Lawmakers ask banks to go easy on them

MANILA, Philippines – Lawmakers on Tuesday, February 3, sought to ease banking rules on them, saying several commercial banks are being difficult, as well as to kins of elected officials. 

At a House committee hearing, Batangas 3rd district representative Nelson Collantes asked the Bangko Sentral ng Pilipinas (BSP) whether banks could mount a standardized procedure of how they deal with clients who fall under politically exposed persons (PEP).

According to Republic Act No. 9160 or The Anti‐Money Laundering Act of 2001, PEP refers to “a natural person who is or has been entrusted with prominent public positions in the Philippines or in a foreign State, including heads of state or government, senior politicians, senior national or local government, judicial or military officials, senior executives of government or state owned or controlled corporations and important political party officials.”

The Philippines, through the Anti-Money Laundering Council (AMLC), checks banks against unlawful use of money, making sure financial institutions are not used as money laundering chests.

Too strict

However, Collantes said banks have gone too strict with how it transacts with PEPs.

“It is incumbent upon any bank to accept deposits and just do the due diligence up there. And if you feel that it is a dubious account, then you must close it,” Collantes told invited guests from the banking industry on Tuesday.

Case in point was Laoag City representative Rodolfo Fariñas’ problem when he tried to deposit P450,000 ($10,192.69) into his Citibank account.

“Citibank has judged me as a criminal perpetrator who could not afford to deposit P450,000 ($10,192.69),” said Fariñas.

Fariñas lead the House inquiry on Tuesday, with his House Resolution 1857 probing why banks refuse to accept deposits to the accounts of their legitimate depositors or the opening of new accounts of relatives of those they refer as PEP. 

Fariñas, however, did not provide further details on his experience during the hearing.

Responding to Fariñas, Citibank Philippines’ counsel Pia Lacson clarified that “we have not discriminated PEPs” although banks are given the discretion to terminate business relations under the law.

Citibank Philippines country compliance officer Jesus Antonio Itchon explained that stiffer rules on PEPs may have been in place due to two reasons.

“The expectation among banks is that we must perform due diligence before allowing the transaction to push through. Otherwise, as you may have seen many times hitting the headlines, banks have been fined for allowing transactions to push through without proper due diligence,” said Itchon.

But Fariñas said that is not the case in the Philippines, because Citibank has not been found to practice the lack of due diligence.

“The problem with Citibank, as well as other banks, since they are multinational banks, is that they tend to lose sight of Philippine laws,” Fariñas remarked.

BSP reminds banks: accept deposits

BSP deputy governor Vicente Aquino reminded banks that it should accept deposits from any parties as long as they do not exceed P500,000 ($11,325.22) a day – and if the transaction is not suspicious as described by law.

“So in the case of Citibank, if that P450,000 ($10,192.69) deposit transaction is in the mind of Citibank to be suspicious, what it has to do is to accept the transaction and report it to the AMLC,” said Aquino.

The Anti-Money Laundering Act of 2001 covers transactions that exceed P500,000 ($11,325.22) within a banking day. Suspicious transaction includes the following elements: 

• Lack of underlying legal or trade obligation, purpose or economic justification;
• The client is not properly identified;
• Amount involved is not commensurate with the business or financial capacity of the client

While the committee on banks and financial intermediaries is exploring ways to relax banking rules on PEPs, a bill which is being tackled the Senate aims to mandate banks to practice stricter monitoring of accounts owned by PEPs.

In October 2014, Senator Miram Defensor Santiago filed Senate Bill No. 2438 or the PEP Watch Act, which mandates banks to ask clients to sign documents to specify if the deposits are their own money or if they are acting as dummies for beneficial owners of these deposits.

The bill comes after senators grilled businessman Antonio Tiu for allegedly acting as Vice President Jejomar Binay’s dummy.

Tiu even submitted proof that he owns the controversial Batangas estate identified with the Binays. – Rappler.com


(US$1 = P44.15)