The Bank of the Philippine Islands on Thursday said it is still in the process of recovering the P46 million that was “mistakenly withdrawn” by its clients at the height of the bank’s massive system glitch, a bank executive told a congressional hearing.
BPI president and chief executive officer Cezar Consing told the House committee on banks and financial intermediaries, chaired by Eastern Samar Rep. Ben Evardone, the technical glitch had led to “mis-postings” and “P46 million were mistakenly withdrawn” by BPI clients.
This even as the Central Bank said the glitch was a “human error,” with Chuchi Fonancier, assistant governor of the Bangko Sentral ng Pilipinas, citing reports and evidence that allayed fears that the problem was caused by hacking.
Consing said what happened was accidental and the BPI has been addressing the problem.
“It was accidental,” Consing said in response to Evardone’s query if the circumstances caused by the technical glitch was “illegal.”
“The fact is most of this P46 million is getting paid back, most, if not all of it,” Consing said.
He said the funds were from “merchants, small businesses” accounts.
“We are making arrangements with them to settle. Almost all of them have expressed willingness to settle,” Consing said.
BPI Chief financial officer and executive vice president Joseph Gotuaco said the average mis-posting on both debit and credit amounted to P7,000.
“The highest amount that was debited was P1.6 million and the highest credit was P2.5 million,” Gotuaco said.
Parañaque Rep. Gus Tambunting said the BPI must be able to assure its clients that their money are safe despite the technical glitch.
“We trust the bank, we trust BPI, but we do not keep a file of all those pieces of paper that come out of the machine. But when it comes to internal data processing errors like this, what assurance can you give a customer like me that internal data processing errors will not steal their money?” Tambunting said.
Meanwhile, Senator Chiz Escudero has called on the banking sector to beef up its cybersecurity measures to deter threats to online banking.
“We should uphold the public’s confidence and trust in our country’s banking industry, and ensure them that their financial transactions are protected from different forms of fraud and theft, may it be online or not,” Escudero said.
Escudero, chairman of the Senate Committee on Banks, Financial Institutions and Currencies, said the banking sector should be reliable and well-equipped to prevent cyber-attacks and immediately address and resolve internal system malfunctions.
The senator’s committee conducted a Senate investigation on the state of the banking system in the Philippines after BPI and BDO recently experienced an internal error and fraud, respectively.
He said the Senate probe was intended to inform the public of what really happened and to eliminate speculations with respect to the incidents related to BPI and BDO.
“Whether due to human error or system glitch, we shouldn’t let these kinds of incidents compromise the credibility and integrity of our banking sector,” Escudero said.
Unfortunately, more than a week after the BPI fiasco, the country’s leading bank, clients of BDO reported “unauthorized withdrawals” from their bank accounts.
On June 16, BDO released a statement saying they have obtained reports of “potentially compromised automated teller machines (ATMs)” after reported losses from their clients. The management said this is very different from the BPI incident as theirs is a case of ATM skimming.
Skimming, BDO explained, is the unauthorized copying of the magnetic stripe information of ATM cards which stores the details of the card and is necessary for ATM transactions. This is done through the use of illegal devices that can read or “skim” the magnetic stripe during a transaction.
BDO said only seven out of all their 3,700 ATMs were reported with detected illegal transactions last week.
BDO assured the public that they have exerted all efforts to protect their clients’ money and that they have already upgraded their ATMs in order to prevent fraudsters from further stealing.
Escudero, meanwhile, said he is confident that the banking sector, with the guidance of the Bangko Sentral ng Pilipinas, can guarantee the stakeholders that such incidents can be handled properly and that measures to protect the people’s money are in place.
In 2014, BSP announced that it will implement the Europay Mastercard Visa (EMV) technology—a more secure chip-based technology than the traditional magnetic stripe. However, due to the magnitude and complexity of the EMV migration process, BSP moved the deadline of compliance from January 1, 2017 to June 30, 2018.
BSP assured the public that the use of the EMV technology will help in preventing and detecting ATM skimming transactions.
It added that with the EMV Card Fraud Liability shift Framework, in case of fraud or ATM skimming, banks that are not yet EMV compliant will bear the loss and not the depositor.
