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PH remittance firms wire over $1 billion in ‘suspicious’ money

September 21, 2020, Rappler.com

Two Filipino remittance firms have sent more than $1 billion in “suspicious” funds to shell companies, while some of the country’s biggest banks helped facilitate the transactions for years without knowing where the money came from, a report by the Philippine Center for Investigative Journalism (PCIJ) revealed.

Transactions made by Philrem Service Corporation and Werquick Incorporated were flagged in suspicious activity reports (SARs) filed in the United States, PCIJ said, citing secret bank reports from the US Financial Crimes Enforcement Network (FinCEN).

Philrem is the remittance company linked to the $81-million Bangladesh cyber heist in 2016. PCIJ noted that Philrem appears in at least 6 SARs, “joining the ranks of Dubai gold trader Kaloti and billionaire Roman Abramovich who are both subjects of multiple reports.”

Werquick is a money service business owned by Philrem’s Salud Bautista.

The documents used by PCIJ were from a leak obtained by Buzzfeed News and the International Consortium of Investigative Journalists (ICIJ). (READ: Major banks moved vast sums of illicit money – ICIJ)

How it happened

For any cross-country money transfer, cash has to go through US scrutiny, as money would have to be converted into dollars first.

In the case of Philrem and Werquick, the monitored transactions passed through the Bank of New York Mellon (BNYM), one of the oldest and largest banks in the US.

BNYM filed the SARs, which noted some 5,001 “suspicious” transfers worth $1.03 billion involving Philrem and Werquick. The bank report also noted that Philrem was involved in the Bangladesh heist.

The PCIJ reported that the SARs “point to much larger figures” reaching up to $1.6 billion.

The FinCEN files involving the two remittance companies had a total of 7 SARs covering 2012 to 2016.

The SARs flagged Philrem and Werquick’s activities because:

  • The true ordering customers are not disclosed in the wire details.
  • The source of funds and the purpose of the transaction cannot be ascertained.
  • Some of the counterparties appear to be shell-like or unverifiable entities.
  • Many of the wires were sent in large, round-dollar (and occasionally repetitive) amounts.
  • Many were sent between the same counterparties within a short period of time.
  • The wires were sent from the Philippines, a high-risk jurisdiction for money laundering and other financial crimes.

Philrem and Werquick sent the cash using their accounts in BDO Unibank, Rizal Commercial Banking Corporation (RCBC), and Metropolitan Trust Bank (Metrobank).

PCIJ added that both companies were transferring cash without information on who actually sent the money. Money was also sent to shell-like companies.

While forming shell companies is legal, it is also quite common in money laundering schemes.

Philippine banks

As early as November 2011, BNYM already advised BDO that any wires sent by order of Philrem must include the sender’s information. 

However, SARs documents in 2014 and 2015 revealed that Philrem was allowed to transfer cash without information on where the money came from.

At least $82.3 million worth of wires with no known originator were sent by Philrem using its BDO account.

Werquick was also able to send over $738,000 using its BDO account, again with no details of where the money came from.

The report also revealed that RCBC and Metrobank facilitated transactions without knowing who the senders were. At least $94.3 million were transferred using RCBC accounts, while $25 million passed through Metrobank.

BNYM said the transfers were “often sent only a few days apart, and all were sent in large, round-dollar amounts, with most in the amount of $1,000,000, $1,500,000, or $2,000,000.”

One of the SARs also mentions the United Coconut Planters Bank (UCPB) as one of Philrem’s banks, but PCIJ was not able to find transaction details made through UCPB. However, a document showed that UCPB, as well as BDO, responded to a know-your-customer request by BNYM.

No comment

PCIJ sought the comments of Philrem and Werquick owners, but they have not responded to the request.

BDO said it could not address PCIJ’s questions specific to the transactions because of legal limitations. 

BDO’s chief compliance officer Federico Tancongco said the Philippines has “one of the most restrictive regimes when it comes to laws on confidentiality of deposits and assets in the possession of banks.”

Tancongco added, however, that BDO “routinely investigated transactions that raised suspicion or irregularity.”

“While the regulators and the banks work together and invest in automated systems to adopt a robust framework to detect attempts at money laundering and terrorist financing, the perpetrators are also relentless in evolving their tactics and sophistication. Thus no one can guarantee that all attempts can be detected and stopped in time,” he said.#

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