Strengthen KYC protocols

BSP orders banks amid Wirecard controversy

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) directed yesterday all banks and financial institutions to tighten the monitoring of their employees and strengthen their respective know-your-customer protocols after two of the country’s largest banks were dragged into the controversy over the $2.1-billion missing funds of German financial technology leader Wirecard AG.

BSP Governor Benjamin Diokno said in an interview with ABS-CBN News Channel that banks should tighten their protocols and procedures after BDO Unibank Inc. and Bank of the Philippine Islands (BPI) were linked to the scandal.

“I think there’s got to be some lessons here, to the extent that they (banks) have to be strict in knowing your clients. I think they should also be strict in knowing the officers of the bank because some junior officers committed this fraud partly,” Diokno said.

BDO said it had terminated the marketing officer who allegedly fabricated a bank certification in favor of Ernst & Young (EY) Germany, while BPI suspended a junior officer for also allegedly issuing a spurious certification.

“I think that they should be dealt with severely because it is the reputation of the Philippine banking system which is at stake. We should be very strict on the behavior of banks and bank employees,” the BSP chief said.

Diokno reiterated that the perpetrators of the fraud used the names of two of the country’s biggest banks to make the cover-up more credible. Both BDO and BPI have said that they have no transactions or working relations with Wirecard.

“We have actually made it very clear that no money entered the country and there is no effect on the two banks. The

central bank is actually doing its own investigation,” Diokno said.

Over the weekend, Diokno already clarified that none of the $2.1 billion missing funds of Wirecard entered the Philippine financial system.

Meanwhile, Wirecard announced on Monday that there was a likelihood that the missing $2.1 billion from its accounts simply do not exist. The scandal prompted Wirecard chief executive officer Markus Braun to step down last Friday.

BDO refused to comment when asked if both banks intend to take legal action against Wirecard for being dragged into the scandal and for tainting the reputation of the country’s second and third largest private banks.

“The bank cannot provide anymore information as we have banking laws we need to respect,” BDO president and chief executive officer Nestor Tan said.