Bangladesh Bank heist trail goes cold in Manila as probes falter

MANILA | BY RAJU GOPALAKRISHNAN

A slot machine is pictured at Solaire Casino in Pasay City, Metro Manila April 16, 2015.
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More than three months have passed since $81 million was stolen in a brazen cyber-heist
from Bangladesh's central bank and sent to Manila yet authorities in the Philippines appear

no closer to nabbing those who laundered most of the money through a bank and casinos
here.
Nobody has been arrested, the National Bureau of Investigation (NBI) - the nations
equivalent of the FBI - has not been allowed to get fully involved in the probe, and a
Philippines Senate investigation petered out last week.
Several official and private investigators said they had hoped to make headway by following
the money trail in the Philippines, but they told Reuters it has gone cold. They said the
perpetrators probably knew the Philippines well and likely chose it because of the weakness
of its money laundering laws.
The cyber-heist, one of the biggest-ever in the world, shouldn't be seen as just the hacking
of a bank, said Augustus "Ace" Esmeralda, a Manila-based private investigator.
"It's more of somebody stealing the money employing a hacker, and someone who knows
banks, the anti-money laundering system, the casinos ... It's the modern-day Ocean's 11,"
he said, referring to the Hollywood movie about a crime syndicate robbing Las Vegas
casinos.
"I call it Manila 12," added Esmeralda, who says he is following the case on behalf of two
international bank clients.
One of the key reasons is that casinos are not covered under the Philippines' anti-money
laundering law, which means they are not obliged to report suspicious transactions or the
players involved.
The Philippines Congress decided in 2013 to keep casinos off the list of institutions covered
under the law to allow the country's gaming industry to expand.
Also hindering investigators are antiquated bank secrecy laws that are among the strictest in
the world. They stipulate that almost all deposits and foreign currency details are
confidential.

The unidentified hackers infiltrated the computers at Bangladesh Bank in early February and
tried to make 35 transfers of money, worth a total $951 million, from its account at the
Federal Reserve Bank of New York. All but one of the attempted transfers involved were to
the Rizal Commercial Banking Corp (RCBC) in the Philippines. Most were blocked, but $81
million went to accounts at a single branch in Manila. The Senate inquiry heard from those
who handled the money that most of it then went to casinos and casino agents in the
Philippines, including junket operators, through a remittance agency.
BACCARAT TABLES
Vast sums are gambled in Manila's high-end casinos each day. At the Solaire Resort and
Casino, a Reuters team saw pink chips for one million Hong Kong dollars (about $130,000) at
the baccarat tables of the VIP rooms.
Nearly half the high-end gamblers there are ethnic Chinese, from mainland China or other
parts of the region.
Solaire, operated by Bloomberry Resorts Corp, has said about $29 million of the funds from
the heist came to the casino and most was transferred to the accounts of two junket
operators.
"You go into a casino with one million bucks," said Senator Serge Osmena, a member of the
committee investigating the case. "You bet 10,000, probably lose it, and you hand over
990,000 to your friend and he goes out and cashes it."
The money then is untraceable, he said.
Immediately after the heist it became clear that the money came to the Philippines. An NBI
agent told Reuters that a team was on standby to make an arrest during Easter week at the
end of March but was ordered to stand down with no reason given.
The agent, who spoke on condition of anonymity, said he did not know the arrest target's
name.
INCREASINGLY FRUSTRATED

The investigations are being handled by the Anti-Money Laundering Council (AMLC), a
government agency with modest resources, while the NBI, which has 5,000 agents on its
rolls, is only being used in a support role.
"We have minimal participation in the investigation," said NBI Director Virgilio Mendez when
asked about the heist. He said he could not comment further.
AMLC chief Julia Bacay-Abad said earlier this year the agency has only nine financial analysts
to review millions of large transactions each month. She told Reuters last week that
resources were not hindering the probe, though she declined to disclose how many
investigators the AMLC has.
Bacay-Abad also declined to comment on the probe's status.
The NBI agent said he was frustrated watching the case from the sidelines and seeing the
Philippines compared with other havens of money laundering.
The AMLC has filed criminal complaints against the manager of the RCBC branch that
received the funds, the owners of relevant bank accounts at the branch and the owners of
the remittance agency that it says was a "cleaning house" for the money.
It has also filed a complaint against Kim Wong, who owns the gaming firm Eastern Hawaii
Leisure Company and also operates the VIP area of the Midas casino in Manila, and a
Chinese associate of his called Weikang Xu.
Wong, who is also Chinese and lives in Manila, told the Senate inquiry he received almost
half the heist funds without knowing they were stolen.
He, the owners of the remittance agency and the branch manager have denied any
wrongdoing. Government agents told the Senate inquiry they have not been able to find Xu.
Wong, who has been seemingly relaxed when giving testimony at Senate hearings, is close
to several senior politicians, such as Alfredo Lim, a former Manila mayor. Senator Panfilo
Lacson, a former national police chief, has told Reuters that Wong is "a friend of mine".

Of the $81 million stolen, Wong told the Senate probe he received almost $35 million from
the remittance company Philrem, and has handed back $15 million to authorities. Much of
the rest, he said, had been spent in buying chips for clients.
He has said the money was brought into the Philippines by two Chinese acquaintances, one
from China and one from Macau, the world's biggest gambling hub.
CHINA'S DENIAL
Out of the rest of the money, the Solaire casino received about $29 million.
Philrem, the remittance agency, has said it handed over the remainder to Wong and Xu in
cash, but Wong has said the agency still has $17 million. Senator Ralph Recto, vice chairman
of the Senate Committee on Finance, has said the network of Chinese people involved
suggested the masterminds were from China, but that has been dismissed by Chinese
foreign ministry spokesman Lu Kang as "complete nonsense."
The focus of the Senate committee's report is likely to be on drawing up legislation that can
strengthen anti-money laundering laws and ease bank secrecy laws, rather than identifying
who was behind the laundering. But it is unclear whether any proposed change in the laws
will get traction.
Osmena said lawmakers had not wanted to amend the laws because their own finances
could come under scrutiny.
The Philippines elected a new congress this month and it will take office in July along with
the nation's new president. But both Osmena and another senator leading the inquiry,
Teofisto Guingona, lost their seats in the elections.
(Additional reporting by Karen Lema, Manny Mogato and Neil Jerome Morales; Editing by
Martin Howell)

6 things we know about

RCBC money-laundering
scam
Since the Anti-Money Laundering Council started its probe into the heist on
February 19, a lot has happened from confessions to resignations
Chrisee Dela Paz
Published 10:00 AM, April 02, 2016
Updated 5:42 PM, April 03, 2016

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NEW LEADS? More leads surface as key witness Kim Wong faces the Senate, steering authorities
to the location of the stolen money and two alleged main players in the money-laundering case.
Photo by Alecs Ongcal/Rappler

MANILA, Philippines It has been about 7 weeks since the Philippine

government started its probe into the $81-million bank heist in downtown
Manhattan.
But until now, it is still unclear who are liable for the heist and where the stolen
money is.
A lot has happened since the Anti-Money Laundering Council (AMLC) started its
probe on February 19: Bangladesh Bank governor Atiur Rahman and two
deputies resigned;criminal complaints were filed; Rizal Commercial Banking

Corporation (RCBC) president and CEO Lorenzo Tan went on leave; and $4.63
million of the stolen fund wasreturned to the AMLC.
For Bangladesh Ambassador to the Philippines John Gomes, the return of $4.63
million from casino junket agent Kam Sin "Kim" Wong on Thursday, March 31, is
"a step in the right direction.
Bangladesh officials will arrive in the country in the coming days to help the
Philippine government in its probe into the heist and, hopefully, "recover the rest
of the amount.
As the Philippine Senate prepares for its 4th hearing on Tuesday, April 5, here is
what we know about the heist so far:

1. Everyone knows each other

All of those allegedly involved in the transactions of coursing the $81-million
stolen funds through the Philippines know each other in one way or another.
(READ: Network: Who's who in the RCBC money-laundering scam)
The money trail involved RCBC, PhilRem Service Corporation, Solaire Resort
and Casino, Midas Hotel and Resort, and some casino junket operators.
At the Senate probe on Tuesday, March 29, it was discovered that Wong was
acquainted with most of the witnesses called to the hearing.
According to Wong, he knows PhilRem treasurer Michael Bautista, RCBC's Tan,
sacked RCBC Jupiter branch manager Maia Santos-Deguito, Chinese-Filipino
businessman William Go, and car dealer Jason Go.
"You all know each other one way or the other," Senate President Pro Tempore
Ralph Recto said during the last hearing, while questioning PhilRem owners on
the flow of funds through the local financial system.

Wong said he met Deguito and Tan at a party hosted by car dealer Jason Go. He
knew the Bautistas of PhilRem for their love of high-end cars.

2. Stolen funds entered RCBC office twice

The $81-million stolen money from Bangladesh Bank entered RCBC more than
once, but the bank still pushed through with the withdrawals and conversion.
(READ: RCBC money laundering scam mirrors sins of the past)
On February 4, SWIFT Code (MT103) ordered the inward remittance to the
Philippines of $81 million. It then found its way to RCBC.
Per regulations, before any dollar remittance enters the Philippines, it has to pass
through US correspondent banks. In this case, these are Wells Fargo Mellon
Bank, Citibank, and Bank of New York.
From the 3 correspondent banks, the $81 million did not enter the RCBC JupiterMakati branch directly. The money first went through the RCBC Settlement
Division, which is part of the head office.
From there, it was credited to the Jupiter-Makati branch on February 6.
From February 5 to February 13, the stolen funds from Bangladesh Bank were
transferred to remittance company PhilRem.
On February 9, RCBC received a SWIFT code from Bangladesh Bank requesting
for a refund, putting it on hold if the funds had been transferred, or freezing the
funds for proper investigation.
During the Senate probe, PhilRem President Salud Bautista confirmed that her
company went back to the RCBC Treasury to convert a total of $61 million in
different days."

"So the money went back to RCBC," Recto said during the hearing, which was
later confirmed by Tan.

CCTV SCREENSHOTS. Senator Sergio Osmea III browses through evidence submitted by Kim
Wong. Photo by Alecs Ongcal/Rappler

3. About $17 million still missing

Wong told the Senate that about a quarter of the $81 million stolen from
Bangladesh Bank remained unaccounted for. He said this was still with PhilRem.
Of the stolen money, about $63 million went to Solaire and Midas casinos, while
the remaining $17 million is said to be still with PhilRem a claim denied by its
officers.

4. Part of stolen funds still in casinos

Silverio Benny Tan, the legal chief of Solaire operator Bloomberry Resorts
Corporation, confirmed during the hearing that some P1.36 billion went through
Solaire's gaming tables, a bulk consolidated into the account of "a big-ticket
foreign junket operator" through instructions of Ding Zhize. (READ: Casino junket
operator gives new leads in bank heist)
On March 10, Tan said Solaire froze Ding's accounts, yielding a total of P108.696
million or $2.34 million.
"We are waiting for a proper court order on how to dispose of it," Tan told the
Senate.

5. A portion returned to AMLC

Acting as agent for Midas Hotel and Casino, Wong confirmed at the last hearing
that his company, Eastern Hawaii Leisure Company Limited, got hold of P1 billion
or $21.575 million of the stolen funds.
Of the P1 billion, Wong took P450 million as Gao's debt payment, while P550
million went through the gaming tables. He said P510 million of that amount was
lost to Midas.
Keeping his promise, Wong turned over to AMLC $4.63 million left under junket
operations on Thursday, March 31.

'NOT ME.' Kim Wong (left) tells senators he is not involved in the Bangladesh bank heist. On the
right is former senator Rene Saguisag, co-counsel of sacked RCBC branch manager Maia SantosDeguito. Photo by Alecs Ongcal/Rappler

6. Junket operators act as facilitators

Wong told the Senate panel that casino junket operators Ding Zhize and Gao
Shuhua faciliated the entry of the laundered money into Philippine casinos.
Gao, who Wong had known for about 8 years, had a P450-million debt to Wong
after losing money in casinos in 2014, he said.
Wong said that he knew Ding through Gao who, he said, had "promised" him that
he would bring in more casino players in the Philippines.

"Two foreigners brought the $81 million in the country. One of them has been in
and out of the country and is a popular junket agent and high roller. I will write
their names and put it in a sealed envelope, with a copy of their passport and will
submit it to the committee," Wong told the Senate panel in Filipino.
Wong recalled that on February 5, he received a phone call from Deguito,
informing him that there would be a huge amount of funds that would enter the
junket operators' accounts. (READ: RCBC money-laundering scam mirrors sins
of the past)
He said he advised Deguito to send the money to Solaire Resort and Casino in
"cold cash."
Also within the day, Wong said Bautista personally delivered P80 million in cash,
while Deguito brought in about P20 million.
"The first delivery of P90 million was delivered to Weikang Xu who we met at the
casino," Bautista testified at the Senate hearing.
PhilRem then converted part of the $81 million into pesos and delivered the
money in cash tranches to registered casino junket operator Xu, Eastern Hawaii,
and Solaire.
At the resumption of the probe into the Bangladesh bank heist on April 5, the
Senate blue ribbon committee plans to unravel more leads that will steer them to
the real culprit.
Officials of Bangladesh Bank, and members of the Criminal Investigation
Department of Bangladesh government will visit the AMLC on Monday and attend
the fourth Senate hearing.
The Bangladesh Ambassador to the Philippines said his country is "hopeful that
the entire amount will be recovered." Rappler.com

Uncomfortable truths about the RCBC scandal

March 18, 2016 7:05 pm

THE ongoing RCBC money-laundering investigation has evidently become a topic of conversation
from New York to Singapore; besides major newspapers in both those cities (and elsewhere outside
the Philippines) reporting on the story, I also received phone calls from people in both places eager
to discuss the matter.
That should come as no surprise given the magnitude of the crime, but unfortunately not many
people here seem to have grasped yet just how damaging this is to the country. The sad reality is
that the all-too-typical way this scandal is being addressed only serves to camouflage the relatively
simple, broad facts of the case, and almost certainly wont lead to the swift, decisive solutions the
country needs to implement to avoid becoming a financial pariah.
Grandstanding Senators displaying their lack of knowledge about how banking works or
CBCP priests offering tangential complaints about the evils of gambling are not the way to reveal
these uncomfortable truths about the scandal:
This is not the first time this has happened at RCBC. As one correspondenta regional investment
banker, who called in from Singaporeput it, They expect us to believe its like that line in
Casablanca: Of all the gin joints, in all the towns, in all the world, she walks into mine. The choice of
RCBC couldnt have been chance, or a thief just picking a bank at random to launder his money. The
people involved either worked with RCBC, or with some of the people in it, sometime in the past, or
RCBC has a reputation for doing this kind of business.
The people behind RCBC would certainly hotly dispute that accusation, but it is eminently logical
no thief or group of thieves smart enough to successfully carry out the theft of the mind-boggling
sum of $100 million would take the stupid step of entrusting their loot to any person or organization
in whom they did not have absolute confidence. The conspirators knew, through prior experience or
otherwise reliable information, that RCBC could handle a transaction of this unusual kind and scale.
Casinos are not really the issue. Laundering money through a casino? Thats like money laundering
101, my Singapore caller observed. Thats probably the first lesson they give at the moneylaundering seminar.

In one respect, the CBCPs condemnation of the gaming industry is justifiableif it did not exist, it
would not be available as a conduit for illicit financial transactions.
It could be argued that casinos shouldnt have been exempted from the anti-money laundering
reporting provisions, as you suggested, my New York caller (also an investment banker) observed.
I dont know that Id disagree with that. But there are two things I would say should be considered.
First, the casino is basically the last step in the processthe real crime has already happened by
the time the money reaches that stage, which makes finding a substitute path easier if the casino
option isnt available.
Second, imposing anti-money laundering restrictions on casinos, beyond the relatively strict
operating guidelines they already have to follow, essentially criminalizes the industry, he added.
That sounds harsh, but thats exactly what it boils down to: Transactions above a certain amount are
presumed to be illicit and must be reported, and possibly investigated. As I said, that may still be the
way to go. But if thats the case, its going to put a limit on investment in that sectoryoure as much
as telling investors, Theres a limit on how much money well let you make. At least thats how it will
come across. And given the Philippines enthusiasm for trying to build up its casino sector, Im not
sure thats the message they want to convey.
Legislation is not the answer to a management problem. Both of my callers scoffed at the Senate
hearing ostensibly being held in aid of legislation.
The narrative coming out of this ridiculous Senate hearing is that the conspirators exploited
loopholes in the law, one said. They didnt exploit loopholes, they flat-out broke the law that
already exists. Passing a new law is not going to help that at all.
Further adding credence to the assertion that despite its scale, the scam is most likely symptomatic
of a localized management problem is the ownership structure of RCBC, which my Singapore caller,
who is familiar with the people behind most of the big banks in Asean, highlighted: After the
Yuchengco family, the next two biggest stakeholders in RCBC are Cathay Financial, the Taiwanbased insurance concern, and the International Finance Corp. (IFC), an arm of the World Bank.
Do you really think those kinds of organizations would tolerate being part of a money-laundering
scheme, if they were aware of it? he asked, rhetorically. Making the reasonable assumption that
they would not, suggests a personnel rather than a systemic issue.
Which personnel? One bank president I spoke to here found it difficult to believe that top-level
executives were not involved. If an $80 million deposit comes into our bank, I can tell you I would
know who sent it, from where, and who was receiving it. Now, Im certainly not accusing [RCBC CEO
Lorenzo] Tan of anything, and how they work over at RCBC is their business. As far as that goes,

Ive never known them to do anything improper at all, before this. Its just a little hard to believe the
head office would be completely in the dark.
My Singapore caller, who is acquainted with Mr. Tan personally, had a more charitable point of view.
I would be very, very surprised, shocked really, if it turned out he was involved in this at all. Hes got
his flaws, but being a crook is not one of them. Thats not who he is.
But, he added, There was obviously a serious breakdown in management. And thats his
responsibility. Its ironic; in one family you have what seems like the best and worst of Philippine
banking. Nestor [the brother of RCBC CEO Lorenzo] runs BDO, and they win best bank awards all
the time. Its the only Philippine bank to win best bank in Asia. Then over at RCBC, well, its kind of
a mess, isnt it?
What he suggested should happen, and quickly, is that the BSP exercise its regulatory power over
banking management, something for which there is a fairly recent precedent: On mere accusations
(albeit strong ones), Roberto Ongpin was removed from his position at Development Bank of the
Philippines by regulators. If political considerations are not part of the equationwhich was a
persistent rumor in the DBP case, although that is a notion that certainly does not square with the
professional and unassailably ethical character of BSPs current leadershipremoving Tan and any
other officers who may be under suspicion is a unilateral step the BSP could take quickly, and
should, my caller opined, if the Philippines has any desire to avoid being heavily sanctioned.
Unless clear steps are taken toward a resolution of the RCBC scandal, he concluded, This is going
to be a disaster for the country. The additional scrutiny is going to hurt the banking industry, but the
ones who are likely to suffer most are the OFWs, whose remittances would be affected by new antimoney laundering measuresmeasures that in any case may neither be necessary nor effective