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BY NEIL HONEYMAN
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AUTOMATION has revolutionized banking and will continue to do so. Overall, this is good. But there are flaws.
A major issue is that responsibility for safety and security is moving away from banks and towards customers. For example, we have to keep the personal identity number (PIN) of our ATM card secure. No problem, say many of us. Unfortunately, despite adhering to this requirement, many suffered because our ATM cards were skimmed, and our PIN numbers stolen by the use of hidden cameras concealed in ATM equipment.
Banks varied in their reaction to fraudulent transactions. My bank telephoned me immediately after a possibly fraudulent ATM transaction. I was able to confirm that the transaction was indeed fraudulent and the bank, Security Bank, refunded the money stolen from my account within three days.
The role of Bangko Sentral ng Pilipinas (BSP) in providing a safe banking environment needs to be examined. By 2012 it was becoming apparent that many ATM cards were being skimmed and fraudulent transactions taking place. Fortunately, ATM cards with an EMV chip were available. These cards are not skimmable so the possibility of fraudulent transactions was eliminated.
Consequently, BSP instructed banks to replace existing ATM cards with the secure chip-based cards by Jan. 1, 2013. Few banks complied with the BSP instruction. This instruction has been repeated every year since, but banks have taken their time in replacing the insecure cards. Finally, in 2018 it is expected that most banks will have, belatedly, complied with the BSP ‘instruction’.
Does BSP have teeth so as to enforce its instructions? If not, why not?
Does BSP exert adequate oversight? I do not think so.
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For some years I have made remittances from my overseas bank to my bank in the Philippines. The arrangement was that I telephoned my overseas bank to instruct it to send funds here. The overseas bank would ask me security questions in which I could verify authenticity. Voice recognition was also helpful. I would then sign an email confirming my instruction. The overseas bank would send the funds electronically, via SWIFT, to Security Bank’s remittance center in Manila who would then send the funds to my account in Bacolod.
The system worked. It was safe because my bank verified my identity.
Now the system has been changed and no human is involved at the overseas bank. This means that I, not the bank, bear the responsibility for security. This is a change that I do not altogether welcome.
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I now use the system that Bangladesh Bank used with its account at the Federal Reserve Bank, New York. Its account was hacked and fraudulent transactions amounting to $81 million (over P4 billion) took place. $15 million was returned by Kim Wong but $66 million has been lost, seemingly irretrievably, by Bangladesh Bank.
The funds were remitted to Rizal Commercial Banking Corporation (RCBC) in the Philippines. I agree with RCBC’s legal position that it cannot be held responsible since the hacking took place within Bangladesh Bank.
BSP fined RCBC P1 billion for its failure to prevent the movement of the stolen money through it. RCBC has accepted the punishment. Unfortunately, this seems to have been a signal to stop chasing the money.
An example of the truth being buried due to inadequate oversight from RCBC, BSP, and the Anti-Money Laundering Council. (jbabueg@yahoo.co.uk)/PN
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