State-run Land Bank of the Philippines (Landbank) has clarified that the handling of the bank accounts of the Department of Public Works and Highways' (DPWH) contractors did not involve irregularities, countering insinuations that it was complicit in alleged flood control corruption.

This comes as the Bangko Sentral ng Pilipinas’ (BSP) initial inquiries into the unusual massive flows of cash involving government contractors found they were processed through government financial institutions (GFIs), which include Landbank and the Development Bank of the Philippines (DBP).

“Landbank strongly refutes any insinuations that its handling of government contractor accounts, particularly those related to the [DPWH] flood control projects, involved any irregular or unlawful activity,” the state-run bank said in a statement released on Monday, Sept. 29.

It argued that “all transactions in question were carried out strictly within the bounds of Philippine banking laws and regulations, under full compliance with government mandates and oversight requirements.”

As for the budget disbursement process, Landbank explained that the Department of Budget and Management (DBM) released the funds to the contractors’ accounts through the DPWH.

“These funds are legitimate government allocations, not private or unverified sources. Landbank, or any other financial institution, has no legal authority to block or question duly appropriated government disbursements,” it further said.

To process government contracts, contractors are required under DBM and Bureau of the Treasury (BTr) rules to open and keep bank accounts with lenders such as Landbank.

Landbank noted that it followed all know-your-customer (KYC) rules, risk checks, and document requirements when opening the contractors’ accounts.

“There was no basis under the law to withhold the release of funds” for the contractors as the source of funds had already been properly established and recorded.

Under the Anti-Money Laundering Act (AMLA), any cash withdrawal above ₱500,000 is automatically reported to the Anti-Money Laundering Council (AMLC) through a covered transaction report (CTR).

Any transaction considered suspicious is promptly reported to the AMLC through a suspicious transaction report (STR).

“Landbank reiterates that its role is to faithfully execute banking transactions in accordance with law and regulatory standards, and not to assume investigatory functions outside its legal mandate,” it said. 

Landbank said it stands ready to “fully cooperate” with authorities and investigators to help uncover the facts.