Be wary of spurious bank documents — BAP

MANILA, Philippines — The Bankers Association of the Philippines (BAP) yesterday warned the public about spurious documents issued by erring employees, but vouched for the integrity of the country’s financial system amid the $2.1 billion scandal involving German financial technology leader Wirecard AG.

In a statement, the BAP urged the public to practice due diligence in receiving certifications and documents from third parties, and to have the documents validated by the issuing banks.

“Some individuals may try to forge or falsify the documents, but their authenticity can be readily ascertained through careful scrutiny or verification by the appropriate institutions,” the BAP said.

The association of 45 banks issued the statement after two of the country’s largest lenders – BDO Unibank and Ayala-led Bank of the Philippine Islands (BPI) – were dragged into the scandal.

Both BDO and BPI denied Wirecard was a client and dismissed low ranking officers who allegedly issued fraudulent certifications that the banks have the missing funds of the German firm.

“The BAP assures the public that the country’s financial system is sound and that very strict rules regarding the issuance of bank certifications are in place,” the BAP said.

The organization said member banks would continue to work with the Bangko Sentral ng Pilipinas (BSP) and other government agencies to improve processes.

“Our member banks are regularly and proactively strengthening security checks and systems to ensure integrity at every level,” the BAP said.

BSP Governor Benjamin Diokno earlier directed banks and financial institutions to tighten their watch over employees and strengthen their respective know-your-customer protocols due to the aftermath of the Wirecard 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,” Diokno said.

Both BDO and BPI immediately filed a report to the regulator when Ernst & Young (EY) Germany presented bank certifications that the missing funds were deposited with two of the country’s largest banks.

Diokno, who is also chairman of the Anti-Money Laundering Council (AMLC), said none of the missing funds entered the Philippine financial system and that two of the country’s largest banks were used to make the cover up more credible to cover the perpetrator’s tracks.