MANILA, Philippines – Philippine Deposit Insurance Corporation (PDIC) general counsel Atty. Romeo Mendoza on Monday stressed the importance of protecting bank depositors from financial crimes.
On ANC's "On the Money", Mendoza explained that bank fraud occurs when the bank itself dissipates the assets, which cause institutions to fail, thus making depositors lose their uninsured deposits.
He said among the common schemes involve the creation of fictitious accounts and when owners or officers use the bank as their “personal piggy bank.”
Mendoza said there are also instances when banks spend for construction projects that are fictitious.
“This is something we’ve seen several times, when they simulate expenses, they say in the books of the banks that they’ve renovated the premises or so many branches but actually no renovations were made. The construction contracts are fictitious but money went out,” he said.
To avoid being victimized by financial crimes, Mendoza said the most important thing is to “know your bank.”
He said depositors should be suspicious of banks that offer very high interest rates.
“One of the signs that we look out for are when there are very, very high interest rates, as in way, way above market rates…If a bank offers very high interest rates, how on earth can it pay off deposits?” he said.
“There’s also a concern about when the banks solicit deposits outside of their bank premises because sometimes, especially if they’re not authorized to do so, the deposits don’t go into the bank. It’s not recorded at all,” he added.
Mendoza also advised to keep accurate bank records like deposit slips and loan payment records.
Lastly, Mendoza said depositors to be aware that if you guarantee loans from the bank, your deposits will be used to set off the loans if your bank closes.
From 2008 to 2012, the PDIC closed 134 banks and paid out about P40 billion in deposit insurance.
Some of these were due to governance issues, mismanagement, or outright fraud or theft.
source: www.abs-cbnnews.com
