Send shivers down the fine

THE BSP truly wowed the banking sector with its atypical penalty on RCBC, Rizal Commercial Banking Corp. of the Yuchengco group, by synchronizing it perfectly, for one, with the renewed outburst from the Bangladesh government.

The fine amounted to P1 billion, said to be the biggest ever imposed by any Philippine government agency on any business whether foreign or local.

One view in the banking sector was that, with such a never-before-seen amount of fine, the BSP (Bangko Sentral ng Pilipinas) could be using RCBC as an “example” to send shivers down the bank system spine.

The BSP seemed to warn banks that those cyber threats were real, whether credit card frauds or ATM skimming, and the banks—big or small—must do their part to guard against them.

But the big fine could also be an appeasement of sorts to the Bangladesh government, what with the BSP announcing it just when Bangladesh officials went to media attacking RCBC.

All those of course had something to do with the $81-million cyberheist last February involving the Bangladesh central bank, allegedly stolen from its account with the US Federal Reserve, transferred to a branch of RCBC, swapped into pesos by money changer Philrem, and finally landed in the hands of junket operators in casinos.

Recently, after about five months, Bangladesh officials again demanded the return of the entire amount to their central bank, targeting RCBC for being a cog in the intricate scheme to launder the allegedly stolen funds.

And so from out of nowhere, what with news on the cyberheist getting a little revival lately, thanks to Bangladesh officials, the BSP hurled upon RCBC what it called “supervisory enforcement action.”

That is not a living thing under the earth; it is a banking jargon, popularized in the 2000s by monetary authorities abroad, particularly the Fed in the Unites States, in their clampdown on the use of banks for money laundering, terrorist financing and outright financial fraud.

Simply put, it is the immense power of monetary authorities to punish banks that do not follow the rules and the wishes of the governments in countries where they do business.

Now, according to the US Fed, what it called “civil money penalty,” which was the equivalent of the BSP fine on RCBC, was actually not corrective in nature—meaning, it was just a fine, period.

Still, because it was not explained fully, the huge amount of the BSP fine on RCBC could be enough to fuel speculation that the bank did something terribly wrong, perhaps worse than drug trafficking or pedophilia or summary killings.

While the BSP press statement cited the “supervisory enforcement action” in the P1-billion fine on RCBC, it also forgot to say what exactly was the violation or infraction of the bank.

According to bankers that we contacted, it could be anything at all, including a departure from what were regarded generally in the world of banking as “best practices,” or even just a “compromise” fine or something just to put the whole darn affair to rest.

Indeed, the Senate investigation of the alleged money laundering of the $81 million stolen from the Bangladesh central bank took almost three months.

As the hearings dragged on and on, it eventually became the fodder of news outfits for sensationalized reporting, unfortunately pinning down the entire Philippine banking system.

In the final analysis, according to the bankers, there was no question that the BSP was just doing its job in imposing the “supervisory enforcement action” on RCBC, even if the BSP timed it with the return to belligerence of Bangladesh officials.

The BSP possibly aimed to use the huge fine on RCBC to serve notice to the entire banking system that the BSP would not take its fight against money laundering lightly.

In a way, it was similar to the fines of billions of dollars that monetary authorities in the United States and in Europe imposed on gigantic banks in recent years, apparently meant to convince them to take all the steps against money laundering.

Reports abroad indicated that, after meeting the stiff fines, those foreign banks actually shaped up and were judged in no time as becoming stronger, now back to business as usual.

For its part, based on its press statements, RCBC had accepted the penalty, although the bank insisted that the misdeed was accomplished by what it called “few rogue employees in one branch,” which was its consistent position from the start.

Now, as one of the large banks in the country, RCBC has always been profitable, posting net profit of more than P5 billion last year, with its earnings in the first quarter of 2016 already hitting P2.6 billion.

While the huge fine would hurt the stockholders of the listed RCBC, the bank could readily provide for it.

Perhaps at the same time, its story could provide a lesson to the banking system.

But what about the other outfits involved in the Bangladesh heist scandal, such as Philrem, the casinos and, above all, the Anti-Money Laundering Council, the AMLC?

One thing was evident in this sordid affair: money laundering was being committed in this country all along.

How else could the syndicates in drugs, illegal gambling, jueteng, smuggling, graft and corruption enjoy their hundreds of billions of pesos in profits if not through money laundering?

Believe me, they did not just bury the money in the ground.

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Now, as a footnote on the Bangladesh government clamor to get back the entire amount in the heist, its officials resorted to exerting pressure on the Philippine government.

Recently, they held a press conference to call for the re-opening of the Senate investigation, claiming that the long drawn previous hearings were not enough.

The view in banking was that the Bangladesh officials seemed to want the busy Senate to serve as their collection agent.

Look, the two senators that focused on the Senate inquiry into the money laundering case already suffered a huge political setback, having devoted more of their time to the case than their election campaign.

And what about the other high priorities of the new administration of Duterte Harley, such as the tax reforms, the freedom of information law, or the constitutional amendments?

Indeed, instead of pestering the Senate, the policy making body of this republic, the Bangladesh officials perhaps could file cases in the courts, which should be the recourse of any citizen of this country.

But let us not forget that this whole thing that bugged the Philippine banking system started in the Bangladesh central bank, which at one time was accused by the Bangladesh finance minister as being “negligent,” revealing that the heist was nothing but an “inside job.”

He pointed out that, before any instruction for fund transfer could be sent out, the Bangladesh central bank needed the handprints of six different people in proper sequence, an elaborate process that was followed in the heist rather mysteriously.

Now, even our Senate did not get the report that it requested from the Bangladesh side on what really happened in the Bangladesh central bank.

Word went around that the Bangladesh government already aborted its own investigation, and here we got its officials pestering the Senate to resurrect its inquiry.