BSP cancels registration of PhilRem, Werquick, Peso Remittance

MANILA, Philippines – The remittance businesses of Salud and Michael Bautista can no longer operate legally in the Philippines, after the Bangko Sentral ng Pilipinas (BSP) revoked their registration in connection with their role in the $81-million money laundering scam.

The BSP’s Monetary Board announced on Wednesday, June 1, that it has cancelled the registration of PhilRem Service Corporation; Werquick, Incorporated; and Peso Remittance Express, Incorporated due to “significant violations” of Section 451N of the Manual of Regulations for non-bank financial institutions and Circular 706 dated January 5, 2011.

The laundering of the stolen funds from the account of Bangladesh Bank in New York last February was carried out through money transfers from PhilRem via a legitimate bank, the Rizal Commercial Banking Corporation (RCBC).

PhilRem services were used in an elaborately planned bank heist by unknown money launderers to move the stolen funds around the Philippines, keeping the money out of sight and out of reach.

The Philippine central bank said it would work closely with 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).

Run after directors, officers

The BSP said it would run after these remittance companies as well as their directors and officers.

PhilRem president Salud and her husband Michael attended 6 of 7 hearings conducted by the Senate blue ribbon committee.

In the beginning of the Senate probe, the PhilRem owners offered to return to Bangladesh Bank P10.47 million – the amount it earned from transactions linked to the $81 million stolen from the foreign central bank. 

The offer, however, was declined by Bangladesh Bank.

From then on, senators noted inconsistencies in PhilRem owners’ version of the bank heist story.

In April, AMLC filed a money laundering complaint against the Bautistas, saying they were aware the funds coursed through PhilRem were illegitimate, as they deliberately ignored requirements to know the customer and record customer information.

The BSP also issued Memorandum No. M-2016 – 004 last April, reminding all banks about sound risk management practices when dealing with foreign exchange dealers, money changers, and remittance agents.

The central bank ordered banks to “take extra caution and vigilance and perform enhanced due diligence” when transacting with foreign exchange dealers, money changers, and remittance agents.

Should a bank fail to adhere to these measures, its board of directors, senior management, and line officers may face penalties from a written reprimand to disqualification from holding any position in any covered institution.

As the Senate probe into the bank heist concluded last May 19, BSP Deputy Governor Nestor Espenilla Jr said the bank regulator had completed its investigation of the banks and personalities involved in the money laundering scandal.

“There will be recommendations there on what can be done among other things to prevent this kind of situation and also to hold accountable, if any, people who may be responsible,” he added.

The BSP regulates and monitors the operations of banks as well as non-banks including foreign exchange dealers and money changers.

In early February, the $81 million stolen from Bangladesh Bank’s account at the Federal Reserve Bank of New York was deposited into fictitious accounts with RCBC.

From the fake accounts, the stolen funds were converted into untraceable gambling chips in Solaire Resort and Casino as well as Midas Hotel and Casino.

It was into these casinos that PhilRem moved about $63 million of the stolen funds, delivering most of it in cold cash. 

Casino junket agent Kam Sin “Kim” Wong told Philippine senators that the remaining $17 million of Bangladesh Bank is still with the money transfer firm. This was denied by the PhilRem owners.

AMLC has also filed cases against sacked RCBC branch manager Maia Santos-Deguito, Wong, Wei Kang Xu, businessman William Go, and the owners of the fictitious bank accounts before the DOJ.

Former RCBC chief Lorenzo Tan resigned last May 6 after he was cleared of any wrongdoing in the bank heist.

Seasoned banker Gil Buenaventura, who was president and chief executive officer of the Development Bank of the Philippines, replaced Tan. – Rappler.com