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Philippines probes ten banks linked to Westpac AML violations

Christian Fernsby |
The banks received funds for their clients through the Bank of the Philippine Islands, which was the local partner of the Westpac money transfer service known as LitePay.

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The BSP (Bangko Sentral ng Pilipinas) has launched a probe into about ten banks that received funds through BPI (Bank of the Philippine Islands) via its partnership with Westpac’s low-cost money transfer service known as LitePay.

LitePay was made available to the Philippines through a partnership with BPI, the country’s third largest lender by assets.

The bank has reportedly suspended the partnership after LitePay was flagged in AUSTRAC’s money laundering case against Westpac, which is said to have failed to appropriately assess transactions to the Philippines and Southeast Asia that have been linked to child exploitation.

“We have suspended indefinitely our use of the LitePay facility and have asked Westpac to provide us detailed information about suspicious and possibly illegal transactions that may have been coursed through us,” BPI said in a statement. “We have also initiated our own investigation to look into various LitePay transactions that may be suspicious and illegal.”

According to BSP governor Chuchi Fonacier, speaking to reporters on Tuesday (17 December), the central bank is currently reviewing an initial report from BPI which indicated which domestic banks received funds remitted through LitePay.

Fonacier said the transactions were not initially flagged because they were under the threshold for reporting to the Philippine AMLC (Anti-Money Laundering Council). Under Philippine law, only transactions worth PHP 500,000 and above must be reported to the AMLC.

The investigation, expected to be completed in early 2020, will include on-site visits to the banks involved to identify whether they breached domestic AML regulations.

“The duration of the onsite review, which will be a focused look on the remittance transactions and processes, will depend on the extent of information that we will be able to gather,” the BSP said.

BPI is among the ten banks under review, though transactions through the bank represent less than 62,000 of the 23 million breaches Westpac is alleged to have committed.

According to earlier reports, 99 percent of the alleged breaches were the result of transactions initiated by one of Citigroup’s European arms, which used Westpac to transfer money to accounts in Australia.

Citi is not under investigation, as it was not responsible for the Westpac monitoring and software failures. However, AUSTRAC criticised Citi in its court filing for not providing sufficient information about the payments and the source of funds.

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