The Bangladeshi stolen funds’ trail

Due to weak controls in the Philippine banking system, the Asian country was the perfect escape route.

The Philippines.-  Back in February, unknown hackers breached the computer systems of Bangladesh Bank and attempted to steal US$951 million from its account at the Federal Reserve Bank of New York. Some attempted transfers were blocked but US$81 million ended up in the Philippine banking system and were channeled to casinos based in the Asian country accounts.

Security researchers and investigators blamed malware and a faulty printer but also said Bangladesh central bank officials had weak security procedures. Last week, the bank’s governor and two deputy governors quit their jobs as a consequence of the scandal. The perpetrators of one of the biggest cyber heists have not been apprehended and they may never be identified.

Public hearings on the probe in the Philippines’ Senate have focused on Maia Deguito, the manager of a Manila branch of Rizal Commercial Banking Corp (RCBC). Her branch received the stolen money on Feb. 4 and then transferred it to a foreign exchange broker who passed it on in tranches, including $30 million in banknotes that officials say would have weighed 1,500 kg. A colleague of the Deguito testified he saw her drive off in her car with 20 million pesos (US$431,000) in cash from one of several fictitious accounts to which the money was wired. Deguito declined to give evidence in public.

According to an Anti-Money Laundering Council (AMLC) document on Feb. 8 Bangladesh Bank sent RCBC several messages via the SWIFT interbank communications network requesting to stop the transactions and to return the funds. Despite these requests, five withdrawals were made from the accounts in 73 minutes the next morning and by the time the RCBC responded to the SWIFT message later that day, all that remained of the US$81 million was $68,305.

The U.S. State Department issued a report on March 2 that said only 49 anti-money laundering cases have been filed since the AMLC began operating in 2001 and the number of prosecutions and convictions has been virtually null. Recent efforts to include casinos in the Anti-Money Laundering Act have been held up because of forthcoming elections and extensive lobbying from the gaming industry, which the report said was “a weak link” in the Philippines’ anti-money laundering regime.

“Money laundering is a serious concern due to the Philippines’ international narcotics trade, high degree of corruption among government officials, trafficking in persons, and the high volume of remittances from Filipinos living abroad,” the U.S. report stated.