RCBC: Stop payment orders from Bangladesh 'vague'

Jon Carlos Rodriguez and Jamaine Punzalan, ABS-CBN News

Posted at Apr 12 2016 02:29 PM | Updated as of Apr 12 2016 08:39 PM

BSP official says RCBC should have opened messages from Bangladesh Bank, regardless of format

MANILA (2nd UPDATE) - Rizal Commercial Banking Corporation (RCBC) on Tuesday said the bank could have immediately held the stolen $81 million if only the Bangladesh Bank sent "high priority messages."

Macel Estavillo, the head of legal and regulatory affairs of RCBC, said that although Bangladesh Bank did send three requests for freeze on February 9, the messages were "vague" and "ambiguous."

Estavillo said RCBC could've reacted promptly if it received an MT192, the code for a request for cancellation or stop payment order.

“In the case of the bank of Bangladesh, they did not send us any high priority message, they did not send us any stop payment order. They just sent us an unauthenticated free format message or a 999,” Estavillo told senators at the Senate Blue Ribbon investigation on the money laundering scandal.

Estavillo said that on February 9, the banking day after a 3-day-long weekend, RCBC received a total of 790 messages in the SWIFT system, but none of which was an MT192.

SWIFT, or the Society for Worldwide Interbank Financial Telecommunications, is the messaging system used by banks worldwide to transmit funds.

Because there were no apparent red flags, Estavillo said all messages were deemed of "normal priority" and were thus opened sequentially.

She said that at 11:22 a.m. on February 9, the bank's settlements department opened and read an MT999, or a bank-to-bank text message, recalling funds sent to the account of a certain "Alfred Santos Vergara." The account was later discovered by RCBC to be fictitious.

The MT999 was forwarded to RCBC Jupiter, Makati branch.

READ: $81M heist: The money trail

Estavillo said the "normal priority" message from Bangladesh Bank read: "Please be informed that this is a doubtful transaction. You are requested to stop the payment and if you already made payment then freeze the account of the beneficiary for proper investigation. We think the transaction is contradictory with the anti-money laundering law."

However, Estavillo said that three minutes earlier at 11:19 a.m., $19.95 million was already transferred to the supposed account of William Go, which was also discovered later by RCBC to be an unauthorized account.

Estavillo said a similar recall message from Bangladesh Bank was read by the settlements department at 11:25 a.m. in relation to the "Enrico Teodoro Vasquez" account. It was also sent to RCBC Jupiter branch.

But, Estavillo said, at 10:24 a.m., $15.216 million from the Vasquez account was already transferred to another account. Estavillo said the receiving account refused to sign a waiver, and therefore hinders RCBC from discussing details of the transaction.

At 11:34 a.m., or nine minutes after the message from Bangladesh Bank was received, another transfer from the Vasquez account, this time to Go's account, was made for $9.76 million.

The third freeze order request from Bangladesh was read at 11:30 a.m. on February 9 pertaining to the account of a certain Christopher Lagrosas.

But Estavillo said the transfer of funds of $22.7 million was already made from the Lagrosas account to Go's account on February 5 at 3:16 p.m.

Another transfer of $7.23 million was made to Go's account five minutes after the bank read the freeze order request at 11:35 a.m.

According to Estavillo, there was nothing to indicate that the messages were sent by the central bank of Bangladesh.

“We didn’t know that they were the central bank of Bangladesh, we just thought they were a regular bank,” she said.

However, the Bangko Sentral ng Pilipinas (BSP) officer for SWIFT messaging, Nenita Cadapan, said RCBC should have opened the messages from Bangladesh Bank, regardless of the priority format.

Cadapan said, because RCBC and Bangladesh Bank have no relations, the latter could not send an MT192.

"The best option for Bangladesh Bank is to send free format messages, which is what it did...But this doesn't mean messages from Bangladesh Bank are less persuasive. [RCBC] should check it," she said.


Estavillo said alarm bells rang on February 10, when the wording of the message from Bangladesh became clearer. The "normal priority" message, pertaining to the account of Michael Francisco Cruz, was read by RCBC head office at 2:41 p.m.

Estavillo said the message from Bangladesh Bank on February 10 read: “Please be informed that this is a fraudulent transaction and unauthorized access in our SWIFT system. So you are requested to stop the payment and if you have already made the payment, then freeze the account of beneficiary."

Estavillo said the message sent on February 10 was more direct compared to the messages sent on February 9, which she said "used very vague terms."

"Perhaps it was also not clear to them what had happened on February 9, because it was not clear based on their emails sent. We have received many stop payment orders but never as ambiguous as these messages,” she said.

Estavillo stressed that because Go's account was a private account, RCBC did not have any authority to freeze the account and stop the withdrawal.

Estavillo also noted that the branch manager at RCBC Jupiter, Maia Santos-Deguito, could have also alerted the head office, but decided to push through with the transactions.

“Maia Deguito, when she received the first of these messages, rushed to expedite the withdrawals as well. At the end of it, she said, it is better for her to expedite than to have herself and her family killed. It is in that context that even if she received the freeze orders, she still continued to withdraw about $16 million afterwards,” said Estavillo.

Deguito is facing money-laundering charges filed by the Anti-Money Laundering Council (AMLC).

READ: RCBC branch manager sued for money laundering


Estavillo said that when the four bank accounts in Jupiter, Makati branch received the stolen funds on February 5, a hold order was issued by head office on the same day.

She said the order came after office hours when RCBC higher-ups noticed that the total amount wired by the Bangladesh Bank to the accounts were significantly large.

"Our operations group contacted our retail banking group and advised them that they are putting it on hold until further information from the branch," Estavillo said.

But after a series of calls between officials from the head office and Deguito, the hold was lifted on the same night because of the branch manager's assurance that the account owners were her long-standing clients.

Estavillo claimed that Deguito also said that she had been waiting for the funds for over the year, and that all documents for the accounts were in order.

Deguito, however, presented a different narrative.

She said that even she had been surprised at the amounts that were credited to the accounts.

"Nagulat din ako bakit biglang na-credit, wala man lang tawag mula sa settlements [department] na ano ba ito or hingan man lang ako ng supporting documents," she said.

Deguito said that past noon of February 5, she instructed the branch's senior customer relationship officer, Angela Torres, to ask the RCBC settlements department for an advance copy of the MT103--a bank-to-bank text message detailing the source of the funds, its beneficiary and purpose.

She said the settlements department replied at around 6 p.m. and sent copies of the message.

Deguito said that around the same time, RCBC district head Nestor Pineda called her and asked if the accounts could be temporarily held.

She then requested Pineda to send her an e-mail for the hold request, but the latter did not reply.

This prompted her to contact RCBC regional sales director
Bridget Capiña, who allegedly said that there was no need to hold the funds.

Deguito said Capiña pointed out that the funds were already "cleared inward remittances" because the funds were first wired to the head office before it reached the Jupiter branch.

Deguito also denied telling her superiors that she was expecting the funds to enter the four accounts of her bank.

She added that her position as branch manager has no authority to recall the funds because she has a marketing function, and not an operational one.

"If they (settlements) got the recall of funds message first, they should have called operations, hindi po ako. Nasa marketing side ako, hindi ko controlled 'yung mga ganoon, pagho-hold ng funds," she said.

Despite this, Deguito claimed she called Capiña to tell her about the whereabouts of the funds, but the latter handed over the phone to RCBC Treasurer Raul Victor Tan.

Tan allegedly told her that the matter was no longer the problem of RCBC, but that of Bangladesh Bank.

"Noong kausap ko po siya, sabi ko, 'Sir may problema ako kasi wala na akong ma-recall doon sa apat na accounts na na-creditan pero andoon iyung funds,'" Deguito said.

"And then he told me, 'Hindi natin problema iyun, problema ng Bangladesh iyun.'"

Tan, however, denied saying this.

Meanwhile, Estavillo believes the Anti-Money Laundering Act should be amended to give banks "holding power" in questionable transactions.

Bangko Sentral ng Pilipinas (BSP) deputy governor Nestor Espenilla said RCBC may face a maximum fine of P30,000 per day or per transaction for failing to act on the order.

Aside from monetary penalties, Espenilla said BSP may also impose non-monetary sanctions if the bank is found guilty of negligence.