BSP eyes bigger fines for banks violating anti-money laundering law

MANILA, Philippines – The Philippines’ central bank wants heftier fines and penalties for institutions violating the Anti-Money Laundering Act (AMLA) Law to prevent the country from becoming a haven for money laundering.

This recommendation from the Bangko Sentral ng Pilipinas (BSP) comes amid the ongoing probe into the Bangladesh Bank fund heist.

In early February, the $81-million stolen money from Bangladesh Bank’s account at the Federal Reserve Bank of New York was deposited into fictitious accounts with Rizal Commercial Banking Corporation (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 Service Corporation moved about $63 million of the stolen funds, delivering most of it in cold cash.

During the 5th Senate probe into the bank heist, BSP Deputy Governor Nestor Espenilla Jr. said that should RCBC is proven liable for the money laundering, the maximum monetary penalty would be P30,000 a day. (READ: TIMELINE: Tracing the $81-million stolen fund from Bangladesh Bank)

“With respect to the BSP’s charter, our penalties are limited by law, that is 30,000 maximum per day or per transaction. So that is assessed on a case-by-case basis, depending on the circumstances of the situation,” Espenilla said.  

Should RCBC fail to adhere to AML 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.

Senator Ralph Recto said the monetary fines “are low compared to other countries.”

“We read all these articles in other jurisdictions, particularly in the US. Penalties there range all the way up to billions of dollars,” Recto said during the hearing.

Espenilla replied “yes” when asked by Recto if the BSP would recommend to the Senate blue ribbon committee to increase the penalties for banks that are involved in anti-money laundering.  (READ: Network: Who’s who in the RCBC money-laundering scam)

“Just applying the principle of proportionality here, I think there is certainly basis for the Senate and Congress to consider higher penalties that is currently under the law,” the BSP official said.

“Your Honor also mentioned about the pending request under the BSP charter amendment to increase the possible penalties that may be imposable by the BSP, and this is because the economy has grown and the transactions have grown so I think there should be flexibility there so that,” Espenilla added.

Tip of the iceberg

Meanwhile, Senator Sergio Osmeña III said on the sidelines of the hearing that the RCBC money-laundering issue “is just the tip of the iceberg.”

“This doesn’t only applies for RCBC, but for other banks as well. This is why I asked the central bank to check other banks also. It’s easy here because there is a complainant. Something was stolen. But if I were a Mexican drug lord, I won’t complain,” Osmeña told reporters.

Last week, BSP reminded all local banks that it is their “ultimate responsibility” to ensure the financial system is not being used as channel for money laundering and terrorist financing activities.

The central bank on April 6 issued a memorandum to all banking institutions, ordering them to “take extra caution and vigilance and perform enhanced due diligence” when transacting with foreign exchange dealers, money changers and remittance agents. — Rappler.com