FinCEN: Philippine Money Remitters Named in SARs

Philrem and Werquick used local banks to wire funds for unidentified customers without identifying source of funds, the true beneficiary, or the purpose of the transactions.

Philippine money service businesses Philrem and Werquick were found to have sent more than USD 1 billion in suspicious transactions between 2012 to 2016, mostly using their accounts at local banks, the Philippine Center of Investigative Journalism (PCIJ) says in a report.

A trove of leaked documents known as the FinCEN Files reveals that the transactions in question were flagged in SARs (suspicious activity reports) submitted to FinCEN (Financial Crimes Enforcement Network), the intelligence unit of the US Treasury.

The documents were obtained by BuzzFeed News and shared with ICIJ (International Consortium of Investigative Journalists), which organised a team of over 400 journalists globally to analyse the data – including a team from the PCIJ.

“Since the FinCEN files cover activities involving Filipino parties mostly from 2012 to early 2016, the reports can be seen as a precursor to the 2016 Bangladesh Bank heist,” PCIJ said. “The SARs indicate how vulnerable the Philippine financial system had been to money laundering as moving funds apparently can be done without naming or verifying the source and beneficiary as well as specifying the purpose of the transfers.”

Philrem, which has been linked to the USD 81 million theft from the Bangladesh Bank in 2016, appeared in at least six SARs. The company’s registration was revoked in 2016 and its executives are still embroiled in several cases related to the heist.

Werquick is the subject of two SARs contained in the FinCEN Files. The company is owned by Salud R. Bautista, a co-owner of Philrem.

The SARs naming the two companies were filed by the BNY Mellon, which had taken note of Philrem’s involvement in the Bangladesh Bank heist, and included Werquick in its scans upon learning of its link to Philrem.

BNY found 5,001 suspicious transfers worth USD 1.03 billion involving Philrem and Werquick between November 2012 to March 2016.

“In the SARs, it appears that Philrem and Werquick were able to send multimillion in US dollars without identifying or verifying the source of the funds, the true beneficiary, as well as the purpose of the transactions,” PCIJ said.

In addition, the two companies were sending wires to shell-like companies, some with bank accounts in Hong Kong, in amounts that were often in similar large, round-dollar, and/or repetitive/trending amounts.

Documents showed that BDO Unibank, RCBC (Rizal Commercial Banking Corp) and Metrobank (Metropolitan Trust Bank) facilitated the transactions in which the identity of the actual sender was unknown or the funds were transferred to shell-like entities.

The Philippines’ Bank Secrecy Law, enacted in 1955 to encourage individuals to deposit their money in banks, appears to have played a part in the banks’ shielding the identities of the remitters.

There has been a push in the Philippines to ease bank secrecy restrictions, but doing so would mean public officials would have to disclose their bank deposits, making it less likely the law will be removed.

According to Graham Barrow, a money laundering expert and director of The Dark Money Files Ltd, the Philippines will likely continue to attract financial crime because local regulators are not seen as being very assertive or punitive in dealing with transgressions.

“Put alongside a still largely cash-based economy and a thriving casino and gaming industry, the Philippines is an attractive venue for criminals to use as a throughput destination, meaning the money will be washed here but will flow elsewhere.”