To effectively curb financial fraud and illegal capital flows, the Central Bank of the Philippines (BSP) has recently authorized regulated financial institutions to temporarily freeze suspicious funds for up to 30 days under specific circumstances. This key measure is introduced to implement the "Anti-Financial Account Fraud Act" (Republic Act No. 12010).
According to Circular No. 1215 signed by BSP Governor Eli Remolona Jr. on May 30, banks and other financial service providers can quickly initiate freezing procedures upon detecting suspected fraudulent or illegal transfer transactions, and coordinate with relevant departments to verify and ensure the security of the funds.
The central bank stated that the new regulation aims to prevent the rapid transfer of stolen funds between accounts, thwart fraud gangs from transferring or laundering money, and thus effectively protect consumers from financial losses.
Under the new policy framework, if the bank's internal monitoring system detects transactions lacking reasonable economic basis, unclear source of funds, or unauthorized use of sensitive information, financial institutions can temporarily seize the related funds and conduct further investigations. Frozen funds will be considered as received, but cannot be withdrawn or transferred during the freezing period.
It is important to note that this freezing mechanism does not apply to mistaken transfer transactions, nor to traditional credit card consumption, unless it involves electronic transfer activities.
Account holders of frozen accounts have the right to appeal, and can submit relevant evidence to prove the legality of the transactions. The maximum freezing period is 30 days, during which disputes can be resolved or handled through court intervention.
Additionally, if consumers proactively report suspected fraudulent transactions, or if the bank's detection system automatically flags anomalies, the freezing procedures can take effect immediately, without the need for a prior court ruling.
Simultaneously, the central bank has also issued Circular No. 1214, establishing an information-sharing mechanism with the National Bureau of Investigation (NBI), police, and other law enforcement agencies, ensuring efficient coordination in investigating fraud cases and tracking funds.
The Central Bank of the Philippines emphasizes that this move will significantly enhance the risk control capabilities of the financial system, curb fraud activities conducted through "straw accounts", social engineering, and even internal collusion, providing stronger financial security for consumers.
