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The Anti-Financial Scamming Act (AFASA) defines money mules as those who allow their e-wallets or bank accounts to carry proceeds from illegal activities such as ponzi schemes and money laundering
In 2024, the Cybercrime Investigation and Coordinating Center (CICC) had to handle over 10,000 scam complaints, triple the amount of complaints it received in 2023.
This translated to about P198 million in losses for cybercrime victims.
A total 3,242 of the complaints were those of online fraud, which includes love scams, financial fraud and investment scams.
To offer a recourse to victims of these scams, the government passed the Anti-Financial Scamming Act (AFASA) on July 20, 2024. (READ: Marcos signs New Government Procurement Act, anti-scam law)
The law prohibits and punishes numerous financial crimes, such as serving as money mules, orchestrating social engineering scams, and engaging in acts of economic sabotage.
President Ferdinand Marcos Jr. hoped the law would protect Filipinos from falling for scammers targeting their bank and e-wallet accounts.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Elmore Capule likened AFASA to a “trident” that will help the government combat financial scams in three ways:
1. Criminalize social engineering scams and money muling
Capule defined money mules as those who allow their financial accounts to carry proceeds from a crime or any illegal actions. Meanwhile, social engineering involves the manipulation of a victim to obtain their cash.
Some examples include syndicates’ borrowing of a legitimate account to transfer dirty money. “If you allow your account to carry proceeds from a crime or any illegal activity, that is money laundering. So the moment that account carries illegal funds, that is prohibited under the AFASA,” Capule explained.
An advisory from the Securities and Exchange Commission warned that the lending or renting of e-wallet and registered bank accounts may allow syndicates to use them for crimes such as the following:
- Advance fee loan schemes
- Ponzi schemes
- Money laundering
- Other illegal investment-taking activities
Those found guilty of money muling can be imprisoned for six to eight years, as well as fined up to P500,000. Social engineering syndicates, meanwhile, can face up to 12 years in prison and a fine of up to P1 million.
Capule said AFASA imposes heftier penalties if the victim is a senior citizen. “The penalty is 12 to 14 years [imprisonment]. That’s very strict. Again, because a lot of senior citizens are being victimized because it’s easier to victimize them,” he said.
2. Involve financial institutions in combating financial scams
AFASA also compels banks to temporarily hold funds that are subject to disputes. Capule explained that this is a preventive measure to stop scammers from receiving their victims’ money.
Capule said that those who believe they have been defrauded may report the incident to the relevant bank or financial institution so the latter may hold the disputed transfer.
But what happens if the fund transfer went through? Capule said other financial institutions will also be notified of the possible fraudulent transaction.
“So it [report] will be jumping from one bank to another, meaning it is flexible enough to alert the entire banking system. So the moment that it [money] starts moving, the next recipient will be alerted to call,” he said.
Under the draft circular on AFASA’s implementation, the funds can initially be held for up to five days. But a court can order holding the funds for up to 20 calendar days.
Apart from the holding of fund transfers, AFASA also mandates banks and other financial institutions to craft a fraud or risk management system that can automatically detect shady transactions.
If the BSP finds an institution’s detection system inadequate, Capule said the banks and financial institutions such as e-wallets will be liable for any fraud occurring within their systems. He describes the provision as a “powerful” one, as it gives banks a stake in the issue.
3. Authorize the BSP to investigate accounts that may be involved in suspicious activity
For Capule, Section 12 is perhaps the biggest provision in AFASA as it grants the BSP authority to probe any suspicious financial accounts.
Bank secrecy and data privacy laws do not apply to bank accounts, e-wallets and other financial accounts under investigation.
Under the draft circular for the implementation of this provision, the BSP’s Consumer Account Protection Office (CAPO) will look into suspicious financial accounts and disseminate this information to pertinent authorities.
“The complaint will be filed to that office, and that office can issue an order directing the banks to open the boxes,” Capule said.
Any information that the BSP gathers from its investigation may be used for law enforcement.
Because of this, the draft circular will require the monetary authority to enter an information sharing agreement with the following government agencies:
- Philippine National Police (PNP)
- National Bureau of Investigation (NBI)
- Anti-Money Laundering Council (AMLC)
- Cybercrime Investigation and Coordinating Center (CICC)
- Any government agency authorized to investigate or prosecute prohibited activities under AFASA.
Failure to comply with an inquiry order or the unauthorized disclosure of financial account information used for an investigation shall be subject to criminal and administrative liabilities.
CAPO is also authorized to apply for cybercrime warrants or issue preservation orders related to alleged crimes being investigated under AFASA. – Rappler.com
