Philippine Deposit Insurance Corp. has cautioned the public against engaging in banking transactions outside bank premises, citing potential fraud in such activities.

PDIC president Jose Nograles gave the warning as he reported that as of end-January, his office had so far denied P204 million worth of claims supposedly by depositors in banks owned by the Legacy Group. The amount involved 4,175 claims.

In a statement, Nograles said 3,500 of the claims, or P125 million of the total denied claims, were not supported by bank records. Regulators said the absence of supporting bank records could mean that the deposit claims were fraudulent or that the deposits were made outside of bank premises.

Legacy banks were ordered closed by the Bangko Sentral ng Pilipinas in December 2008 due to alleged unsafe and unsound practices of said banks. Since the closure, PDIC has been processing deposit claims. It targets to complete payment of valid claims in the first half of this year.

Based on Senate and House investigations conducted last year, it was found that some depositors of the Legacy banks had engaged in banking transactions with people who identified themselves as agents of the concerned banks. The agents would solicit deposits outside bank premises and that many of these transactions were not recorded.

“Examination of the books of the banks revealed that some funds coursed through agents were diverted and a number of transactions were not recorded in the books of the banks. PDIC had no recourse but to deny such claims in accordance with provisions of law,” PDIC said in a statement issued Monday.

Nograles said individuals, therefore, should not do banking transactions outside the premises of a bank because they might be dealing with unscrupulous individuals.

“If a transaction is made outside bank premises, the depositor has no way of ascertaining if the funds actually flowed into the bank and if the transaction is recorded in its records,” PDIC said further in the statement.

Under BSP Circular Letter No. 2008-071, pursuant to Section X213 of the Manual of Regulations for Banks, transacting outside bank premises without prior approval from the BSP is prohibited.