CA affirms anti-laundering fine for DBP
abs-cbnNEWS.com | 11/04/2009 8:00 AM
Printer-friendly version | 
Send to friend | 
Share your views
MANILA - The Court of Appeals (CA) has affirmed a resolution that fined Development Bank of the Philippines (DBP) P100,000 for failing to promptly report a suspicious transaction.
In a 16-page decision penned by Associate Justice Pampio Abarintos, the CA's 10th Division dismissed for lack of merit the bank's petition to reverse the August 15, 2006 resolution issued by the Anti-Money Laundering Council (AMLC).
"We find no cogent reason that would warrant reversal or modification of the resolutions sought to be reviewed, thusly, dismissal of the petition is in order," the appellate court said.
The AMLC said DBP violated Section 9-c of the Anti-Money Laundering Act (AMLA) mandating banking institutions "to report to AMLC all covered transactions and suspicious transactions within 5 working days from occurrence thereof, unless the supervising authority prescribes a longer period not exceeding 10 working days."
Suspicious transaction
DBP failed to promptly report to the AMLC a deposit made by Jeffbeck Tubac of a Charter One Bank check amounting to US$16,200. It was returned due to "counterfeit drawee."
Records showed that Tubac opened a peso savings account with DBP-Cagayan de Oro branch on April 1, 2004 with an initial amount of P1,000, then deposited Charter One Bank check dated February 26, 2004, amounting to US$16,200 (about P1.13 million at current exchange rates).
The appellate court noted that "The surrounding circumstances of Mr. Tubac, being anew client in the bank, who was only 23 years old at that time who has not proven his financial capacity, who had an initial deposit of only a thousand pesos, and who suddenly deposited a foreign check equivalent to more than P500,000....are enough reasons for the petitioner to exercise its vigilance in evaluating the suspicious character of the account," the CA said.
During the opening of the account, Tubac claimed that the dollar check, issued by a certain John Lewis to Tubac, was mailed to him by his internet chatmate, a certain Becky Hudson. The check would allegedly fund an internet café business.
The check was then sent to DBP's Foreign Currency Operations (FCO) for clearing.
Subsequently, Tubac withdrew from the account between May and June 2004.
On June 3, 3004, FCO informed the branch that the check was returned due to "counterfeit drawee," prompting the bank to immediately put on hold the account. By then, the funds in the account had been whittled down to P150,618.
The state-owned development bank then sought to file estafa charges. On December 29, 2004, the Office of the City Prosecutor found probable cause to warrant the filing of charges against Tubac.
Late notice
But while the government-run bank followed protocol for filing cases in the courts, it failed to submit the required suspicious transaction report (STR) to the AMLC within the required period.
DBP submitted the STR only on August 15, 2005--more than one year from the time the branch was notified by FCO that the subject check was returned due to counterfeit drawee.
In seeking the reversal of the AMLC resolution at the appellate court, DBP argued that it strictly followed the AMLC's reporting procedure issued in July 7, 2004, and the Bangko Sentral ng Pilipinas' Circular No. 333. Both provide that the STR must be sent to the AMLC within 5 banking days from the time the committee decides that there is reasonable basis for considering a suspicious transaction or other unlawful activity.
But, the CA said DBP's interpretation of AMLA's guidance is "erroneous" since Section 9(c) of AMLA clearly requires that all covered and suspicious transaction should be reported to the AMLC within 5 days from occurrence.
This meant that DBP should have submitted the required report last June 8, 2004.
Comments