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Money launderers, hackers puzzle probers in $81-million heist

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Gerry Lirio, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/news-special1/business/8/21/bangladesh-centralbank.jpg"/><figcaption><div class="embed-desc">Commuters pass by the front of the Bangladesh central bank building in Dhaka March 8, 2016. <em>Reuters</em></div></figcaption></figure></div><p>MANILA - Who wired $81-million that was stolen from the central bank of Bangladesh to the Philippines?</p><p>Money laundering is a crime of conspiracy, and too many John Does overseas involved in one of the world&#x27;s biggest cyber-heists are getting in the way of efforts to recover the money.</p><p>Bangladeshi officials in the Philippines expressed hope that they could bring home the entire amount in full within two months, with more support from President Rodrigo Duterte&#x27;s government, compared to his predecessor.</p><div><strong>NOT PHILIPPINE MONEY</strong></div><p>“That’s your money,” Bangladeshi Ambassador to the Philippines John Gomes quoted Duterte as telling him, in an interview with ABS-CBN News.</p><p>“The President said: ‘We have no business keeping that money. It ought to be returned. I will do everything within my power to return it,’” Gomes said.</p><p>That $81-million was part of $1-billion cyber criminals tried to steal from Bangladesh Bank&#x27;s account at the Federal Reserve Bank of New York in February.</p><p>They succeeded in transferring $81 million to four highly questionable accounts at the Rizal Commercial Banking Corp. in Makati and surreptitiously withdrew and laundered it through casinos and junket operators.</p><div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/news-special1/business/8/21/john-gomes-082116.jpg"/><figcaption><div class="embed-desc">John Gomes, Bangladesh ambassador to the Philippines, walk towards the press conference inside the Bangladesh embassy in Makati on August 5, 2016. <em>Reuters</em></div></figcaption></figure></div><div><strong>SUDDENLY DOLLAR MILLIONAIRES</strong></div><p>If testimonies at the Senate hearings were to be believed, the $81-million ($81,001,617.12 to be exact) landed from the account of the Bank of Bangladesh in New York, through intermediary banks, into four RCBC accounts in the Philippines held under the names of Michael Cruz, $6 million; Christopher Lagrosas, $30 million; Alfred S. Vergara, $20 million; Enrico Vasquez, $25 million on February 5, 2016.</p><p>Until the transfers, the accounts had been dormant for about a year, each maintained with an identical $500 balance, possibly the most glaring sign that the hacking and the subsequent laundering was the handiwork of an organized crime syndicate that took over a year of planning and execution.</p><p>The accounts might have been fictitious, or opened under questionable circumstances, but the holders were real people, their photos and addresses were proof that they existed. A check with the National Bureau of Investigation showed that the four had no previous records of malfeasance and misfeasance.</p><p>By February 11, the entire $81-million eventually ended in remittance firm Philrem’s account, which converted it into pesos.</p><p>Between February 5 and 10, Philrem transferred P1.365 billion to Bloombery Resorts Corp., which runs Solaire casino. On February 9, Philrem transferred another P1 billion to Eastern Hawaii Leisure Co.</p><p>In turn, Bloombery released $15 to SunCity and $2.1 million to Goldmoon; some $700,000 balance unaccounted for, presumably gambled, in all roughly &amp;28.8 million.</p><p>Eastern Hawaii released $11.6 million to Midas; $9.5 million to Kam Sin Wong, also known as Kim Wong, the Chinese businessman-junket operator, who said that junket agents Shuhua Gao and Ding Zhize from Macau had told him that the money would be coming into the Philippines. Wong also collected some more at the house of Philrem’s owners Michael and Salud Bautista, but the Bautistas had failed to disclose this at once.</p><div><strong>CHASING DIRTY MONEY</strong></div><div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/news-special1/business/8/5/rcbc-080516.jpg"/></figure></div><p>But for lack of information on the foreign hackers, Filipino investigators have remained unsure and uneasy that the money laundering scandal, which exposed the loopholes in the country’s bank secrecy and anti-money laundering laws, could get anywhere soon and make Bangladeshi officials happy thereafter.</p><p>Bangladeshi officials have in fact stopped their own investigation, said an RCBC counsel, a few days day after the Bangko Sentral slapped RCBC with a P1-billion fine on August 5. “They were still completely at sea,” a Filipino investigator said.</p><p>“It is not easy to say, for now, that all is well that ends well,” the investigator said.</p><p>Failure to complete the jigsaw puzzle may work against the turnover of the money, as investigators from the Philippines to Bangladesh to New York could hardly say their sleuthing was over the hump, showing neither calibrated hopefulness nor practical realism as to what the outcome would be, all of them circumscribed by the lack of information about the John Does based abroad and the Tom, Dick and Harry in the Philippines, all protected by the bank secrecy law.</p><div><strong>THAT MUCH TO THIS MUCH</strong></div><p>Two Senate committees held seven hearings between March and May 2016, which put on spotlight several top RCBC officials, Philrem, and business and private individuals, some of whom could have been the conduit of the international criminals, resulted in the recovery of some of the stolen money--$15 million, which King Wong returned during the hearing, now with Anti-Money Laundering Council.&gt;</p><p>RCBC has frozen $68,305, or what was left of the amount deposited to the four accounts in February; Solaire has kept on hold $2.3 million and was willing to turn it to the government over upon court orders.</p><p>About $17 million or $18-million was still-unaccounted for, but authorities kept their fingers crossed that this could still be traceable; the remaining amounts, probably no longer traceable, are believed to have been used to gamble in the casinos.</p><p>Hence, Bangladeshi officials have asked the newly-installed Senate President Aquilino Pimentel III to order the powerful Blue Ribbon and Bank committees to resume public hearing, hoping that a new-round would push Philrem officials to the wall and finally reveal that they had in their possession the still-unaccounted-for $18 million.</p><div><strong>LAST MONEY WITH PHILREM</strong></div><p>“We believe they’re holding the money,” said Bangladeshi lawyer Ajmalul Hossain of the still-unaccounted-for $18 million, shortly after meeting with Philippine officials and investigators in early August.</p><p>But Kim Wong, the Chinese businessman, another junket operator who received part of the stolen millions, said so during the hearing, but the senators failed to extract any admission from Philrem owners.</p><p>The Philrem couple said the money could have been with Chinese junket operator Wei Kang Xu, another Chinese junket operator.</p><p>Wong claimed that Wei Kang Su was not in Solaire when Philrem released money in the casino on February 5, 2016. He must have been protecting his colleague—or simply telling the truth. It would be interesting if the new hearing could find out.</p><div><strong>SENATE UNCOVERED NO HACKER</strong></div><p>“Chasing dirty money wasn’t that easy,” the Filipino investigator said, “Especially if it were laundered in the casinos not covered by the anti-money-laundering law.</p><p>While the committees of Senators Sergio Osmena III and Teofisto Guingona III hit the jackpot with the recovery of some of the stolen millions during the hearings, their investigations raced against time because of the May 2016 elections. (Osmena and Guingona failed to get reelected. The Blue Ribbon now has a new chair, Sen. Richard Gordon).</p><p>The end of public hearings prompted Bangladeshi officials to fly to the Philippines early this month.</p><p>In a report dated June 6, 2016, Guiongona, the anti-graft committee chair, said the committee had exposed how the money was laundered, but “it has yet to uncover how the Bank of Bangladesh account was hacked.”</p><div><strong>10 JOHN DOES</strong></div><p>“The hackers destroyed almost everything,” the Filipino investigator said. “They left some intact, but there were too many gaps to make an intelligent narrative.”</p><p>On Tuesday night, Gordon told ABS-CBN that he was willing to reopen the public hearing.</p><p>“But what is there to hear for?” he said. “We will adopt the resolution and findings of the previous committee.”</p><p>A new resolution is needed to reopen the investigation into the Bangldeshi money laundering scandal, he said.</p><p>While the pieces of evidence gathered abroad were probably still not enough, the Filipino investigator said, the local conduits and how they learned and received the stolen money could provide the missing links.</p><p>Assessing a meeting among officials from the Federal Bureau Investigation in New York, Bangladesh, the Philippines’ Anti-Money Laundering Council and the National Bureau of Investigations, a Philippine official believed that there were anywhere between five and 10 individuals behind the international cyber-crime, excluding their counterpart in the Philippines. They last talked in late July.</p><div><strong>WHO&#x27;S THE LOCAL POINT MAN</strong></div><p>Alas and alack, while some senators seemed to have been morally convinced who these people were during the hearing, they didn’t have enough proof, nor the audacity to say for now that even one or some of them were part of the conspiracy--who could probably lead to another guy, who could help provide answers to the crucial question: Who wired the $81 million to the Philippines?</p><p>Indeed, why would a thief pass the fruit of his thievery to someone he didn’t know? Of course, they know each other, said a Filipino investigator.</p><p>“I don’t believe in everything they said,” Osmena, former chair of the Committee on Banks, told ABS-CBN News, referring to some RCBC officials and private individuals who appeared in the public hearings, especially those pressed to comment on some key questions, including why RCBC failed to stop the release of the money and why it failed to file and label the entry of the $81-million into the bank under suspicion transaction early enough.</p><p>“Nobody said they told us the whole truth. Some are true, some are not-so true, some are untrue, others even quite untrue,” he said.</p><div><strong>WHO IS WEI KANG XU</strong></div><p>The Senate committees heard very little of Wei Kang Xu, supposedly another junket operator. An NBI team inquired about his identity at the Chinese Embassy in Manila and was told that Wei Kang Xu was a “real person” based in Guangzhou, China. Further inquiries have stopped inasmuch as no formal complaint had been lodged against him.</p><p>According to the Filipino investigator, the AMLC asked NBI to background check the other Chinese protagonists in the money-laundering drama, among them: Che Licheng, Yan Yan Ding Haibin, Deng Feng, Gao Shuashua, Wang Sheren, and Gao Ye, all of them supposedly casino players.</p><p>No report had been found from the NBI repository of criminal records, according to an ABS-CBN source, and the Chinese embassy could provide very little information about them.</p><div><strong>DEGUITO&#x27;S TALE</strong></div><div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/news-special1/metro/7/05/20160315-deguito-senate-jc.jpg"/></figure></div><p>Of the top RCBC officials, Osmena singled out Maya Dequito, the RCBC branch manager on Jupiter Street in Makati, receiver of all the millions, with some amount of certainty.</p><p>“Dequito was part of the operation,” having facilitated the opening of the four accounts that received the $81 million. But apart from the public humiliation during the hearings, she faces no formal complaint, yet.</p><p>The Senate committees have recommended that the NBI push through with the investigation for the filing of formal charges against the protagonists, but an NBI official told ABS-CBN News that until the second of August, the bureau has yet to receive a copy of the Senate report detailing its findings.</p><p>No formal complaint has likewise been filed against RCBC officials. A member of the two Senate committees said on Tuesday that the BSP was still building cases against the bank officials.</p><p>While the Bangko Sentral ng Pilipinas imposed the P1-billion fine on RCBC, the single biggest penalty on an erring financial institution in the country’s history, it was not expected to cripple the banking arm of the Yuchengco conglomerate that posted a P5.1-billion unaudited consolidated net income in 2015.</p><div><strongother rcbc="" strong=""></strongother></div><p>On reports that other resigned RCBC officials might have joined other companies, including another Yuchengco company, Osmena said: “They are free to look for their own source of living.”</p><p>No formal complaint has been filed against Philrem either, but the BSP has ordered the closure of its operations; it was given a permit supposedly as a money changer, not a remittance center, another senator said in a letter emailed to ABS-CBN News.</p><div><strong>WHO OWNS THE MONEY?</strong></div><p>All these funds probably belonged neither to the Philippines nor of any of the protagonists in the Senate hearing, but what proof did Bangladesh have, asked a Filipino investigator, to lay claim that it was its own, now that the investigators face an impasse in search of other pieces, no matter how small, of the jigsaw puzzle.</p><p>Lawyers of RCBC, Solaire, Philrem and Kim Wong might as well have articulated the investigators’ dilemma early enough during the hearing when one of them asserted that the Bangladeshi officials had no proof then that the recovered amount belonged to their government.</p><p>Today, eight weeks later, a Filipino official noted that both the Filipino and foreign investigators had no legal proof that the money belonged to the Bangladeshi government either.</p><p>The $15 million Wong had turned over during the Senate hearings is now the subject of forfeiture proceedings in court. His lawyer Kristoffer James Purisima said Wong was not opposing the forfeiture proceedings, but the proper procedure under the law be followed.</p><p>“Your honor, please,” Purisima told the Senate hearing, “we just wanted to clarify that since we believe there is a procedure under the law and there are specific rules of procedure for forfeiture cases, then we believe that the money, because it will be forfeited first in favor of the (Philippine) government before it can be claimed by any party. ..And even if my client signs a (waiver), that’s not his funds legally and technically. And therefore, he can’t give consent to, or withhold consent regarding those funds because those are not his funds.</p><p>There was no expressed consent from Wong’s camp to turn over the funds willfully and straight to the government of Bangladesh and so the AMLC was now in a bind as to how to deal with the matter.</p><p>Barring any substantial opposition to the forfeiture proceedings, the AMLC looks forward to obtaining a favorable court decision in three to five months, way past the timetable of the Bangladeshi officials.</p><div><strong>PREDICATE CRIME</strong></div><p>But aside from the tedious court proceedings, local and foreign investigators were burdened by the prospects of determining the predicate crime that gave birth to the money-laundering apparatus in the Philippines.</p><p>“Let me put it this way: ‘It is not that easy,’” according to a Filipino investigator, “to pin down those covering up a crime without being clear what crime is committed in the first place. It is not easy to file charges when we know these charges would be easily dismissed because they don’t have a leg to stand on.”</p><p>The investigators will have to work harder together, he said.</p><p>A study sponsored by the United Nations said money-laundering should be construed as a dynamic three-stage process that requires: firstly, moving the funds from direct association with the crime; secondly, disguising the trail to foil pursuit; and, thirdly, making the money available to the criminal once again with its occupational and geographic origins hidden from view.</p><p>“Criminal money is frequently moved abroad and then cycled through the international payments system to obscure the audit trail….Thus, between the law enforcement authorities and the launderer, there is one level of bank secrecy, one level of corporate secrecy and possibly the additional protection of lawyer-client privilege if counsel in the corporate secrecy haven has been designated to establish and run the company,” the study said.</p><p>When the world called for tighter laws on money laundering the 15th Congress responded, but the House of Representatives held the Senate hostage to exclude casinos from scrutiny.</p><div><strong>MONEY-LAUNDERING APPARATUS</strong></div><p>After seven public hearings, the two Senate committees recommended that Congress finally break the powerful bank secrecy laws and empower the AMLC to look into the casinos.</p><p>They have to do it now to prevent the rise of more money-laundering apparatus in the Philippines, the committee report said.</p><p>But then again, it may not be as easy as that.</p>

<p>Too many John Does overseas involved in one of the world's biggest cyber-heists are getting in the way of efforts to recover millions of dollars that were stolen from Bangladesh.</p>

Too many John Does overseas involved in one of the world's biggest cyber-heists are getting in the way of efforts to recover millions of dollars that were stolen from Bangladesh.

Money launderers, hackers puzzle probers in $81-million heist

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Money launderers, hackers puzzle probers in $81-million heist

Gerry Lirio,

ABS-CBN News

Published Aug 21, 2016 01:02 PM PHT

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Bangladesh

money laundering

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