The gray list

LATElast month, the global money laundering and terrorist financing watchdog, Paris-based Financial Action Task Force (FATF) again put the Philippines on the gray list, or those under increased monitoring, after failing to address strategic deficiencies to counter money laundering. In addition to the Philippines, list, I am not sure that other countries Malta, Haiti, and South Sudan were should not be placed there also. added to the list. Specifically, it is not clear that the It is gratifying that Bangko German authorities reacted with the Sentral ng Pilipinas (BSP), unlike the necessary speed when the Wirecard Department of Education, has accepted scandal broke in 2019. criticism without demur. Indeed, BSP’s Fact-finding in fraud cases can aim is to make the improvements often spread far and wide. For necessary to be removed from the gray example, the British newspaper The list as quickly as possible. Financial Times was ahead of the pack We should emphasize that it is not when it was becoming clear that all only within BSP’s remit to make the was not well with Wirecard’s accounts. necessary improvements. Many other A tenacious journalist can reach some government entities are also involved. areas more quickly than government

The Philippines was dragged bureaucrats. into the $ 2.1 billion fraud at the The famous “cyberheist” case German financial technology and of 2016 is another example. The payment services firm Wirecard account of Bangladesh Bank held AG. Included in the misinformation by the Federal Reserve Bank, Wall was that Wirecard’s chief operating Street, New York was hacked on 4 officer Jan Marsalek was in the February and more than $1 billion was Philippines in June 2020. Allegedly, stolen. $950 million was sent to Sri this was not the case and, according Lanka where eagle-eyed (and literate) to the NBI’s International Airport officials spotted errors in the narrative Investigation Division, immigration included in the accompanying message officers tampered with Marsalek’s sent over the SWIFT network. These travel records so as to divert pursuing officials immediately sent back the German authorities. money to New York where it was

This example shows t hat credited to Bangladesh Bank. in international crime several Unfortunately, $81 million hacked government entities may be included. from Bangladesh Bank was sent to

In a joint complaint filed by NBI RCBC, Philippines. This money was and BPI, there are allegations of credited to named account holders in falsification of commercial documents. RCBC’s Jupiter Street branch where it

*** was quickly withdrawn. Although BSP is not crying foul RCBC was quick to blame Maia about its demotion to the FATF gray Deguito, the bank’s Jupiter Street branch manager.

At a subsequent Senate hearing, RCBC’s legal officer indicated that the funds went straight from Wall Street, New York to Jupiter Street, Makati. Is this true? I believe that the SWIFT coding system could show that the funds are sent firstly from Wall Street to RCBC’s remittance center. Then RCBC sends the funds to the Jupiter Street branch. If so, then Ms. Deguito may not be the first RCBC employee to know about the $81 million credit. So was Deguito scapegoated? In a subsequent court hearing, she was found guilty of eight counts of money laundering, each of which attracted a sentence of four to seven years imprisonment. There were also enormous fines. Deguito was reportedly given bail. Did the Philippine authorities find the truth?

If not, does this weakness create obstacles to gray list removal?/

PN