RCBC invokes bank secrecy in stolen fund transfer

MANILA (UPDATE) - Rizal Commercial Banking Corp. (RCBC) president and chief executive officer Lorenzo Tan refused to answer questions involving stolen funds from the Bangladesh Bank in a Senate inquiry on Tuesday, invoking bank secrecy.

Tan said he cannot speak about the stolen funds amounting to $81 million, when he was asked by Senator Teofisto Guingona III if there was a failure in the procedure of verifying the identity of the account owner.

“I cannot talk specifically about this case because of bank secrecy, but I assure you that an investigation is going on in our bank to determine the actual facts that happened,” Tan told the Senate committee.

Tan also refused to speak about a stop transfer order, which was issued on February 8, a day after the funds were withdrawn from an RCBC branch in Jupiter St., Makati City.

“I cannot confirm or deny this request specific to this transaction, but as a general rule, when there is a freeze order on an account, the branch manager involved should comply with such order,” he said.

Tan again invoked bank secrecy when he was asked if he sent the stop payment request to the RCBC Jupiter branch manager, Maia Santos-Deguito.

However, Tan's response irked Guingona, who said he cannot agree with Tan's invocation of bank secrecy.

“The one that can invoke secrecy is the owner of the funds. The owner of the funds is the central bank of Bangladesh, and they’re here precisely to ask us to help them recover the funds. They are not invoking secrecy,” said Guingona.

RCBC's anti-money laundering head, Laurinda Rogero, also invoked bank secrecy when asked what time the bank received the stop payment order.

Rogero said she cannot speak about the specific incident because it has yet to be confirmed if the funds were indeed stolen.

“The determination of the ownership as well as whether or not there was fraud committed has not yet been established,” she said.

Guingona, however, disputed her statement, saying the "account holders have been proven to be fake."

"What are you hiding?" the senator said.

In his opening statement, Tan said the bank "vehemently denies and disavows any and all knowledge, complicity or participation in the alleged money laundering of $100 million in the Philippines.”

Tan also denied having knowledge of the anomalous transaction, adding that he would not have to approve the transaction as president and CEO for it to push through.

“We have been cooperating and will continue to cooperated with the regulators concerned to the maximum extent allowed by our legal framework to help them get to the bottom of this alleged money laundering,” he said.

WHAT HAPPENS TO SUSPICIOUS TRANSACTIONS?

During the Senate inquiry, Tan explained the procedure on suspicious transactions, saying that a bank cannot freeze accounts without a court order.

He also said withdrawals of large amounts do not need authorization from him to be approved.

“When funds are in an account, they are withdrawable at will by the depositor,” said Tan.

“You just cannot freeze funds because customers have settlements to do. If someone were to buy stocks or bonds, they have settlement days, and if we freeze accounts and try to get approvals, we may affect their business,” he added.

If a transaction is deemed "suspicious," the bank is given 10 days to file a suspicious transaction report (STR), which should be discussed internally and confirmed by a committee composed of the bank's executive group heads.

"The STR, under regulation, must be decided by a committee because you don’t want to wrongly accuse a depositor," said Tan.

Meanwhile, Maria Cecilia Fernandez-Estavillo, head of legal and regulatory affairs at RCBC, said when a stop payment request for a specific transaction is received by the bank's settlement department, it is up to the branch manager to act on the request.

"The branch, once they have been informed of the stop payment order, should issue a post no debit order and determine what the basis of the stop payment order is," she said.

"The implementation will be at the branch level because they are the ones where customers go and where customers withdraw," she added.