$46 million of stolen Bangladesh funds entered Philippine’s casinos, media reports say

Preliminary findings of state-run Philippine Amusement Gaming Corp (Pagcor) has indicated that out of Bangladesh Bank’s $81 million stolen funds that entered the Philippines, $46 million found its way into the casino industry.

Pagcor is in charge of regulating gaming activities in the southeast Asian country.

The Philippine Daily Inquirer quoting an official of Pagcor reported that the funds have circulated in the casino industry for 20 days since the beginning of February.

The rest of the funds were somehow smuggled out.

In another related development, officials of Philippines’ Bureau of Immigration thwarted the attempt of branch manager of Jupiter Street branch of Rizal Commercial Banking Corp (RCBC) to leave the country on Friday.

Bangladesh Bank’s funds, after being stolen from the Federal Reserve Bank of New York, were first deposited in several accounts in the RCBC.

The manager, Maia Santos-Deguito, was undergoing interrogation after being detained from the airport, Inquirer reported.

According to a Reuters report, FireEye Inc's Mandiant forensics division is now helping in the investigation of last month’s cyber heist at the Bangladesh Bank.

The report said the Federal Bureau of Investigation and US Department of Justice had held informal conversations with Bangladesh’s central bank about the case, one of the largest bank thefts in history.

Last month, hackers stole around $1 billion from Bangladesh Bank’s account with the Federal Reserve Bank of New York by issuing payment instructions through Swift (Society for Worldwide Interbank Financial Telecommunication), a secure financial messaging system.

Of the total funds, $81 million was transferred into the five accounts in the RCBC. After converting the funds into peso, the local currency, a portion of it was channelled into two casinos.

There, the funds were converted into chips for betting at the gaming tables.

The chips were then converted back into cash and remitted to overseas accounts.

This came into light after Inquirer published a report on the transactions last week.

Transfer of another $20 million to a fake Sri Lankan non-profit organisation was held up because the hackers misspelled the name of the NGO, Shalika Foundation.

Quoting an official of Pagcor, Inquirer reported that 56 percent of the stolen money that entered the Philippine financial system between Feb 5 and Feb 9 were routed through two casinos.

“The funds were split into a $26-million tranche that was channelled into the account of Solaire Resort and Casino and a $20-million tranche that was directed to the accounts of Easter Hawaii Casino and Resort at the Cagayan Economic Zone Authority in Santa Ana, Cagayan province,” the newspaper said quoting the official.

A Pagcor official, requesting anonymity, told the Inquirer, “Only a portion (of the $81 million) went to the local casinos and these were all used to bet at the tables and buy chips.”

“The rest of the funds never entered the local casino system. So, we don’t know where those funds went,” the newspaper further quoted the official as saying.

The Pagcor official also told the daily that the gaming clients to whose RCBC accounts the funds were credited had started playing at the gaming tables even ahead of the arrival of the money, using a credit line provided by the casinos as a standard practice for high-rollers.

As per Philippines law, the money earned at the gaming table is considered a legal earning once the tax is paid.

“For 20 days, the funds were just there, being used for betting. Everything seemed normal. There was nothing out of the ordinary,” the official told the daily. “It was only when the Inquirer story came out that authorities acted on this.”

A Court of Appeals ordered to freeze the accounts on Mar 1 following a request by the Anti-Money Laundering Council (AMLC) which started the investigation.

But, by the time the freeze order was issued, the funds were already being used for betting in the casinos.

“It remains unclear how much of the stolen funds were frozen by the AMLC order or how any of the funds would be disposed of, or whether they would be turned over to Bangladeshi authorities,” the Inquirer report said.

Immigration officials at the Ninoy Aquino International Airport (Naia) on Friday offloaded the manager of the RCBC branch Maia Santos-Deguito from the Philippine Airlines flight that was bound for Narita, Japan.

According to the daily, Deguito is being investigated by the RCBC head office for alleged violations of the bank’s money-laundering and terrorist financing-prevention programme manual.

Deguito is also accused of falsifying a deposit account opening and other offences listed by the RCBC’s human resources group in a show-cause memorandum dated Mar 2.

Earlier, the AMLC had found the involvement of six persons in transferring the stolen money into those five bank accounts, which were opened in May last year with deposits of just $500.

A local court has ordered a freeze on those accounts for six months.

These accounts had no activity until the $81 million was wired by the US Federal Reserve Bank of New York, the Inquirer reported.