Security and Protection for Bank Depositors – HERNANDEZ


Members of the House committee on banks and financial intermediaries chaired by Rep. Ben Evardone (Lone District, Eastern Samar) on Thursday batted for stronger and ample security and protection for bank depositors following the Bank of Philippine Islands (BPI) data processing error and alleged skimming of automated teller machine (ATM) deposit accounts of Banco de Oro Unibank.

The lawmakers made known their position during the motu proprio investigation conducted by the committee on the BPI and BDO Unibank incidents.

Evardone emphasized during the hearing that House Speaker Pantaleon Alvarez and Majority Floor Leader Rodolfo Farinas (1st District, Ilocos Norte) have asked the committee to investigate, in aid of legislation, the incidents to protect the consumers, especially the depositors, and the banking industry.

Evardone said the objective of the inquiry is to help stabilize, uphold, and promote the interests of the depositors and the banking industry.

At the start of the hearing, Evardone informed the committee members that the BPI requested for an executive session, but he ruled it out as doing so would not look good before the general public, especially the consumers who have been affected by the BPI system glitch.

Rep. Winston Castelo (2nd District, Quezon City) said acceding to the request of the BPI would be counterproductive as the public might think that the House members conducting the investigation are hiding something.

Likewise, Deputy Speaker Ferdinand Hernandez (2nd District, South Cotabato), said the deliberation must be transparent and the public should know the current situation. It is a duty of the lawmakers to ensure the banking industry is stable and the depositors are amply protected, according to Hernandez.

During the hearing, BPI officials led by its president and chief executive officer Cezar Consing explained that the “data processing error” which happened last June 7 and 8, 2017 was due to human error and not hacking.

They apologized over the incident and assured the lawmakers and the public that the bank is doing everything to prevent such incident from happening again.

The BPI officials also clarified that the reported millions or billions in account postings was only a hoax.

Rep. Edgar Sarmiento (1st District, Samar) stressed that there should be a “safety net” and “check system” within the BPI after learning from bank officials that there are only two persons who are entrusted to handle the bank’s programming system.

Sarmiento asked the Bangko Sentral ng Pilipinas to be on top of the situation and expressed hope the BSP would ably exercise its regulatory power over the banking industry.

Rep. Arnolfo Teves, Jr. (3rd District, Negros Oriental) lamented that the BPI is entrusting the fate of millions of its depositors in the hands of only two people.

Human error is not a glitch and that the bank’s system may not be safe since it could be circumvented by human intervention, according to Teves.

Teves asked BPI officials to look into reports that unscrupulous individuals are in collusion with BPI personnel in committing bank skimming and other bank theft.

Rep. Gus Tambunting (2nd District, Paranaque City) urged the BPI to provide safeguards so that the depositors’ hard-earned money is not lost. Tambunting stressed that depositors, especially the ordinary ones, do not keep a record of their ATM transactions.

Deputy Speaker Sharon Garin (Party-list, AAMBIS-OWA) chided the seemingly slow action of concerned government agencies on the BPI system glitch, being still on the investigation stage despite the earlier identification of the problem.

Rep. Harry Roque (Party-list, KABAYAN), a BPI depositor, said he lost P10,000 as a result of the system error. But Roque said his “lost” money has already been restored in his account per the advice of his bank manager.

Roque urged the BSP and the banking industry to put up safeguards so that the money of the depositors, especially the ordinary ones, is protected.

Rep. Aurelio Gonzales (3rd District, Pampanga) detailed three transactions from his late wife’s account with the Rizal Commercial Banking Corporation (RCBC), amounting to P20,500, last June 5, 2017, three days after her demise from the Resorts World Manila tragedy.

Gonzales asked concerned government agencies and the banking sector to ensure that similar incidents will not happen to other people.

On the reported ATM skimming issue, Banco de Oro Unibank president and CEO Nestor Tan, said skimming is common around the world and the technology behind it evolves regularly.

Tan admitted that the banking industry cannot address skimming totally, but it is doing everything it can to prevent it from happening.

Tan apologized to the BDO clients who were affected by the systems failure or ATM glitches. About 95 accounts were affected, according to him.

“We apologize for the inconveniences that we had caused on our consumers” he said.

He said the problem was caused by the failure of computers and processes and human interventions.

“We can’t avoid it. We (will) just try to be ahead of time so we can prevent it” Tan said.

BDO representatives demonstrated to the committee several skimming devices and how these are being installed on ATM machines

With the help of the BSP, Tan said the BDO will implement security measures which will be completed by June 2018.

The National Privacy Commission suggested the use of a new technology known as “vein technology” on biometrics to prevent skimming hacks which could affect millions of consumers and depositors in the country.

Rep. Manuel Zubiri (3rd District, Bukidnon) pointed out similar incidents that happened in other countries. He urged concerned government agencies to learn from how these countries handled the situation to avoid panic and assuage the fear of the general public, especially the depositors.

“We have criminal minds, we can’t stop them. What matters to me is your reaction time” Zubiri said.

Zubiri said banks must have quick reaction time to prevent the root cause right away. He said the BDO has to have a specific team to do physical securities.

Rep. Orestes Salon (Party-list, AGRI) pushed for the setting up of a benchmark in addressing similar incidents so as to minimize, if not avoid, panic among the public.

Rep. Jorge Almonte (1st District, Misamis Occidental) manifested that concerned government agencies have dealt with the situation prudently and that the banking industry is in good hands.

Deputy Minority Leader Eugene Michael De Vera (Party List – ABS) asked if skimming can also happen to credit cards and if there has been report or reports about debit card skimming.

Earlier, a resolution was filed by AKO BICOL Reps. Rodel Batocabe, Alfredo Garbin, and Christopher Co to determine the root cause of the BPI computer glitch and come up with the needed safeguards in order to prevent such incidents from happening again not only in BPI but in other banks and financial institutions.


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