Rcbc 1-3.docx

Chapter I. Background of the Company RCBC (Rizal Commercial Banking Corporation) is the financial flagship company of the Yuchengco Group of Companies (YGC), one of the oldest and largest conglomerates in the Philippines and South East Asia covering 60 businesses which include banking, insurance, construction, and education. Now on its 54th year, RCBC is among the top largest private domestic banks in terms of Assets, with 448 branches and 1,181 ATMs (as of September 2014) all over the Philippines and is present in 24 countries through remittance offices and tie ups. The RCBC group is able to provide a wide scale of services through its thrift bank, investment bank, foreign exchange brokerage house, leasing company, and overseas remittance companies. Between 2010 and 2014, the Bank received over 70 awards from various award-giving bodies, of which 18 came from AsiaMoney such as Best Domestic Private Bank in the Philippines for 3 consecutive years. These recognitions are a testament to RCBC's growth story and serve as its inspiration to continue to innovate, improve, and reach out beyond its 6.5 million customers The Rizal Commercial Banking Corporation (RCBC) was established in 1960 as a development bank and is licensed by the Bangko Sentral ng Pilipinas (BSP) for both commercial and investment banking. It is one of the largest universal banks in the Philippines with total consolidated resources of Php554 billion for full year 2017. As a diversified financial services institution, RCBC serves corporate and individual banking needs through the most appropriate vehicles to serve its chosen markets with innovative products and services. With an inclusive financial business model in mind, in 2009 it ventured into the microfinance business to service the smallest entrepreneurs via the Rizal Microbank. Responding to an ever-growing digital consumer base, RCBC continually innovates its products and services to match the dynamic consumer needs in the digital space. Providing ease and convenience, in 2007, it launched the RCBC MyWallet. This all-in-one card allows customers to enjoy electronic banking convenience anytime, anywhere and it lets customers do transactions like a regular ATM card: withdrawals, cashless shopping, balance inquiry and bills payment--all these, without the hassles of keeping a monthly maintaining balance. To further supplement its electronic banking capability, RCBC launched its retail online channel soon after, as a personal internet banking system. RCBC OnlineBanking allows customers to have a better online banking experience with its features such as enhanced and customizable user interface, real-time presentation of Bankard credit card transaction history, prepaid mobile loading and viewing of investments and RCBC Savings bank loans. This is also available as a mobile application. Aside from this, together with RCBC Savings Bank, RCBC launched the Touch Q Lobby Management System in 2014. The RCBC Touch Q is a self-service teller assist kiosk in the branch that conveniently pre-stages customers' banking transactions. It provides assistance to customers in financial and non-financial transactions like cash and check deposits, cash withdrawal, check encashment, bills payment, fund transfer, MyWallet reloading, account opening among many others. The system manages the traffic inside a branch through a smart queuing system. Customers can access the RCBC Touch Q on the web and through mobile apps (both Apple and Android) even before going to the branch. Upon completion of the online transactions, a QR code or reference number will be generated which customers can use for queue prioritization in the branch. RCBC is also committed to uplifting its customers’ lives through various community enhancement projects, corporate social responsibility programs, and social empowerment ventures. These include the Earth Care-tree planting drive, Green ATM project in partnership with ABS-CBN, goat-livelihood donation program, micro financing services, among many others. 1

A pioneering financial services organization, RCBC has received numerous awards from various institutions including "Best Banking Group in the Philippines, "SME Bank of the Year", "Overall Best Private Bank in the Philippines", Domestic Retail Bank of the Year; and "Philippines' Overall Best for Interest Rates, and Best Cash Management Bank in the Philippines. Its subsidiaries include RCBC Savings Bank, RCBC Forex Brokers Corporation, RCBC Capital Corporation, RCBC Securities, Inc., and RCBC Bankard Services Corp.

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Chapter II. Discussion of the Case Statement of the Problem: The RCBC money-laundering investigation has evidentl y become a t o p i c o f conversation from New York to Singapore; besides major newspapers in both those cities (and elsewhere outside the Philippines). That should come as no surprise given the magnitude of the crime, but unfortunately not many people here seem to have grasped yet just how damaging this is to the country. The sad reality is that the all-too-typical way this scandal is being addressed only serves to camouflage the relatively simple, broad facts of the case, and almost certainly won’t lead to the swift, decisive solutions the country needs to implement to avoid becoming a financial pariah. Imagine how our country involved in one of the biggest bank robberies in the world that sometimes looks to be like in the movie. How $81 million or 3.8 billion was stolen from Bangladesh Central Bank account maintained at the US Federal Reserve Bank of New York was transfer electronically and the stolen money was transferred in several accounts at the RCBC and the rest was moved into different casinos account. It could be argued that casinos shouldn’t have been exempted from the anti-money laundering reporting provisions; Casinos are not really the issue, the real crime has already happened by the time the money reaches that stage, which makes finding a substitute path easier if the casino option isn’t available. At present time allowing such big transfer of money, Is this act operated by the manager or branch officer alone without somebody from the higher up made order? Now that financial scandal had happened here in the country and that technology is in and everyone can monitor or control any financial transaction using internet and web, what is the assurance or guarantee that deposit account or savings is safe from money-laundering? What stiffed penalty about this case be made to curtail or punished the culprits individual, groups and institutions involved? Is the Philippine Banking laws at risks or there is a need to amend this law? Conflicting statements – even outright lies and obvious cover up – dominated the sound bites that we have heard so far from the televised Senate public hearings. Fortunately, the Philippine banking system has grown big and solidly stable to absorb the shock waves as a consequence of this money-laundering scam that hit the Rizal Commercial Banking Corp. (RCBC). After initially talking in executive session by the senators, then testifying in subsequent open public hearing, RCBC bank manager Maia Deguito changed her story several times. Under intense questioning by Sen. Sergio Osmeña, chairman of the Senate committee on banks, currencies, and financial institutions, Deguito was caught in her own web of lies. Deguito is the RCBC branch manager in Jupiter, Makati City who allegedly placed the money in bogus accounts and moved it to the casinos partly through a remittance company. She claimed it was casino junket operator Kim Wong who ordered all the withdrawals and money transfers from RCBC.

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Events of the Case The $81 million stolen from the Bangladesh central bank’s American accounts last February 2016 was immediately sent via electronic transfer to four accounts in Deguito’s RCBC branch on Jupiter Street in Makati City, the country’s acknowledged financial district, according to testimony to the Senate inquiry. Those accounts appeared to have been set up solely for that purpose because they were done using aliases. From the multiple accounts, the money was allegedly consolidated into a single US dollar account in the name of Filipino-Chinese businessman William Go. The amount was then hastily withdrawn, converted into peso, and transferred to at least three casinos. Four of these payment instructions were cleared and credited to the RCBC, Jupiter Branch, savings accounts of beneficiaries 'Michael F. Cruz,' 'Jessie Christopher M. Lagrosas,' 'Alfred S. Vergara,' and 'Enrico T. Vasquez,' thereby making it appear that the said amount originated from legitimate sources, to the damage and prejudice of complainants. After that, the bulk of the money was transferred into accounts of a local ethnic Chinese businessmen, William Go, who has since protested his innocence. He said that his signature was forged to set up the accounts. From there, the money was briefly held by Philrem, a foreign exchange brokerage. Philrem President Salud Bautista told Senate investigators that $30 million went to a man named Weikang Xu. He was described as a casino junket operator but senators have said they know little more about him other than he is of Chinese origin. The AMLC said another $29 million ended up in Solaire, a casino on a glittering Manila bayside strip that the Philippines hopes will become one of the world’s biggest gambling destinations. That money was exchanged into chips but could only be turned back into cash after being played in the casino, its management told the Senate inquiry. Another $21 million was sent to Eastern Hawaii Leisure, which runs a sparsely furnished casino with Chinese-only television in Santa Ana, a sleepy town in the far northern Philippine province of Cagayan, according to the council. The Philippines has some of the world’s strictest bank secrecy laws to protect account holders, while its casinos are exempt from rules altogether aimed at preventing money laundering. Sen. Sergio Osmena III said that the Philippines is very attractive for dirty money because the laws have gaping holes and therefore it is easy to launder money here. Still, if the thieves were to get away with their audacious heist, the money had to be moved quickly through the banking system and into the casinos. And it did. Authorities took four days to order a recall of the money. But by then it had vanished — leaving in its place a tale of death threats, bribes, shady business figures and a bank manager who could be the villain or a victim. The manager of the RCBC’s Jupiter Branch in Makati City (Metro Manila), Maia SantosDeguito said that she did not do anything wrong , after authorities stopped her at the country’s premier Ninoy Aquino International Airport from trying to leave the country.

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With authorities in Bangladesh and elsewhere bamboozled over who masterminded the cyber heist, Deguito’s role as manager of the bank that accepted and shifted the money has come under intense scrutiny. She has accused the bank’s president, Lorenzo Tan, of ordering her to move the money. Tan has fiercely denied the accusations. Senators who launched an inquiry this week into the affair are yet to determine whether she was a scapegoat, but are convinced she was not the mastermind. The Senate inquiry and another probe by the Anti-Money Laundering Council (AMLC) have hit several major hurdles, including a security camera at the bank not working when the money was shifted. Accusations and counter-accusations between Deguito and RCBC management have further confused investigators. Personalities who are involved in the money laundering act and their relationships: 1. KIM WONG AND JASON GO Kim Wong often transacted with Jason Go, a known car trader. Along with RCBC CEO and President Lorenzo Tan, they are reported to be members of a "Thursday Club". Tan, however, denied this. 2. MAIA DEGUITO AND JASON GO Maia Santos-Deguito said Jason Go is an old client from a previous bank who helped her get new clients. 3. LORENZO TAN AND JASON GO According to RCBC CEO and president Lorenzo Tan, he and car dealer Jason Go are friends. RCBC treasurer Raul Tan said that Go, a "valued client" of RCBC, suggested to bank heads they recruit and assign Maia Santos-Deguito to the Jupiter branch of RCBC. This is said to be common knowledge among RCBC employees. 4. LORENZO TAN AND KIM WONG RCBC CEO and President Lorenzo Tan said he met Kim Wong in a restaurant in 2002 and is reportedly part of a "Thursday Club", along with Jason Go. Wong, however, insisted that Tan had nothing to do with the money-laundering scheme. 5. KIM WONG AND MAIA DEGUITO Kim Wong met Maia Santos-Deguito through Jason Go after seeing her numerous times when he transacted with Go. He said that on February 5, Deguito called him to say that a huge amount of money would be sent to RCBC. 6. BAUTISTAS AND MAIA DEGUITO The money stolen from Bangladesh Bank was transferred from RCBC Jupiter to PhilRem, owned by Salud Reyes Bautista and Michael Bautista, and was converted into pesos. The Bautistas said they have been doing business with RCBC for "3 to 5 years" already and did not know the money was stolen. 7. BAUTISTAS AND JEROME TAN Jerome Tan, RCBC Securities president until his untimely death, was a friend of Michael Bautista. He was with Tan when the drowning incident happened in 2012 in Subic, Zambales. 8. BAUTISTAS AND WEIKANG XU

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PhilRem President Salud Reyes Bautista said on March 15 that Maia Santos-Deguito instructed her to personally deliver P600 million and $18 million in cash to Weikang Xu in Solaire Resort and Casino. 9. KIM WONG AND BAUTISTAS Kim Wong and Michael Bautista of PhilRem admitted they have known each "for quite a while" already. Wong said PhilRem transferred P1 billion of the laundered funds to his company's bank accounts and that he visited the Bautista residence 3 times for one transaction but covering 3 tranches. 10. KIM WONG AND MAIA DEGUITO Kim Wong, on March 29, said that he first met Maia Deguito through his car transactions with Jason Go. She prodded him to refer clients to her. 11. GAO SHUHUA AND KIM WONG Chinese junket operator Gao Shuhua and Kim Wong have known each other for 8 years. Gao, according to Wong, owed him money amounting to P450 million and referred Gao to Deguito when he sought help in opening a dollar account in the Philippines for investment purposes. 12. GAO SHUHUA AND DING ZHIZE Gao Shushua and Ding Zhize are the two foreigners Kim Wong tagged as the main facilitators of the entry of the laundered money into Philippine casinos. Zhize allegedly promised Wong, through Gao, that he would bring more casino players to the country. 13. MAIA DEGUITO AND LORENZO TAN Maia Santos-Deguito said it was RCBC CEO and President Lorenzo Tan who invited her to join the bank in 2013.

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Chapter III. Researchers’ Objective Money Laundering is the movement of criminally-derived funds for the purpose of concealing the true source, ownership, or use of the funds. The laundering is a necessity for any profit-generating criminal activity. The basic objective of this paper is to give an overview and discuss the development of the country against money laundering. It examines the anti-money laundering as well as the functions of both national and international regulatory and professional bodies. Despite the huge efforts and frequent cooperation by the governments, law enforcement agencies, professional bodies and financial institutions both local and international, money laundering still now remain a threat. It is found that it is really difficult for a financial institution to detect money laundering and prove the earnings of crimes without the help of international regulations, without coordination and professional ethics. This paper also examines the development of different measures against money laundering and provides some suggestions that come up to financial security and provides assistance to policy makers in the formulation, evaluation and implementation of effective mechanisms against Money Laundering. Objectives of the Case T h i s s t u d y a i m s m a i n l y i d e n t i f yi n g t h e r e l a t i o n s h i p between banks and money laundering operations through the following:  To provide the present scenario of the bank’s measures against money laundering and discuss the development of anti-money laundering measures.  To examine the national anti-money laundering legislation and the activities of regulatory and professional bodies.  To detect common goals of national dealings against money laundering and evaluate the activities of regulatory bodies.  To analyze whether the provisions of RCBC is sufficient to support the international efforts to combat money laundering Scope and Limitation The scope of the study is limited to the legislative aspects of Anti-Money Laundering (AML) Law. The scope of the Research has been broadly confined to predicate crimes and criminalization of money laundering as both are interlinked and money laundering being an ancillary offence of the predicate crime, and these two areas need a precise, strong, well drafted AML laws and regulations which are appropriate to the present situations as well as penalties & punishment and regulatory issues relating to it. These laws are also subject to constant revision and amendment due to every changing nature of the money laundering offence which is transnational in character, requiring changes periodically based on the typologies, requirements, change in categories of offences, and difficulties faced in the enforcement regime. The researchers are also limited by the information provided in the web, news and footage of court trials.

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Chapter IV. Findings and Discussions

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Chapter V. Recommendations

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Chapter VI. Summary and Conclusion

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