BSP tests new anti-scam law in flood control corruption probe

Insider Spotlight

• BSP uses Anti Financial Account Scamming Act (AFASA) for first time
• Law overrides bank secrecy in corruption-related financial probes
• Flood-control scandal triggers precedent-setting investigation
  
  

The Bangko Sentral ng Pilipinas (BSP) has, for the first time, invoked a new anti-financial crime law to investigate accounts tied to the flood-control corruption controversy.

The central bank said it is applying the Anti Financial Account Scamming Act (RA 12010), which took effect in June, to track potential “money muling” — the use of bank accounts to move or conceal criminal proceeds.

“The BSP is using AFASA for the first time to join and assist other agencies in investigating and prosecuting the persons alleged to be involved in these crimes,” BSP general counsel Roberto Figueroa said. “We are also keen to leverage this authority to uphold the integrity of our financial system against criminal actors”.

Why it matters

Unlike earlier investigations constrained by the country’s bank secrecy laws, AFASA grants the BSP direct authority to scrutinize accounts linked to suspected financial crimes. The law removes deposit secrecy and data privacy protections for accounts under investigation, giving regulators sharper tools to trace corruption funds.

This precedent sets the stage for broader use of AFASA in corruption, smuggling, and cyber-fraud cases, signaling tougher financial oversight than previous administrations could attempt.

What’s new

• The probe was launched at the request of Public Works Secretary Vince Dizon.
• Banks have been reminded to enforce temporary fund holds under AFASA rules and BSP Circular No. 1215.
• Convictions for "money muling" carry six to eight years’ imprisonment plus fines of up to P500,000, alongside civil forfeiture of assets.

The big picture

The BSP action comes on top of a Court of Appeals' freeze order on implicated accounts sought by the Anti-Money Laundering Council. The combination of AFASA and AMLC measures creates a two-pronged clampdown on illicit funds.

For financial institutions, the case is a warning: regulatory shields around client secrecy now have sharper exceptions, and compliance will increasingly require proactive enforcement against suspicious accounts.