$81-M bank deal would trigger red flags

“YOU’D BE a fool to think a bank’s branch manager can do it acting entirely alone.”

Thus said a treasurer of a local bank who explained on Monday the various levels of control that all local financial institutions have put in place after the Anti-Money Laundering Act became law in 2001.

It’s a reporting regime so strict that banks have “several layers” in place to guard against the transit of dirty money through their books.

This view was supported by the Anti-Money Laundering Council (AMLC) executive director, Julia Bacay-Abad, who said that a suspicious transaction should trigger “red flags” as the funds move from one part of a bank to another. More so, if it is a complex transaction that involves many stages to complete.

“Under the law, any suspicious transaction over P500,000 should be flagged by the bank and reported to us within 10 days,” said Abad, who is in charge of the operations of the country’s watchdog against dirty money.

“And they don’t even have to wait for 10 days,” she said. “They can report a suspicious transaction immediately because everything is done electronically. The bank’s reports to us are done electronically.”

The AMLC chief agreed to grant the Inquirer an interview on the condition that she speak about the banks’ processes in general and not the specific case involving the $81 million in suspected laundered funds that were coursed through Rizal Commercial Banking Corp. (RCBC) last month.

The funds were later determined to be part of nearly $1 billion that went missing from Bangladesh Bank’s current account in the US Federal Reserve Bank.

While the bulk of the funds was stopped in time before being transferred, $81 million made it past RCBC, converted into pesos with the help of a foreign exchange dealer, with amount half of the funds finding their way into local casinos.

A report indicated that the AMLC was able to seize only $68,000 by the time the Court of Appeals issued a freeze order on March 1.

Bank presidents and treasurers interviewed by the Inquirer agreed that, as a general rule, an inward remittance of $81 million—worth about P3.8 billion at the prevailing exchange rate—would have to penetrate “several layers of control” before the client-recipient could even move the funds to a casino.

“As soon as the funds arrive electronically from New York (the location of the US correspondent bank), the head office would know about it immediately,” said a bank president said, who requested anonymity.

“And if there are instructions to credit the large amount to bank accounts that haven’t been active, that’s the very first red flag right there. At that point, it should have already been flagged as suspicious,” he added.

As the funds move from a bank’s operations department to its treasury department to its branch banking department, each “unit” could theoretically stop the transaction if it aroused suspicious among the officials, according to another bank president.

“On the average, any given bank would have at least five and maybe up to seven layers of control at various levels from top to bottom to stop a suspicious transaction like this,” he said. “If the laundered funds got through, then the system failed.”