NATIONAL COLLEGE OF BUSINESS AND ARTS

FAIRVIEW, QUEZON CITY

RCBC RECEIVES FRESH SUMMONS FOR BANGLADESH BANK HEIST CASE

Submitted by:

PROF. AILEEN DE JESUS

Prepared By:

GEROBIN, GENELLE R.
BATAS, ANNA LYSSA M.
FRIAS, RUDYLYN P.
MACABALLUG, PAMELA ANN L.
SANCHEZ, MEGUMI MAE E.

October 2021
I. INTRODUCTION

The Rizal Commercial Banking Corporation (RCBC) was founded in 1960

as a development bank and is regulated for both commercial and investment

banking by the Bangko Sentral ng Pilipinas (BSP). With total consolidated

resources of Php554 billion for the entire year 2017, it is one of the Philippines'

major universal banks. RCBC provides business and individual banking needs

through the most appropriate vehicles to serve its selected markets with innovative

products and services as a diversified financial services company. With an

inclusive financial business strategy in mind, it launched the Rizal Microbank in

2009 to provide microfinance to the smallest entrepreneurs.

RCBC is majority-owned by the Yuchengco Group of Companies (YGC),

one of Southeast Asia's oldest and largest conglomerates, with over 60 businesses

including Malayan Insurance, the leading non-life insurance company;

Sunlife/GREPA Financials, a life insurance joint venture with Sun Life Financials,

Philippines; EEI Corp., the leading globally-oriented construction company; and

vehicle dealerships. The World Bank's International Finance Corporation and

Cathay Life Insurance Co., Ltd., a wholly-owned subsidiary of Cathay Financial

Holding., Ltd., Taiwan's largest publicly-listed holding company, are among the

bank's other major investors.

II. IDENTIFY ITS THEFT

In this case, the type of risk presented is Human Risk. Human risk is the

risk that is caused or made by a person inside or outside of the company. The

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RCBC theft was made by their former bank manager-employee and they were

found guilty of money laundering on eight charges. According to the bank, the case

includes Maia Santos Deguito, the former manager of RCBC's Jupiter branch,

where the $81 million from Bangladesh Bank's account was transacted under fake

identities. This is the first conviction in one of the world's greatest cyber heists.

Theft is a crime punishable by our laws in the Philippines. Specifically,

Article 308 Revised Penal Code substantially provides that any person who shall

take or steal with intent to gain the personal property of another without his or her

consent and with no further use of violence, intimidation of persons, or force upon

things, shall be liable for the crime of theft. Further, if the crime of theft shall be

committed by and through the following means, the crime is considered as

QUALIFIED THEFT:

1. Committed by a domestic servant, or

2. With grave abuse of confidence, or

3. If the property stolen is a motor vehicle, mail matter, or large cattle or

consists of coconuts taken from the premises of a plantation, fish were

taken from a fishpond or fishery or

4. If the property is taken on the occasion of fire, earthquake, typhoon,

volcanic eruption, or any other calamity, vehicular accident, or civil

disturbance (Article 310 of the Revised Penal Code).

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III. HOW DID THEY MANAGE AND MITIGATE THOSE RISK

One of the relevant information on the company or court decision on this case

stated different resolutions on how they manage this kind of problem. Bangladesh

bank, finance and law ministry officials try to move forward with the recovery

process. They will have to decide where to sue the parties involved.

● The Makati Regional Trial Court Branch 149 sentenced Maia Deguito, a

former branch manager of Rizal Commercial Banking Corp (RCBC), to 4 to

7 years in prison for each of the 8 counts of money laundering.

● Aside from the prison term, Deguito was ordered to pay a fine

corresponding to not more than 200 percent of the value of the laundered

money, which would amount to almost $110 million.

● RCBC was fined a record P1 billion by the Bangko Sentral ng Pilipinas in

August 2016 for its failure to prevent the movement of the stolen money

through its system.

● In a resolution made public Wednesday, the DOJ denied the bank officials'

motion for reconsideration due to lack of merit. Assistant State Prosecutor

Mary Jane Sytat recommended the filing of an anti-money laundering

charge against the following:

■ Former RCBC Treasurer Raul Victor Tan

■ National sales director for retail banking Ismael Reyes

■ Regional sales director for retail banking Brigitte Capiña

■ Customer service head for Jupiter business center Romualdo

Agarrado

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 ■ Senior customer relations officer for Jupiter business center Angela

Ruth Torres

● RCBC downplayed the case filed by Bangladesh Bank as a “political stunt.”

Banks and other financial institutions are under massive pressure to

proactively preserve themselves and their consumers from digital banking

and payments fraud. In every bank and financial institution, there's fraud

prevention technology on how a bank problem mitigates risk.

Control employee theft

In 2016, there’s an unknown criminal that used fraudulent orders on

the SWIFT payments system to steal the funds from Bangladesh's central

bank account at the Federal Reserve Bank of New York. The money was

sent to accounts at a branch of RCBC in Manila then headed by Deguito.

By using verified fraud prevention technology, it utilizes pre-employment

testing to detect employee attitudes about honesty and illegal bank

transactions,

Reserve Requirement

Reserve requirements is the percentage of bank deposits and

deposit substitute liabilities that banks must set aside in deposits with the

BSP which they cannot lend out, or where available through reserve-eligible

government securities. Reserve requirements for universal and commercial

banks like RCBC stand at 12%.

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IV. HOW DID THEY AFFECT THE SAID SITUATION IF YOU WERE GENERAL
MANAGER

The money laundering case of RCBC violated two of the core corporate

principles of good governance, which are Accountability and Transparency. The

corporation broke the code of ethics by failing to take responsibility and tell the

truth. The RCBC responded by stating that they are dealing with a third-party

investigation and that the said executive executives are unrelated to the matter.

They refused to acknowledge the possibility that the claims were true and flatly

denied it. When the matter of money laundering came to light, they also neglected

to be transparent with their commercial and financial actions. Inside the

corporation, the executives had secret goals that reflected dishonesty,

miscommunication, and cooperation.

As a general manager, the situation that happened inside the bank is the

pattern of activity in which one person tries to acquire an "unfair" advantage over

another. Bank fraud is a purposeful act of omission or commission by any person

in the course of a banking transaction or books in the bank's books of account,

which results in wrongful gain to any person for a temporary period or otherwise,

with or without monetary damage to the bank. As general managers, we should

implement double security inside the bank to prevent this kind of situation.

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V. HOW CAN YOU RESTORE PEOPLE'S TRUST AND PREVENT SUCH
INCIDENTS.

Since the risk identify here in the issue of RCBC is the Human risk and the

suspect, in this case, is also the bank manager of RCBC, all banks not only RCBC

must strictly implement some rules and regulations that obeyed all the rules fairly

not only to the employee but also to those employees who are in the higher position

such as a manager. RCBC needs to improve their form of security to avoid this

kind of situation because if the people may see that RCBC improved their security

especially in safeguarding all the money that they put into that bank, of course,

they will also patronize some of the services of that bank if they will see and feel

secured by the performance of the bank. In this scenario, to prevent this kind of

incident again they need to develop devices or improved their security in terms of

the money that is being transacted, they need to know if that person is existing or

not because this kind of situation can be the start of unlawful acts in terms of the

transactions that not being identified properly.

In this case, money laundering can be avoided because all the transactions

are being monitored and that kind of security may also attract the investors and

old clients to trust again. Also in terms of corporate governance, all banks mayor

should increase the punishments about this to avoid this kind of incident since the

corporate governance include the transparency and accountability that all

employees should know and perform this, if all employees know and practice

business ethics they carry it even if they are outside in the workplace, all

employees should perform their professionalism and discipline inside the

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 workplace especially in the banks because they need to secure the money of the

people so that they need to be professional and having integrity.

REFERENCES:

Lema, K. (2019, January 10). Philippine court orders jail for former bank manager over
Bangladesh central bank heist. Reuters.
https://www.reuters.com/article/us-cyber-heist-philippines-idUSKCN1P40AG

Neil. (2021, January 12). RCBC receives a fresh summons for the Bangladesh Bank
heist case. BusinessWorld Online.
https://www.bworldonline.com/rcbc-receives-fresh-summons-for-bangladesh-bank-heist-
case/

Price Stability - Inflation Targeting. (n.d.). Www.bsp.gov.ph. Retrieved October 14,

2021, from

https://www.bsp.gov.ph/Pages/PriceStability/ReserveRequirement.aspx

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