EDITORIAL — Regulatory failure

In the age of online banking, and amid the government’s aggressive move toward digitalization, cash transactions are rarely needed. And massive cash withdrawals should attract the attention of banks.

By law, single bank transactions involving more than P500,000 are supposed to be reported to banking regulators and anti-money laundering authorities.

Yet no red flags were raised at the Malolos Highway branch of the state-run Land Bank of the Philippines when a private contractor withdrew nearly half a billion pesos in cash in a single transaction, not just once but two times this year.

Images of enormous piles of cash, supposedly meant as kickbacks to thieving lawmakers and public works officials, were as shocking as the sight of crumbling or missing flood control projects costing billions in public funds.

How were such massive amounts of cash withdrawn from the banking system without red flags being raised? Even without digital technology, banks can issue manager’s checks.

It took the Landbank branch two days to put together the P457 million in cash that was withdrawn by contractor Sally Santos, owner of Syms Construction Trading. There have been two withdrawals of such huge amounts of cash this year, according to Senate President Pro Tempore Panfilo Lacson. The first was on March 24 and the second on July 3.

Landbank branch manager Lilibeth Lim told the Senate Blue Ribbon committee chaired by Lacson that she saw nothing irregular because the amounts were covered by notices of cash allocations from the Department of Public Works and Highways.

Citing ledgers provided by Santos, Lacson said other cash withdrawals were completed in a single day on different dates – for P180 million, P141 million, P299 million and P65 million.

Blue collar workers may prefer to be paid in cash. But those amounts are far larger than any payroll requirements for flood control interventions in a single engineering district. Didn’t Landbank personnel ever wonder why contractors opted for such colossal amounts of cash instead of bank-to-bank digital transfers?

The cash was reportedly brought to the office of Brice Hernandez, who was recently sacked as DPWH assistant district engineer for Bulacan’s first district. Hernandez in turn has implicated lawmakers and other DPWH officials in the corruption scandal.

Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said he himself was shocked by the images of those mountains of cash, which reportedly went to the pockets mostly of crooked lawmakers.

Remolona vowed that the BSP would tighten scrutiny of cash transactions, whose paper trail is limited. This is regulatory failure that must be quickly and decisively corrected. The BSP must not fail the nation.