesh leading to the conduct of investigation by the Philippines’ Anti-Money Laundering Council (AMLC).
The Senate’s Blue Ribbon Committee also conducted its investigation after it was requested by Bangladeshi officials to help recover the stolen money.
So far, money laundering cases have been filed against individuals, including the branch manager of the bank where the stolen money ended.
Monetary officials said this particular case was a proof of the need to amend the country’s bank secrecy law as well as the anti-money laundering law.
In a briefing, BSP Deputy Governor Vicente Aquino said these laws had certain provisions that made it hard to immediately run after questionable transactions
For one, Republic Act No. 1405 or the Act Prohibiting Disclosure of an Inquiry into Deposits with any Banking Institutions, which took effect on Sept. 9, 1955, ensures absolute confidentiality of all bank deposits.
Republic Act. No. 6426 or An Act Instituting a Foreign Currency Deposit System in the Philippines provides “absolute” confidentiality of all foreign currency deposits. The law took effect on April 4, 1974.
There are, however, exemptions on these laws. Under Sec. 2 of RA No. 1405, a deposit account can be checked by authorities after its owner has issued a written permission or consent for this action, if the account holder is facing violations of the Constitution, treason, bribery, and graft and corruption among others.
Under RA No. 6426, there is also a need for a written permission from the account holder for his account to be checked by other persons.
Aquino said these laws have been approved a long time ago and need certain amendments to address the changing times and environment.
“I am for the repeal of these two laws but if these are legally not possible there should be amendments to these… so we can show to the whole world that we are compliant to international rules on money laundering,” he said.
The BSP have repeatedly got the support of lawmakers, both from the House of Representatives and the Senate, to amend bank-related laws but measures towards this have not been approved.
Under the central bank proposals, there is a need to, among others, include as an exemption to these laws the implementation of tax treaties or other international agreements for tax purposes, and to authorize the central bank to inquire into bank deposits and investment accounts to check compliance with banking law and regulations.
These proposals also suggests that the Office of the Ombudsman and the Department of Justice (DOJ) be allowed to inquire or examine bank deposits or investments as part of their preliminary investigations and to reduce the required list of evidence to inquire or examine bank account or investments.
Aquino said that unlike in other countries wherein bank secrecy laws were not really about general confidentiality of the bank accounts but openness, the Philippines law provided for absolute confidentiality.
He said even Switzerland, which was previously on the top of the list in terms of keeping the secrecy of bank accounts, had amended its law on this front.
“I’m hopeful that these additional amendments on those deposits secrecy laws would be fast-tracked by the next Congress, would be approved by both houses of the Congress,” he said referring to the 17th Congress.