Bangladesh's central bank in Dhaka. Photo: Reuters/Ashikur
crime syndicate that pulled of this high-tech heist obviously did its
homework. They knew how to move millions of dollars clandestinely from
the Bangladesh central bank's account at the Federal Reserve Bank of New
York, and were to move it to—the Philippines.
The heist would have
actually been a billion dollar heist if the hackers had not misspelled
the word “foundation” as “fandation” for the huge sum of money that was
supposed to be transferred to the Shalika Foundation in Sri Lanka.
Thanks to that spelling error, a $1 billion dollar heist was reduced to
a $101 million dollar heist. The hackers still managed to send $20
million to Sri Lanka. Luckily, that amount was promptly returned by Sri
Lankan officials. Unfortunately, the remaining $81 million was sent to
the Philippines where it immediately vanished!
Like it or not, that
says a lot about the Philippines, the Filipinos, and the country's
banking system. From the perspective of money launderers our enchanted
islands are magical; millions—maybe even billions—of dollars can
disappear right before your very eyes. And dirty money laundered with
the help of the country's bank secrecy laws, corrupt officials, crime
syndicates, sloppy regulators and incompetent law enforcement can
reappear pristine white on the other end.
Over the decades, the
Philippines has built up a reputation as the "go-to" country when it
comes to money-related scams. Wire fraud, credit card fraud, investment
scams, you name it; the country seems to have more than its fair share
of them. And the main enabling factor all these years has been the
Philippine bank secrecy law enacted during the corrupt dictatorial
regime of Ferdinand Marcos.
After Ferdinand and
Imelda literally cleaned out the Philippine treasury, the country was
flat broke and in dire need of foreign reserves. So the sly dictator and
his henchmen found a way to kill two birds with one stone. That stone
was the Foreign Currency Deposit Act of the Philippines (FCDA), or
Republic Act No. 6426 signed into law by the late dictator in 1974.
To attract foreign
capital the FCDA offered what disreputable individuals, money
launderers, and crime syndicates couldn't resist—an ironclad guarantee
that the Philippine government could not look into their foreign
denominated bank accounts without their written consent. This was great
for Marcos and his henchmen as well—the money they stole from the people
would forever be safe from prying eyes.
Today, 43 years since
its signing and 28 years since Marcos kicked the bucket, this Marcos-era
law continues to embarrass the country. As this heist shows, the
Philippines is still the go-to place for hiding dirty money. Except now
everything happens with binary code and in the blink of an eye.
The rest of the
banking world has gone through significant changes since 1974. Even
Switzerland's highly secretive banking laws have given way to greater
transparency. The Philippines appears to be the only major holdout.
Unless the FCDA is repealed or changed, the Philippines will continue to
hold on to its nefarious reputation as the world's dirty money "laundromat"
where crooks from all over send their dirty money to get it "cleaned."