By: Atty. Gregorio B. Austral, CPA
Responsibility to protect client’s financial account
under the new AFASA Law
Under the Anti-Financial Account Scamming Act (AFASA), Republic Act No. 12010, it is the responsibility of financial institutions to protect access to client’s financial account
Under Section 6, of the AFASA, institutions shall ensure that access to their clients’ Financial Accounts is protected by adequate risk management systems and controls such as MFA, FMS, and other Account Owner enrollment and verification processes: Provided, That such risk management systems and controls are proportionate and commensurate to the nature, size, and complexity of their operations.
Institutions that are determined by the BSP to be compliant with the requirements of adequate risk management systems and controls shall not be liable for any loss or damage arising from the offenses under Sections 4 and 5 of this Act.
Without prejudice to other liabilities under existing laws and consistent with BSP rules and regulations, Institutions shall be liable for restitution of funds to the Account Owners for failure to employ adequate risk management systems and controls, or failure to exercise the highest degree of diligence in preventing loss or damage arising from the offenses under Sections 4 and 5. Conviction shall not be a prerequisite to the restitution of funds.
As a temporary protection measure, the AFASA provides that nstitutions shall have the authority to temporarily hold the funds subject of a disputed transaction within the period prescribed by the BSP, which shall not exceed thirty (30) calendar days, unless otherwise extended by a court of competent jurisdiction: Provided, That Institutions shall promptly notify the BSP whenever it temporarily holds the funds subject of a disputed transaction.
A transaction shall be considered disputed if the Institution, based on information obtained from another Institution, a complaint from an aggrieved party, or a finding under its own FMS, has reasonable ground to believe that such transaction appears to be:
(a) Unusual;
(b) Without clear economic purpose;
(c) From an unknown or illegal source, or unlawful activity; or
(d) Facilitated through social engineering schemes.
Where such belief arises from a finding under its own FMS, the Institution shall perform acts as may be legally warranted to preserve the integrity of the Financial Account.
No administrative, criminal, or civil liability shall be imposed against an Institution or its directors, trustees, officers, and employees for holding the funds subject of a disputed transaction when done in accordance with BSP rules and regulations.
The BSP shall issue rules and regulations on: the circumstances under which Institutions are required to exercise such authority to avoid probable fraud; the grounds for, procedure, and period of holding funds; the period wherein the Institutions should notify the BSP whenever it holds funds; the verification and validation process; the release of funds subject of a disputed transaction; and other actions that may be undertaken by the Institutions and Account Owners during the period of temporary holding of funds. (Anti-Financial Account Scamming Act (AFASA), Republic Act No. 12010, [July 20, 2024])