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 With one day to go, a Congressional committee heard repeated pleas
not to hamstring an industry that could rival other Asian gambling
meccas by obliging casinos to report suspicious transactions.
Finally, the senator chairing the meeting agreed "with a heavy
heart" to exclude them, a transcript of the proceedings shows.
That same senator now heads a panel trying to fathom how $81 million
hacked last month from the New York Federal Reserve account of
Bangladesh's central bank wound up with two casinos and a junket
operator in the Philippines - and then disappeared.
It is one of the biggest cyber heists in history, and since the
money trail has gone cold in the Philippines, the perpetrators may
never be identified.
The senator, Teofisto Guingona, told Reuters after a public hearing
on the case last week that fierce lobbying by the gaming industry
over the law had left the Philippines one of the world's softest
targets for money launderers, putting the financial system at
serious risk.
"It can wreak havoc on the economy," he said. "Any money coming in
and out of the country will come under scrutiny. People might just
say 'to hell with it, it's not worth doing business with the
Philippines'."
The Philippines depends heavily on remittances from workers abroad,
which account for about 10 percent of its GDP.
The country's central bank chief said last week financial markets
had shown no signs of distress over the scandal, but added: "We have
to recognize there is a risk that is associated with this."
Unknown hackers breached the computer systems of Bangladesh Bank in
early February and attempted to steal $951 million from its account
at the Federal Reserve Bank of New York, which it uses for
international settlements.
Some attempted transfers were blocked, but $81 million wound up in
the Philippines.
Security researchers blamed malware and a faulty printer but said
Bangladesh central bank officials were also responsible because of
weak security procedures. The bank's governor and two deputy
governors quit their jobs over the scandal last week.
Bangladesh said on Saturday it had formally sought the assistance of
the U.S. Federal Bureau of Investigation.
BANK SECRECY LAW
Public hearings on the heist in the Philippines' Senate last week
focused on the manager of a Manila branch of Rizal Commercial
Banking Corp (RCBC). Her bank received the stolen money on Feb. 4
and transferred it to a foreign exchange broker who passed it on in
tranches, including $30 million in banknotes that officials say
would have weighed 1,500 kg.
A colleague of the manager testified he saw her drive off in her car
with 20 million pesos ($431,000) in cash from one of several
fictitious accounts to which the money was wired. The branch manager
declined to give evidence in public.
According to an Anti-Money Laundering Council (AMLC) document seen
by Reuters, on Feb. 8 Bangladesh Bank sent RCBC several messages via
the SWIFT interbank communications network requesting transactions
be stopped and the funds returned.
However, five withdrawals were made from the accounts in 73 minutes
the next morning. When RCBC responded to the SWIFT message later
that day, all that remained of the $81 million was $68,305.
RCBC President Lorenzo Tan told the Senate he could not discuss what
happened because of the country's bank deposit secrecy law, one of
the world's strictest and a legacy of the martial-law era of
President Ferdinand Marcos in the 1970s.
"Prevention of ... money laundering is being hampered by the very
strict bank deposit secrecy law," central bank Governor Amando
Tetangco told reporters. "Once the funds go into a bank deposit
account, that's it. The trail turns cold."
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Sergio Osmena, another senator probing the bank heist, has pressed
for years to amend the bank laws. He made no headway, he said,
because secrecy suits businesses that want to evade taxes and can
bribe lawmakers to resist legislative change.
"I am quite happy that a scandal like this has happened," Osmena
told Reuters, explaining he believes the Bangladesh case is the tip
of an iceberg alerting people to hundreds of money laundering crimes
going unreported every year.
CASINOS A 'WEAK LINK'
In a March 2 report, the U.S. State Department said only 49
anti-money laundering cases have been filed since the AMLC began
operating in 2001. The number of prosecutions and convictions has
been virtually nil.
Recent efforts to include casinos in the law have been held up
because of forthcoming elections and extensive lobbying from the
gaming industry, which the report said was "a weak link" in the
Philippines' anti-money laundering regime.
"Money laundering is a serious concern due to the Philippines'
international narcotics trade, high degree of corruption among
government officials, trafficking in persons, and the high volume of
remittances from Filipinos living abroad," the U.S. report said.
With ambitions to become one of Asia's gaming hubs alongside Macau
and Singapore, the government opened a tract of reclaimed land near
Manila airport for casinos. Two world-class resorts now operate
there, counting Chinese high rollers among nearly half of their VIP
clients, and two more are under construction.
The Senate hearing was told $29 million of Bangladesh's money was
transferred to one of these casinos, Solaire, owned and operated by
Bloomberry Resorts Corp.
"We did not know it was dirty money," Silverio Benny Tan, corporate
secretary of Bloomberry Resorts, told reporters.
The Philippine Amusement and Gaming Corporation, which regulates the
industry, says that to prevent laundering, money transferred to
casinos for players must be exchanged for 'dead chips' that can only
be cashed in from winnings.
But, for Senator Guingona, the disappearance of such large sums into
casinos underlines the weakness of Manila's anti-laundering regime
and could push the country back into the 'gray list' of the
Financial Action Task Force (FATF).
A spokeswoman for FATF, a Paris-based inter-governmental
organization that combats laundering and terrorist financing, said
an Asia-Pacific body was responsible for reviewing Manila.
"We cannot comment on the current case being reported in the media,"
said Alexandra Wijmenga-Daniel. "However, ongoing deficiencies in
the anti-money laundering and counter-terrorist finance regime of
the Philippines would be of concern."
(Additional reporting by Neil Jerome Morales in Manila and Leigh
Thomas in Paris.)
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