PhilRem in the eye of a stormy money laundering controversy

The money laundering scheme involving funds stolen from the Bangladesh Bank account with the Federal Reserve Bank of New York has placed PhilRem Service Corp. in hot water.

The currency remittance firm has emerged as a conduit in moving the money from the Rizal Commercial Banking Corp. branch on Jupiter Street in Makati City to the casinos – where the stolen money was supposedly laundered – and other benefactors that included junket operators.

PhilRem was registered with the Securities and Exchange Commission (SEC) on September 2, 1998.

Its primary purpose is "to engage in the business of remittance of money currency from abroad to be delivered to the different parts of the Philippines."

Philrem sales grew to P27.212 million in 2014 from P20.427 million in 2013, according to the latest available financial statement from the company. Cost of sales rose to P15.405 million in 2014 from P5.520 million in 2013.

However, the company netted only P373,951.62 in 2014 compared with P190,771.20 in 2013.

P10.4M in handling fees

From transactions involving the stolen Bangladesh funds, PhilRem earned P10.4 million in handling fees.

PhilRem confirmed before the Senate blue ribbon committee it was responsible for transferring $81 million from RCBC to the various recipients. But the company claimed it was not aware that the transactions involved illicit funds in a money laundering scheme.

"Tinawagan lang kami ng branch manager..." PhilRem President Salud Bautista, who was summoned by the Senate as resource person, told the committee. She was referring to RCBC Jupiter branch manager Maia Santos-Deguito.

"Sana pala 'di na kami tinawagan, at 'di naman kinuha ang transaction nito kung ganitong stolen lang pala ang money," Bautista said during the third committee hearing on March 29.

"If you check our records, lahat ng bangko at kliyente namin pinagkakatiwalaan kami. Alam nila na 'di kami mag-ta-touch na anything illegal," she added.

In one of the Senate hearings, Bautista told the panel that Philrem was willing to hand over the proceeds totaling P10,474,654 to Bangladesh.

She said the amount was equivalent to one-fourth of 1 percent of the total amount PhilRem handled involving  Bangladesh millions.

Where is the $17 million?

Bautista testified before the committee that PhilRem transferred the $81 million to casino junket operator WeiKang Xu, in several tranches from February 5 to 13, 2016 and in the presence of Kam Sin "Kim" Wong – another junket operator and a longtime Philippine resident.

"Dineliver po namin lahat... May mga dokumento po (ng mga transaksyon)," she said.

Wong, however, claimed otherwise and alleged that some $17 million still remains with PhilRem.

Wong also claimed before committee the amounts disbursed by PhilRem involving the Bangladesh funds:

• P1.365 billion went to Solaire Resort and Casino
• P1 billion went to Midas Hotel and Casino
• P100 million delivered personally by Deguito and Michael "Concon" Bautista, Salud's husband and PhilRem's treasurer
• P300 million and $5 million he personally fetched from the Bautista residence
• "In sum, the figures total around $64 billion."Seventeen million dollars na kina Concon," Wong alleged.

Michael belied the allegation. "I would like to deny the $17 million is with us," he told the committee.

Know Your Customer

As a result of handling the money transfers totaling $81 million, PhilRem may be held liable for failing to exercise the KYC rule to scrutinize the source and recipient of the funds, according to the Bangko Sentral ng Pilipinas

KYC or know your customer is a standard form of client due diligence for banks and financial and investment companies as part of regulatory compliance in their day to day operations.

According to PricewaterhouseCoopers International Limited (PwC), "Compliance with anti-money laundering, KYC and sanctions requirements continues to be a key focus area for management, and firms must ensure they are following appropriate compliance procedures to meet the increasing regulatory demands."

In its' "Anti-Money Laundering: Know Your Customer Quick Reference Guide and Global AML Resource Map," the assurance, tax, and advisory services company emphasized that, "Firms operating on a global scale must also demonstrate a robust compliance framework, ensuring that each territory has sufficient management oversight and that AML requirements are being adhered to at both a local and global level."

Bautista claimed that her company relied on the RCBC compliance to KYC.

'Anomalous' transactions

Apart from its involvement in the Bangladesh controversy, an October 28, 2015 report supposedly by the Anti-Money Laundering Council (AMLC) also linked PhilRem to a supposedly anomalous fund transfer amounting to P100 million to a Hong Kong company involving Vice President Jejomar Binay.

“It was very malicious and irresponsible... to claim that these transactions involved the Vice President, based on a supposed AMLC report which we are asking the agency to comment on,” Binay’s spokesperson Joey Salgado claimed.

The report supposedly claimed that Binay, through his law firm and alleged dummies, transferred a total of P100 million to Hong Kong-based Three Star Phil – supposedly an investor in one of Binay's alleged dummy companies.

Links to RCBC

In the executive session requested by Deguito, it was discussed that Concon Bautista was supposedly an acquaintance with former RCBC Securities President Jerome Tan.

Tan drowned during a yachting trip in 2012, with Bautista supposedly among those with Tan during the drowning incident.

"That came up during the executive session," Senator Teofisto Guingona III told reporters. – with GMA News Research/VDS/JST, GMA News