Philippine banks are expected to set up within a year a centralized fraud detection system that is aligned with the Anti-Financial Account Scamming Act (AFASA), an official of the Bangko Sentral ng Pilipinas (BSP) said.
BSP Deputy Governor Elmore Capule said the Bankers Association of the Philippines (BAP) is already developing a coordinated verification protocol – similar to an early warning device – that will alert banks to instantly freeze suspicious transfers once these are reported by customers.
“The whole network should be alerted the moment a report is made,” Capule said. “With the use of big data and artificial intelligence, the response can be immediate and seamless.”
The banking group has submitted a draft system framework to the BSP. The initial framework is a shared database of accounts that are linked to fraudulent activities.
BAP President Jose Teodoro Limcaoco said they are still discussing operational rules with the Philippine Payments Management Inc.
“We like the way the IRR (the set of implementing rules and regulations) has come out (but) now we just have to implement it,” Limcaoco, who is also president and CEO of Bank of the Philippines Islands, said.
He also said the operational details will still be reviewed by BAP and the Philippine Payments Management Inc.
Meanwhile, Capule, who is formerly the BSP’s chief legal counsel, said AFASA overrides bank secrecy provisions.
AFASA empowers the BSP and banks to open accounts and exchange information related to scams. “By law, AFASA is an explicit exception to bank secrecy,” he said.
The central bank earlier issued circulars requiring enhanced fraud management tools, such as geolocation tracking, transaction velocity checks, and blacklisting mechanisms for institutions with large transaction volumes.
Capule said if banks fail to put up a central anti-scam system by August 2026, they not only risk penalties from the BSP but also restitution claims from defrauded or victimized customers.
“If a scam happens because the bank’s system is inadequate, restitution falls on the bank, not the victim,” he said, citing provisions under the Financial Consumer Protection Act.
In June this year, the BSP issued the IRR on AFASA to stop financial scams, to strengthen consumer protection, and encourage trust in the financial system.
AFASA, signed into law on July 20, 2024, prevents the misuse of financial accounts in fraud and scams such as phishing and vishing. It also defines and penalizes social engineering schemes, money muling activities, and related offenses.
BSP Governor Eli Remolona Jr. has said that the IRR boosts its arsenal of tools against cybercrime.
The BSP has issued three AFASA-compliant circulars: Technology (IT) Risk Management Regulations, the Rules on Financial Account Inquiry and Information Sharing, and the Regulations on Temporary Holding of Disputed Funds and Coordinated Verification Process.
These regulations reinforce the responsibility of banks and non-banks to strengthen fraud prevention and detection, as well as grant the BSP authority to inquire into financial accounts linked to scams and to allow real-time or near-real-time automated systems to track disputed transactions within one year.
