By Beting Laygo Dolor, Contributing Editor
Ten local banks which had transactions coursed through the Bank of the Philippine Islands — considered as one of the Big 3 (composed of BPI, Metrobank and Banco de Oro) — are facing an investigation by the Bangko Sentral ng Pilipinas (BSP) for their suspected role in an Australian money laundering scandal.
While the BSP said there was no formal investigation for now, remittances from Westpac — one of Australia’s biggest banks — would be reviewed since Australian authorities suspended its operations last month.
BSP Deputy Gov. Chuchi Fonacier said last week that it was “still premature to comment about ramifications. We have to complete our review first.”
In a statement to media, BPI said it was not facing a formal investigation but only received a request from the BSP “for certain information regarding Westpac LitePay transactions.”
BPI President Cezar Consing said there were “other banks” involved but refused to name them. He did, however, say they were “large” banks, meaning they were among the country’s nationwide commercial banks and not small regional and/or rural banks or savings and loan associations.
He said when BPI entered into an agreement with Westpac, the Australian bank committed “to do all the due diligence on their side, which is very customary since they are the sending bank.”
As such, Westpac was “responsible that the funds they send are clean,” Consing added.
The BPI-Westpac partnership was forged in 2016. Under the agreement, the Australian bank remitted money to the Philippines via its LitePay platform.
BPI’s only role was to guarantee that the funds sent to the Philippines would be credited to the accounts of BPI clients, or those of other banks.
Those “other banks” would be the 10 banks that the BSP are seen to investigate.
Regarding the alleged failure of the LitePay facility, the BPI president and CEO said these were “a very serious concern to us.”
Consing added: “We have always worked closely with the regulators and authorities to ensure continued compliance with both domestic and global money laundering laws and regulations.”
BSP Gov. Benjamin Diokno sought to downplay the scandal’s potential impact on the local financial system since only “very small” amounts were involved.
“I don’t think it will have any large impact on the financial system. We just want to make sure we get a handle of what is going on.”
BPI added that it had terminated its remittance partnership with Westpac as soon as it learned of the suspension of the Australian bank.
Initially, the partnership between BPI and Westpac appeared to be a sound deal. Both are among the biggest banks in their home countries.
There is also a growing Filipino community in Australia. As with most Filipino expats, they remit funds to their families back home on a regular basis.
From July to October, this year alone, BPI recorded 61,687 transactions coursed through its system. The total is a paltry 0.27 percent of the 23 million Westpac transactions.
It is difficult to determine if the funds sent to the Philippines from Australia can be considered as “dirty money” or funds from questionable sources such as drugs and other vices, especially if the amounts sent are not that substantial.
Only when it comes up to PHP500,000 (about US$10,000) does the Anti-Money Laundering Council conduct an inquiry.
The sudden and unexpected closure of Westpac is considered the single biggest financial scandal in Australian history. Theoretically, Westpac faces a potential $330 trillion in fines and all of its top executives being held personally liable.
If this pushes through, chances of Westpac re-opening are extremely slim, unless an outside entity buys the bank’s assets and liabilities lock, stock and barrel.