It was incumbent upon the officers of Luzon Development Bank (LDB) to undertake enhanced due diligence background checks on accounts of politically exposed persons, particularly those holding sensitive government positions like Chairman Bautista's. Clearly, he is a politically exposed person (PEP). As part of LDB's KYC (know-your-customer) procedure, they should have verified his source of funds and continued to monitor his accounts. Obviously, his acts of opening several accounts with large daily deposits should have served as red flags especially since it is public knowledge that a government officer receives a modest salary.
The bank should therefore have reported all of these to the BSP and AMLC in their Covered Transactions Report. It is not enough that LDB submits reports to the BSP; the law requires that any suspicious transaction should be reported to the AMLC. It therefore appears that there was an intention to conceal these financial transactions. One will normally not use a small thrift bank to move substantial amounts. The fact that several accounts were opened and used to move moneys around is suspect.
Unfortunately, since our bank secrecy laws require permission from Chairman Bautista and his co-depositors in order for the Senate to scrutinize further into the matter, then we at the Senate can only ask so much. I moved that Mr. Bautista be invited to our next hearing to shed light on the accusations made against him or voluntarily provide the Committee with a written permission for the committee to look into his accounts, thereby acting as a waiver of secrecy.
Source: Senate of the Philippines