Chapter Vi Summary And Conclusion.docx

Chapter VI Summary and Conclusion Summary

Since the Anti-Money Laundering Council (AMLC) started its probe into the heist on February 19th of 2016, a lot has happened- from confessions to resignations. On March 15, 2015, four dollar bank accounts under fictitious names, namely Enrico Teodoro Vasquez, Alfred Santos Vergara, Michael Francisco Cruz and Jessie Christopher Lagrosas, were opened with Rizal Commercial Banking Corporation (RCBC) Jupiter Branch in Makati. The accounts were dormant not until February 4th of the same year, wherein hackers broke into Bangladesh Bank (BB) with the Federal Reserve Bank of New York, which ordered the transfer of 35 payment instructions, involving $ 951M, 30 of which were blocked due to lack of details, one (1) which were transferred to a fake foundation in Sri Lanka, wherein $20M were salvaged, and four (4) of which were transferred to RCBC- Jupiter Branch worth $81M. The $81M found their way to the four fake bank account of RCBC, accordingly $6 million was deposited to Cruz’s account, $19.99 million to Vergara, $25 million to Vasquez, and bulk or $30 million to Lagrosas. The money was then consolidated and deposited to a new dollar account opened on the same day of William So Go of DBA Centurytex Trading. Later, the stolen funds were transferred to Philrem Services Corporation. Philrem converted into pesos some of the $81 million and delivered the money in cash to a registered casino junket operator named Weikang Xu, Eastern Hawaii Leisure Company, and Bloomberry Hotels Incorporated. Bangladesh Bank ordered for a “stop payment” to RCBC and thus requesting for the return of the stolen funds. But despite the order, RCBC-Jupiter Branch continued to allow withdrawals from the accounts. On Febuary 16, Bangladesh Bank Governor Atiur Rahman told Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr that Society for Worldwide Interbank Financial Telecommunication (SWIFT) code MT103 on February 4, which ordered the inward remittance to the Philippines of $81 million, "is fraudulent." Rahman then asked Tetangco to help them regain the loss of $81 million from their account with the Federal Reserve Bank. Febuary 23, the real William So Go said RCBC Jupiter branch manager Maia Santos-Deguito, asked to meet her at Fort Bonifacio, Taguig. Go revealed that Deguito informed him that she

opened a fictitious dollar and peso bank accounts for Centurytex without him knowing. On March 1, the Court of Appeals started freezing the accounts including Kam Sin “Kim” Wong, the president and general manager of Eastern Hawaii Leisure Company, and other related accounts. Wong told the senate that casino junket operators Ding Zhize and Gao Shuhua facilitated the entry of the laundered money into Philippine Casinos. Gao, who Wong had known for about 8 years, had a P450-million debt to Wong after losing money in casinos in 2014, he said. Wong said that he knew Ding through Gao who, he said, had "promised" him that he would bring in more casino players in the Philippines. Wong also recalled that on February 5, he received a phone call from Deguito, informing him that there would be a huge amount of funds that would enter the junket operators' accounts. He said he advised Deguito to send the money to Solaire Resort and Casino in "cold cash." Also within the day, Wong said Salud Reyes-Bautista, PhilRem president, personally delivered P80 million in cash, while Deguito brought in about P20 million. On March 12, Deguito and her husband were aboard to Tokyo, japan, but were offloaded due to the immigration bureau’s orders. Three days after, BB’s governor resigned and three (3) of his subordinates were fired. March 17, the Senate Blue Ribbon Committee, on resumption said that Go’s signature has been forged thus these accounts were believed to not belong to Go. One of them is banker officer Romualdo Agarrado, who testified that Deguito knew about the "stop payment" but proceeded with releasing the money, telling him she feared for her life. The case led to the resignation of its executive vice president Raul Victor Tan. It said the reason for Tan’s resignation is “to pursue other endeavors,” which were not revealed. RCBC thanked Tan for his seven years of "valuable services" to the company and wished him well for his future endeavors. The bank’s board of directors appointed Carlos Cesar Mercado, senior vice president, to replace Tan as acting treasurer effective also Wednesday. Tan attended several Senate hearings on the money laundering case but the RCBC management itself has given him clearance from the controversy.

“RCBC's internal investigation had previously cleared Mr. Raul Tan of any participation in or breach of banking policies with respect to the $81M money laundering issue,” the RCBC reiterated in a statement attached to the disclosure. RCBC Legal and Regulatory Affairs Head Macel Estavillo said it was not the first time Tan expressed intent to resign. "Out of decency and honor, and despite his lack of involvement in the same, he tendered his resignation because of command responsibility, as Deguito - whose culpability has been clearly and convincingly established - was under him," Estavillo said in a statement. RCBC earlier issued an apology for the involvement of its personnel in the money laundering scheme, such as former branch manager Maia Santos-Deguito. The scandal should prod the government to conduct a thorough review of two things: first, the technical security of our banking system, to ensure that a similar cyber theft will not happen or is not already happening; second, our anti-money laundering laws and regulations, in conjunction with the internal controls of banks, to identify the loopholes that enabled such a huge amount of stolen money to be laundered through a local bank. Our anti-money laundering laws impose penalties if it is proven that the bank allowed the proceeds of crimes like robbery, corruption, drugs and illegal gambling to be deposited with it. The penalty for bank employees is imprisonment, and for the bank itself, revocation or suspension of its banking license. The Senate inquiry into the scandal is limiting its focus to the personal liabilities of the employees of the bank branch involved. The senators are treating RCBC with kid gloves, as shown in their lack of probing questions on the potential liability of the banking institution. Wittingly or unwittingly, the senators are conducting their investigation not “in aid of legislation,” but in aid of proving the defense of RCBC—that the scandal is the sole liability of a “rogue employee” who was making money on her own. The bank is projecting itself as an injured party. In other countries, the bank itself is criminally liable if there was systemic failure or inadequacies in its internal controls to prevent the money laundering. The bank is also criminally liable if it commits “willful blindness” despite the clear presence of “red flags.” Any bank must not benefit from a scheme of creating a fictitious wall to insulate its top management

from liability. Top executives must not be allowed to bury their heads in the sand while dirty money is being laundered in one of their branches, thereby enabling the bank to reap windfall profits if the crime is not noticed, and to confine liability to scapegoat employees if the crime is exposed. The senators should leave the criminal investigation of the bank employees to the Department of Justice and instead focus their attention on reviewing what RCBC did when the red flags of money laundering appeared on their monitoring screens. Conclusion

The Philippines has become an ideal place for money laundering because its strict bank secrecy laws make it very easy for criminals and money launderers. The Philippine anti-money laundering laws also do not cover casinos and financial transactions in real estate, jewelry and non- profit organizations. These are the areas where money laundering is normally done. It is tempting to believe that these areas were deliberately not included specifically to facilitate money laundering and tax evasion practices. Money laundering is a “profit center” for many banks all over the world because they derive huge profits from proceeds of corruption, illegal drugs, illegal gambling and other crimes. The Philippine government should be more active in implementing its laws to prevent these illegal acts from entering the country. Lawmakers should revise and amen the RA 9610 or the Anti-Money Laundering Act of 2001 and lessening the secrecy on bank accounts which are under the RA 1405 or the Law on Secrecy of Bank Deposits. RCBC, PhilRem with other entities involved and all business not involved, should improve their practice on being ethical. If they would these scandals will be lessen thus improving the occurrence of such illegal and unethical acts. It would also help the Philippines reputation. If the Senate is serious in strengthening Philippine laws to prevent money laundering, it must initiate amendments by making banks liable to pay hundreds of millions, or even billions, of pesos in criminal penalty under the doctrine of “let the master answer.” 1. To lose or to win situation required personal decision because consequences of the effects lies to you not the higher person who made the order if it’s illegal and

beyond common sense. Money can’t buy anything and integrity is doing the right thing, knowing that nobody's going to know whether you did it or not. Owners of

erring banks, and not just their top executives, should be held liable for large-scale money laundering done with their actual or constructive knowledge. It’s time the owners are made to account for how their businesses are operated by their hirelings.

2. This $81 million money laundering scandal is a big embarrassment to the Philippines. The country will forever be tagged for its infamy because it is one of the world’s biggest heists. Private Banks and their depositors are also upset. The relationship between a bank and its clients, its depositors in particular, is fiduciary in character, or one characterized by a very high degree of trust. After all, no person will deposit his hard-earned money with a bank he does not trust. When then banking system loses the trust of its depositors, the banking system will collapse. Since current interest rates on bank deposits are practically negligible anyway, depositors will just keep their money in safety deposit boxes rather than deposit the same in the bank. 3. Before resorting to any amendment of either the Bank Secrecy Law, the government should focus its attention on this latest large-scale money laundering controversy. Besides, amending the laws at this stage will serve no useful purpose to the ongoing investigation because laws cannot be given any retroactive effect, especially if they are penal in character.