Phillipines may be put on global monitoring list for ‘dirty money’
The Philippines must pass tougher anti-money laundering rules by October to avoid joining the list of countries with weak controls
Manila — The Philippines’ loose law against money laundering and strict deposit secrecy rules risk isolating its banks from the global financial system, according to the president of the nation’s largest group of lenders.
“The combination of both tends to invite bad money in,” Cezar Consing, president of the Bankers Association of the Philippines, said in an interview at his office in Manila.
A reputation for being a dirty-money haven may lead to local lenders “losing their connectedness with the world”, said Consing, who is also president and CEO of Bank of the Philippine Islands (BPI), the nation’s fourth-largest lender by assets.
The Philippines must pass tougher anti-money laundering rules by October or risk being placed on a global monitoring list for countries with weak controls. That would mean restrictions on international banking transactions for Philippine citizens and companies.
Calls for easing some of the world’s strictest deposit secrecy measures have also mounted amid an investigation into cash smuggling linked to online casinos mostly catering to Chinese gamblers.
BPI’s recent probe into fund transfers made through Australian partner Westpac Banking also points to the need for better co-ordination between financial institutions, Consing said. Last year, Westpac was blamed for Australia’s worst-ever money laundering breach after millions of cash remittances were funneled to Southeast Asian countries, with some of the transfers allegedly going to child pornographers.
“The problem is there hasn’t been any information-sharing from Westpac or Australian authorities,” he said. “They’ve kept it to themselves.”
Banking policy must also keep up with the fast pace of technological changes to keep cyber-crime at bay and protect customers, Consing said. “Public interest is becoming a more important issue for us.”
Since taking BPI’s top post in 2013, Consing has weathered a social media storm after the bank’s online services broke down and showed inaccurate customer account balances almost three years ago.
Other Consing comments:
- On the coronavirus impact on Philippine banks: “2020 is a big question mark. All banks are looking at their budgets now and saying, ‘Let’s think this through’. My fear is that 2019 may be a high water mark for bank profitability given what we’re seeing right now.”
- On the potential for central bank easing: Bangko Sentral ng Pilipinas can “easily afford” to cut the ratio of deposits lenders are required to hold in reserve by two percentage points to 12% this year.
- On loan growth: “The loan growth we’ve seen in the past two or three years is at a healthier level than four or five years ago. Anytime you have loan growth at 20-plus percent, you’re asking for trouble. You’re tempting the creation of asset bubbles.”
- On BPI’s focus: The bank’s goal remains increasing share of lending to small businesses and individuals to 30% of the total from 25% now. “That objective isn’t changing, but if the market slows down because of recent developments, the time it would take to get to the target number is going to be longer.”
With Cecilia Yap