In July, President Bong Bong Marcos signed the Anti-Financial Account Scamming Act(AFASA) into law, marking a great stride in the Philippines' ongoing war against scammers and digital financial crime.
During the signing ceremony, the President reflected on the millions of Philippine citizens who would benefit from this new law. "It will protect our people from falling prey to perpetrators who target their banks and e-wallet accounts," said PBBM.
The Ever-Growing Scam Problem
Owing to the low bar for complexity and difficulty, digital scams have seen a steady rise over the past year. The nonprofit Global Anti-Scam Alliance performed a study uncovering that $1.03 trillion was lost by consumers worldwide in scams in 2023. The study shows that the Philippines would have lost an estimated P459.98 billion from digital scams during the same year.
According to data from the Philippines' central bank, Bangko Sentral ng Pilipinas (BSP) 59.48% of cyber fraud losses among BSP-supervised financial institutions (BSFIs) in 2023 were due to account takeovers, identity theft, and phishing. Overall, cyber fraud losses surged by 212% from the previous year.
AFASA in Brief
For the first time in Philippine law, AFASA provides an explicit definition of “financial account scamming,” which covers a specific range of illicit activities.
These include traditional money muling operations, where individuals utilize their accounts to facilitate the transfer of illicit funds.
The illicit funds mean criminals need a multitude of accounts in others' names. As such, these activities also include opening accounts using fake names or identity documents belonging to other people and selling or renting out financial accounts.
The AFASA also includes social engineering as a form of financial account scamming.
Social engineering involves attackers manipulating users and account holders into performing actions that would compromise their accounts or sensitive data for illicit purposes.
AFASA outlines a comprehensive scheme for penalizing scammers. Money muling can result in 6-8 years imprisonment and/or fines from P100,000 to P500,000. Social engineering scams carry with them 10-12 years (up to 14 if the victim is a senior citizen) and fines of up to P1 million (or up to P2 million for senior citizen victims).
Economic sabotage carries the possibility of life imprisonment and fines up to a whopping P5 million.
AFASA also puts the onus on BSP-supervised financial institutions (BSFIs) to reimburse customer losses due to scams if the bank didn’t have adequate fraud countermeasures in place or acted negligently. BSFIs will also be held responsible if they fail to freeze funds involved in a disputed transaction as required by the new law.
“For claims not exceeding P10 million, aggrieved account holders may file a formal complaint for adjudication before the Consumer Complaints Resolution Office of the BSP,” the central bank said.
The scope of AFASA will also extend beyond traditional banking services. Financial accounts, including deposit accounts, trust accounts, investment accounts, credit card accounts, and electronic wallets will also fall under AFASA's purview.
This wide scope seeks to provide a comprehensive set of protections against various forms of financial account scamming that millions of Philippine citizens face today.
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