Chapter VI Summary and Conclusion

Summary

Since the Anti-Money Laundering Council (AMLC) started its probe into the heist on
February 19th of 2016, a lot has happened- from confessions to resignations.

On March 15, 2015, four dollar bank accounts under fictitious names, namely Enrico
Teodoro Vasquez, Alfred Santos Vergara, Michael Francisco Cruz and Jessie Christopher
Lagrosas, were opened with Rizal Commercial Banking Corporation (RCBC) Jupiter Branch
in Makati. The accounts were dormant not until February 4th of the same year, wherein hackers
broke into Bangladesh Bank (BB) with the Federal Reserve Bank of New York, which ordered
the transfer of 35 payment instructions, involving $ 951M, 30 of which were blocked due to
lack of details, one (1) which were transferred to a fake foundation in Sri Lanka, wherein $20M
were salvaged, and four (4) of which were transferred to RCBC- Jupiter Branch worth $81M.
The $81M found their way to the four fake bank account of RCBC, accordingly $6 million
was deposited to Cruz’s account, $19.99 million to Vergara, $25 million to Vasquez, and bulk
or $30 million to Lagrosas. The money was then consolidated and deposited to a new dollar
account opened on the same day of William So Go of DBA Centurytex Trading.

Later, the stolen funds were transferred to Philrem Services Corporation. Philrem
converted into pesos some of the $81 million and delivered the money in cash to a registered
casino junket operator named Weikang Xu, Eastern Hawaii Leisure Company, and Bloomberry
Hotels Incorporated. Bangladesh Bank ordered for a “stop payment” to RCBC and thus
requesting for the return of the stolen funds. But despite the order, RCBC-Jupiter Branch
continued to allow withdrawals from the accounts.

On Febuary 16, Bangladesh Bank Governor Atiur Rahman told Bangko Sentral ng
Pilipinas Governor Amando Tetangco Jr that Society for Worldwide Interbank Financial
Telecommunication (SWIFT) code MT103 on February 4, which ordered the inward
remittance to the Philippines of $81 million, "is fraudulent." Rahman then asked Tetangco to
help them regain the loss of $81 million from their account with the Federal Reserve Bank.
Febuary 23, the real William So Go said RCBC Jupiter branch manager Maia Santos-Deguito,
asked to meet her at Fort Bonifacio, Taguig. Go revealed that Deguito informed him that she
opened a fictitious dollar and peso bank accounts for Centurytex without him knowing. On
March 1, the Court of Appeals started freezing the accounts including Kam Sin “Kim” Wong,
the president and general manager of Eastern Hawaii Leisure Company, and other related
accounts.

Wong told the senate that casino junket operators Ding Zhize and Gao Shuhua
facilitated the entry of the laundered money into Philippine Casinos. Gao, who Wong had
known for about 8 years, had a P450-million debt to Wong after losing money in casinos in
2014, he said. Wong said that he knew Ding through Gao who, he said, had "promised" him
that he would bring in more casino players in the Philippines.

Wong also recalled that on February 5, he received a phone call from Deguito,
informing him that there would be a huge amount of funds that would enter the junket
operators' accounts. He said he advised Deguito to send the money to Solaire Resort and Casino
in "cold cash." Also within the day, Wong said Salud Reyes-Bautista, PhilRem president,
personally delivered P80 million in cash, while Deguito brought in about P20 million.

On March 12, Deguito and her husband were aboard to Tokyo, japan, but were
offloaded due to the immigration bureau’s orders. Three days after, BB’s governor resigned
and three (3) of his subordinates were fired. March 17, the Senate Blue Ribbon Committee, on
resumption said that Go’s signature has been forged thus these accounts were believed to not
belong to Go. One of them is banker officer Romualdo Agarrado, who testified that Deguito
knew about the "stop payment" but proceeded with releasing the money, telling him she feared
for her life.

The case led to the resignation of its executive vice president Raul Victor Tan. It said
the reason for Tan’s resignation is “to pursue other endeavors,” which were not revealed.
RCBC thanked Tan for his seven years of "valuable services" to the company and wished him
well for his future endeavors. The bank’s board of directors appointed Carlos Cesar Mercado,
senior vice president, to replace Tan as acting treasurer effective also Wednesday. Tan attended
several Senate hearings on the money laundering case but the RCBC management itself has
given him clearance from the controversy.
 “RCBC's internal investigation had previously cleared Mr. Raul Tan of any
participation in or breach of banking policies with respect to the $81M money laundering
issue,” the RCBC reiterated in a statement attached to the disclosure. RCBC Legal and
Regulatory Affairs Head Macel Estavillo said it was not the first time Tan expressed intent to
resign. "Out of decency and honor, and despite his lack of involvement in the same, he tendered
his resignation because of command responsibility, as Deguito - whose culpability has been
clearly and convincingly established - was under him," Estavillo said in a statement. RCBC
earlier issued an apology for the involvement of its personnel in the money laundering scheme,
such as former branch manager Maia Santos-Deguito.

The scandal should prod the government to conduct a thorough review of two things:
first, the technical security of our banking system, to ensure that a similar cyber theft will not
happen or is not already happening; second, our anti-money laundering laws and regulations,
in conjunction with the internal controls of banks, to identify the loopholes that enabled such
a huge amount of stolen money to be laundered through a local bank. Our anti-money
laundering laws impose penalties if it is proven that the bank allowed the proceeds of crimes
like robbery, corruption, drugs and illegal gambling to be deposited with it. The penalty for
bank employees is imprisonment, and for the bank itself, revocation or suspension of its
banking license.

The Senate inquiry into the scandal is limiting its focus to the personal liabilities of the
employees of the bank branch involved. The senators are treating RCBC with kid gloves, as
shown in their lack of probing questions on the potential liability of the banking institution.
Wittingly or unwittingly, the senators are conducting their investigation not “in aid of
legislation,” but in aid of proving the defense of RCBC—that the scandal is the sole liability
of a “rogue employee” who was making money on her own. The bank is projecting itself as an
injured party.

In other countries, the bank itself is criminally liable if there was systemic failure or
inadequacies in its internal controls to prevent the money laundering. The bank is also
criminally liable if it commits “willful blindness” despite the clear presence of “red flags.” Any
bank must not benefit from a scheme of creating a fictitious wall to insulate its top management
 from liability. Top executives must not be allowed to bury their heads in the sand while dirty
money is being laundered in one of their branches, thereby enabling the bank to reap windfall
profits if the crime is not noticed, and to confine liability to scapegoat employees if the crime
is exposed.

The senators should leave the criminal investigation of the bank employees to the
Department of Justice and instead focus their attention on reviewing what RCBC did when the
red flags of money laundering appeared on their monitoring screens.

Conclusion

The Philippines has become an ideal place for money laundering because its strict bank
secrecy laws make it very easy for criminals and money launderers. The Philippine anti-money
laundering laws also do not cover casinos and financial transactions in real estate, jewelry and
non- profit organizations. These are the areas where money laundering is normally done. It is
tempting to believe that these areas were deliberately not included specifically to facilitate
money laundering and tax evasion practices. Money laundering is a “profit center” for many
banks all over the world because they derive huge profits from proceeds of corruption, illegal
drugs, illegal gambling and other crimes.

The Philippine government should be more active in implementing its laws to prevent
these illegal acts from entering the country. Lawmakers should revise and amen the RA 9610
or the Anti-Money Laundering Act of 2001 and lessening the secrecy on bank accounts which
are under the RA 1405 or the Law on Secrecy of Bank Deposits. RCBC, PhilRem with other
entities involved and all business not involved, should improve their practice on being ethical.
If they would these scandals will be lessen thus improving the occurrence of such illegal and
unethical acts. It would also help the Philippines reputation.

If the Senate is serious in strengthening Philippine laws to prevent money laundering,

it must initiate amendments by making banks liable to pay hundreds of millions, or even
billions, of pesos in criminal penalty under the doctrine of “let the master answer.”

1. To lose or to win situation required personal decision because consequences of

the effects lies to you not the higher person who made the order if it’s illegal and
 beyond common sense. Money can’t buy anything and integrity is doing the right
thing, knowing that nobody's going to know whether you did it or not. Owners of
erring banks, and not just their top executives, should be held liable for large-scale money
laundering done with their actual or constructive knowledge. It’s time the owners are
made to account for how their businesses are operated by their hirelings.

2. This $81 million money laundering scandal is a big embarrassment to the

Philippines. The country will forever be tagged for its infamy because it is one of
the world’s biggest heists. Private Banks and their depositors are also upset. The
relationship between a bank and its clients, its depositors in particular, is fiduciary
in character, or one characterized by a very high degree of trust. After all, no
person will deposit his hard-earned money with a bank he does not trust. When
then banking system loses the trust of its depositors, the banking system will
collapse. Since current interest rates on bank deposits are practically negligible
anyway, depositors will just keep their money in safety deposit boxes rather than
deposit the same in the bank.

3. Before resorting to any amendment of either the Bank Secrecy Law, the
government should focus its attention on this latest large-scale money laundering
controversy. Besides, amending the laws at this stage will serve no useful purpose
to the ongoing investigation because laws cannot be given any retroactive effect,
especially if they are penal in character.