BPI, other banks under review for ties to money laundering scandal in Australia

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The Bangko Sentral ng Pilipinas is looking into possible lapses committed by about 10 banks involved in cash transfers from Westpac, an Australian bank accused of allowing dirty money transfers to the Philippines.

Metro Manila (CNN Philippines, December 17) — The Bangko Sentral ng Pilipinas (BSP) said it will be reviewing about 10 banks to assess their ties with an Australian bank caught in a massive money laundering scandal.

At the center of the inquiry is the Bank of the Philippine Islands (BPI), which is the remittance partner of Westpac, one of the biggest banks in Australia.

CNN reported that Westpac allegedly failed to report more than 19.5 million fund transfer instructions in and out of Australia to the Philippines and other parts of Southeast Asia. The transactions in question supposedly involve money for child exploitation.

Australian regulator AUSTRAC has accused Westpac of breaking the law over 23 million times, as the supposed frequent and low-value payments sent via LitePay — its online remittance platform — trace back to "at least 2013."

Westpac tied up with BPI in 2016 to offer the LitePay service to local depositors, targeting overseas Filipinos looking to send money to their families back home faster. In a statement, BPI said it has suspended ties with LitePay "indefinitely" as the Westpac scandal came to light and has launched its own investigation on the issue.

BPI Head of Corporate Affairs and Communications Owen Cammayo said BPI processed 61,687 transactions from Westpac from July 2016 to October 2019, with a third credited to BPI accounts. He added that only 0.27 percent of the 23 million money transfers questioned by AUSTRAC passed through BPI.

"The alleged failures of Westpac's LitePay facility are a very serious concern to us. We have always worked closely with the regulators and authorities to ensure continued compliance with both domestic and global money laundering laws and regulations," Cammayo said.

He added that the central bank has not rolled out a formal investigation on BPI yet regarding WestPac, but has requested for certain data regarding LitePay transactions.

BSP Deputy Governor for Financial Supervision Chuchi Fonacier said BPI has been used as the entry point for cross-border transactions before the money is eventually moved to accounts in different banks.

"So far, we've identified the other banks who became the recipient of the remittances from Australia. We're doing a review and then if there's a need for us to go on site then we will go on site to see whether banks are complying with anti-money laundering regulations," Fonacier told reporters on Tuesday.

The banks involved have not been named yet, but Fonacier said about 10 lenders may be covered by the review.

The Ayala-led BPI has submitted a partial report to the regulator. The central bank is still verifying the details of the incident, Fonacier said, which could last until January 2020.

The BSP official added that the probe will review fund transfers from Westpac to BPI and eventually, to other universal and commercial banks. She added that the process is "tedious," as this involves establishing patterns in small-value transactions across bank accounts.

"What makes this one different is that (it involves) small transactions, so hindi siya required to be reported to AMLC (Anti-Money Laundering Council) kasi nga 'yung threshold, hindi naman umaabot doon [because the value of the transactions does not reach the reporting threshold]," Fonacier added.

Under AMLC rules, all banks and financial firms should report any fund transfers worth ₱500,000 or higher in a day as well as "suspicious" transactions which involve out-of-pattern or unjustifiable amounts of cash. This is meant to detect ill-gotten wealth or fund proceeds from illegal activities.

But Fonacier said banks should still practice due diligence before clearing money transfers.

"Hindi porke maliit 'yung transaction ay taken for granted na [Banks can't take for granted some transactions just because they involve small amounts]. They should really do a close monitoring of activities of the transactions at the branch level," Fonacier added.

Two top executives at Westpac have stepped down in the wake of the money laundering scandal.

CNN Philippines' Sandra Zialcita contributed to this report.