A phrase that professionals like to borrow from the accounting profession is ‘bottom line.’ It is attractive and useful because of its suggestion of the completion or finality of the examination of an issue.
After three Senate Blue Ribbon Committee hearings—the last one was two days ago—and countless media stories on the matter, many things remain confusing and unanswered about the heist in this country, using the Philippine banking system’s facilities, of US$81 million hacked from the Bangladesh Bank’s deposit with the Federal Reserve Bank of New York (NY Fed). Who knew what when, who delivered what to whom, who was in on the whole exercise and whether there was a conspiracy involving people at the very top of one of this country’s largest commercial banks—these are some of the questions that are frustratingly looking for believable answers.
With the officials and personnel of Rizal Commercial Banking Corp., the two frontline regulatory agencies (Bangko Sentral ng Pilipinas and the Anti-Money Laundering Council), PAGCOR, remittance company Philrem and three so-called casino junket operators, with three lawyers at their sides declaring their guiltlessness to high heaven and invoking the protection of the Deposit Secrecy Act and the Constitutional right against self-incrimination, getting at the truth will almost certainly be a long and torturous process. But one can already speak of a bottom line. Out of all the charges and counter-charges one truth has already emerged.
The simple, ineluctable bottom line is that in the recent RCBC episode the entire Philippine anti-bank-fraud system—and this, as I have already indicated, includes the BSP and the AMLC—failed. More to the point, it failed miserably.
The greatest of the ironies in the RCBC affair is that whereas it took only a matter of hours in the latter part of February 5, 2016 for the heist to be accomplished, it took days for the regulators to act effectively. Heists like that which took place at RCBC are pulled off very quickly, and in this electronic age the regulators’ window of preventive opportunity is forever narrowing. By the time February 5, 2016 ended, the heist was a done thing. This, despite of the fact that there was a desperate request from the by-now-alerted NY Fed for payment to be stopped.
Filipinos can understand that the whole caper was pulled off with too much ease for there to not have been a conspiracy—who the conspirators were is what the Senate is trying to establis—and they expect the regulators to try to prevent capers of the RCBC kind, but they are at a loss to comprehend why the regulators were not all over the place right away. The folks at the New York Fed and the Bangladesh Bank must have been gnashing their teeth over the fact that the New York Fed stop-payment order produced no immediate results.
Certainly, there was no shortage of law and regulations. The General Banking Act, the AMLA Act, BSP regulations and the banks’ own internal operational protocols were all in play, yet the disposition of the stolen Bangladesh funds was undertaken with such apparent ease—from RCBC branch to the casino junket operators to Philrem to Goodbyeland—that there might as well have been no laws and regulations at all.
To be sure, bank heists can and, as the RCBC episode has shown, sometimes will, happen. But Filipinos expect that the Philippine banking system’s regulators will at least put up a credible fight. Truth to tell, their impression is that the regulators did not put up a credible fight in the RCBC affair.
The Governor of the BSP has issued a statement proclaiming grandly that the Philippine banking system can withstand the RCBC loss and that all is well with the system. The first part of the statement is true: the Philippine banking system indeed can withstand the hijacking of $81 million. But the second part of the BSP chief’s statement is not true. All is not well with the system’s security mechanisms. Not well at all.
Governor Tetangco should begin with the mechanisms of BSP and of AMLA, of whose governing body he is a member. There is a lot of tightening and staying alert—and, yes, keeping awake at the post—to be done, Governor. Unless this comes to pass, another RCBC-type heist is bound to happen.
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