Bangko Sentral ng Pilipinas (BSP), Central Bank of the Philippines has revealed on Saturday penalizing any financial institution involved in laundering $81 million stolen. The fund has been stolen from Bangladesh Bank reserve kept with Federal Reserve Bank of New York in May.
Meanwhile, the Philippine central bank has also decided strengthening its regulatory oversight for non-banking financial institutions. Such institutions have allegedly been contributing to the growth of shadow banking in the Philippines.
BSP's decisions in regulating transactions of banks and non-banking financial institutions have been narrated by Nestor Espenilla Jr., its Deputy Governor, according to a report published in The Manilla Times. He has been addressing at the Economic Journalists Association of the Philippines-San Miguel Corp. Business Journalism Seminar.
Lack of transparency in deposit secrecy has made the local financial system attractive to bad money, cites the deputy governor. Admitting lapses in the existing anti-money laundering law (AML), he predicts that the regulators won't waste the opportunity to reform concerned laws centering the crisis. Flaws in AML have partly led to the entry of $81 million in stolen money from Bangladesh Bank into Rizal Commercial Banking Corp. (RCBC) and casinos, reports Inquirer.net, whistleblower for the heist. RCBC has remained at the center of a Senate investigation while grilling its president and branch manager through a hearing. The funds have been wired from RCBC to remittance company Philrem Service Corp. before sending to at least two casinos. Still now, almost all of the money remains traceless, reports Bloomberg. BSP is worried also about non-bank financial institutions due to an unintended consequence centering strengthening oversight over the formal banking system. This has eventually caused expansion of the shadows or shadow banking which may take place in the non-bank context, explains Espenilla. Lorenzo Tan, the RCBC president has committed to recommend for repaying part of the fund that can't be retrieved, if his bank is found guilty. He has made the commitment while addressing in a five- hour senate hearing in Manila on April 12. Meanwhile, casino junket operator has returned $5.5 million to the country's Anti-Money Laundering Council since March 31. He claims for receiving the returned fund from two Chinese nationals. He has also pledged for returning another $9.8 million since received from an anonymous person as a debt payment.
