Honeyman: The heist revisited

IT IS now well over two months since the seventh and final Senate Blue Ribbon Committee meeting discussed the Bangladesh Bank heist in which $81 million in stolen money reached the Rizal Commercial Banking Corporation (RCBC).

Of the $81 million, junket operator Kim Wong returned $15 million. The $66 million was gone.

The remittance company, Philrem, which converted United States (US) dollars into Philippine Pesos, is still under scrutiny.

The US agency, the Federal Bureau of Investigation (FBI), is also investigating the case in New York where the hacking of Bangladesh Bank’s account took place.

Since the hackers in New York cannot be unconnected with some of the personalities in the Philippines, I hope the FBI investigations include finding out what happened here. The implementing rules and regulations (IRR) of the Anti-Money Laundering Act of 2001 (RA 9160) empower the Anti-Money Laundering Council (AMLC) to cooperate with the FBI. As AMLC Commissioner F. Dooc said at the Blue Ribbon Committee, he would “leave no stone unturned” to find out what happened.

Meanwhile, Quezon City Rep. Feliciano R. Belmonte Jr. (4th District) has filed House Bill 014 which seeks to include casino operators in the coverage of the Anti-Money Laundering Act. No doubt the House of Representatives will be considering this in due course.

The acid test of Belmonte’s proposed bill is whether the existence of his bill at the time of the heist would have made any difference. The prime responsibility for fighting money laundering must rest with the bank, in this case RCBC.

Irrespective of who is or is not at fault, the regrettable conclusion is that the Philippines is perceived by many abroad as an exotic locale in which money-laundering may be facilitated with impunity.


Earlier this year Hong Kong became a safe haven for money launderers from the People’s Republic of China (PRC). Many PRC residents were able to come to Hong Kong and withdraw their renminbi deposits, the PRC currency, at Automated Teller Machines (ATMs) in Hong Kong dollars. They then used the Hong Kong dollars to buy single premium insurance policies which could be redeemed fairly quickly but at a discount. The insurance policy was a money laundering facility because the funds obtained from the policy, in Hong Kong dollars, were clean even though renminbi funds may have been doubtful, depending on how they were acquired in PRC.

It is not clear to me that all the missing $66 million in the RCBC heist was laundered through casinos. Other money laundering opportunities such as offered by insurance companies seem just as likely.

I should mention that the Chinese authorities has put a stop to the use of Hong Kong insurance companies, typically AIA and Prudential, as money laundering vehicles for PRC businesses.

This Chinese clampdown has not gone unnoticed by the insurance companies themselves. In January, when money laundering in Hong Kong was in full flight, Mark Tucker, AIA’s CEO, came to the Philippines and explained that PhilamLife (AIA’s subsidiary here) was only around 3 percent of AIA’s total business whereas AIA in Hong Kong was doing ten times the volume.

Now that there is less money laundering via insurance policies in Hong Kong, Tucker returned to the Philippines in May and bemoaned the fact that insurance sales here are low because the Filipino is financially illiterate. Nonsense! The ratings agency Standard and Poor uses the authoritative definition of financial literacy as being significantly dependent on an understanding of risk which includes the possibility of being cheated by insurance companies. Filipinos know about this which is why the insurance sector does badly here compared with other countries.

Tucker needs to put his own house in order before he belittles the Filipino.

We also need revisions to the Anti-Money Laundering Act to include insurance companies as well as casinos.

In fact, casinos are bastions of probity compared with insurance companies.

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