How Does AFASA’s Coordinated Verification Process Work?
Introduction
Businesses that lose money through fraudulent electronic fund transfers may now request immediate action from the financial institutions involved. The Anti-Financial Account Scamming Act, or AFASA, authorizes financial institutions to temporarily hold disputed funds and requires involved institutions and account owners to participate in a coordinated verification process.
This process is intended to trace the transaction, verify whether it was authorized and legitimate, preserve disputed funds when possible, and determine whether the funds should be returned to the source account owner. The procedure is particularly relevant when a business discovers an unauthorized transfer, social engineering scheme, or payment sent to an unintended beneficiary.
Governing Law and Regulations
Section 7 of Republic Act No. 12010, or the Anti-Financial Account Scamming Act, authorizes financial institutions to temporarily hold funds subject of a disputed transaction for the period prescribed by the Bangko Sentral ng Pilipinas, not exceeding 30 calendar days, unless a court of competent jurisdiction grants an extension.
Under the same provision, a transaction may be treated as disputed when the institution has reasonable grounds to believe that it appears to be unusual, without clear economic purpose, from an unknown or illegal source, or facilitated through a social engineering scheme. The institution must promptly notify the BSP when it temporarily holds disputed funds. [Anti-Financial Account Scamming Act (2024)](#L1.7)
Section 8 of AFASA requires the institutions and account owners involved to initiate coordinated verification upon receipt of a complaint, information from another institution, or detection through a financial institution’s fraud management system. During this process, the usual restrictions under the Bank Secrecy Law, the Foreign Currency Deposit Act, the Revised Non-Stock Savings and Loan Association Act, and the Data Privacy Act do not apply to the extent provided by AFASA. [Anti-Financial Account Scamming Act (2024)](#L1.8)
The BSP implemented these provisions through BSP Circular No. 1215, which applies to Bangko Sentral-supervised institutions that temporarily hold funds subject of disputed transactions. [BSP Circular No. 1215 (2025)](#I1.35)
When May a Business Trigger the Process?
A business may initiate the process when it has a reasonable basis to report a disputed transaction. Typical situations include:
- an unauthorized online banking or electronic fund transfer;
- a payment made after an employee was deceived through a phishing, impersonation, or other social engineering scheme;
- a transfer to an incorrect or unknown beneficiary account;
- a transaction that materially differs from the business’s ordinary payment activity; or
- a transaction that appears connected with fraud or an unlawful source.
The report should be made immediately to the business’s source or originating financial institution. Speed matters because the receiving institution can hold disputed funds only if they remain identifiable and available within the financial system, subject to the applicable rules and procedures.
Step One: File a Prompt and Complete Complaint
The business should contact its financial institution through the official fraud-reporting channel and clearly state that the transaction is disputed. The complaint should identify the business, the affected account, the transaction, and the basis for alleging fraud or unauthorized transfer.
At a minimum, the business should provide:
- the account name and account number of the source account;
- the transaction date and time;
- the amount transferred;
- the transaction reference number or unique transaction identifier;
- the payment or transfer method;
- the beneficiary account details, if known;
- a description of how the fraud occurred; and
- supporting documents showing the transaction and the business’s account of events.
The business should request a written acknowledgment and case reference number. BSP Circular No. 1215 contemplates the generation of an acknowledgment for a complaint-initiated holding and the issuance of a case reference number to the source account owner. [BSP Circular No. 1215 (2025)](#I1.14)
Step Two: Submit Supporting Evidence
The business should submit evidence that allows the institutions to verify the transaction and assess whether it was authorized. Relevant materials may include bank statements, electronic receipts, invoices, purchase orders, contracts, screenshots, email exchanges, text messages, call records, internal incident reports, employee affidavits, police reports, and other documents showing the fraudulent conduct.
Where the incident involved social engineering, the complaint should explain the deception used to obtain credentials, authentication information, payment instructions, or access to the account. AFASA specifically recognizes social engineering schemes as a type of financial account scam.
The business should preserve original electronic evidence and avoid altering screenshots, message histories, email headers, or transaction records. It should also maintain a chronology showing when the fraud was discovered, when the institution was notified, and what remedial steps were taken.
Step Three: Request Temporary Holding of the Disputed Funds
The business should expressly request that the originating institution refer the transaction to the receiving institution and seek the temporary holding of the disputed funds. The request does not itself guarantee that funds will be held or recovered. The financial institution must independently determine whether the statutory and regulatory conditions for holding are present.
A receiving institution may temporarily hold disputed funds when its information, a complaint from an aggrieved party, information from another institution, or its own fraud management system provides reasonable grounds to believe that the transaction is unusual, lacks a clear economic purpose, comes from an unknown or illegal source, or was facilitated through social engineering.
The initial holding period may not exceed 30 calendar days unless extended by a court of competent jurisdiction. The institution must notify the BSP when it temporarily holds the disputed funds. [Anti-Financial Account Scamming Act (2024)](#L1.7)
Step Four: Participate in Coordinated Verification
Once the complaint or fraud alert is received, the involved financial institutions and account owners must participate in coordinated verification. The process applies whether the disputed funds remain within the banking system or have already been transferred elsewhere.
The verification process may include the following actions:
- tracing the transaction through the participating institutions;
- checking the accuracy and authenticity of transaction records;
- sharing relevant account-owner and transaction information with involved institutions;
- reviewing sworn complaints, affidavits, police reports, fraud-management findings, and investigation reports;
- communicating with account owners regarding the purpose and circumstances of the transaction;
- examining the source of funds and the relationship between the parties;
- reviewing account activity, transaction patterns, and recognized fraud indicators;
- cross-checking information against independent or reliable sources; and
- assessing the transaction in light of the account owners’ profiles, conduct, explanations, and allegations.
These activities are expressly identified in BSP Circular No. 1215 as possible components of coordinated verification. [BSP Circular No. 1215 (2025)](#I1.20)
Step Five: Respond to Requests for Information
The business should respond promptly to requests from its financial institution or other involved institutions. It may be asked to explain the commercial purpose of the payment, identify the persons who approved it, provide contracts or invoices, confirm whether access credentials were compromised, or submit additional proof of unauthorized activity.
The business should designate one responsible officer or legal representative to coordinate with the bank. Inconsistent explanations, delayed responses, or failure to submit requested evidence may weaken the request for recovery and may affect the institution’s assessment of the transaction.
The business should also distinguish between a genuinely unauthorized transfer and a commercial dispute. AFASA’s coordinated verification process addresses disputed transactions involving indicators of fraud or unlawful activity; it is not a substitute for an ordinary collection action or contract claim where the payment was authorized but the parties later disagree about performance.
Step Six: Monitor the Holding Period and Possible Release
The business should monitor the case reference number, acknowledge all communications, and request updates on the status of the verification. The financial institution should inform the source account owner of the initial actions taken and of the possible consequences of failing to participate or substantiate the legitimacy of the transaction.
Under the BSP rules, the beneficiary account owner may challenge the initial holding, request that it be lifted, or submit proof that the transaction was legitimate. The process may result in the disputed funds being debited from the beneficiary account and released to the source account owner if the investigation supports that outcome. [BSP Circular No. 1215 (2025)](#I1.14)
Recovery is not automatic. It may depend on whether the funds remain available, the evidence submitted by the parties, the findings of the involved institutions, and whether a court order or separate legal proceeding becomes necessary.
What Businesses Should Not Do
- Do not delay reporting while conducting an internal investigation.
- Do not send additional money to a suspected fraudster to recover the original transfer.
- Do not communicate with the suspected beneficiary in a manner that may result in the movement or concealment of funds.
- Do not submit inaccurate, exaggerated, or unsupported allegations.
- Do not delete electronic messages, transaction records, or device evidence.
AFASA also recognizes liability for malicious or bad-faith reporting that is completely unwarranted or false and results in the temporary holding of funds. A complaint should therefore be factual, documented, and limited to matters that the business can substantiate. [BSP Circular No. 1215 (2025)](#I1.14)
Coordinated Verification Compared with an AMLA Freeze Order
The temporary holding process under AFASA should be distinguished from a freeze order issued under the Anti-Money Laundering Act. An AFASA holding is an administrative and time-limited response to a disputed transaction, subject to BSP rules. An AMLA freeze order is a court-authorized remedy issued upon a finding of probable cause that an account or related account is connected with unlawful activity or money laundering.
In Castañeda Limlingan et al. v. Republic of the Philippines, et al., General Register No. 222312, the Supreme Court recognized that an AMLA freeze order may cover related accounts when probable cause establishes a material connection to unlawful activity. A covered institution receiving such an order must immediately prevent transactions involving the subject account and related web of accounts; it does not independently decide whether probable cause exists. [Castañeda Limlingan et al. v. Republic of the Philippines, et al. (2025)](#J1.67)
Businesses should therefore understand that requesting an AFASA holding does not itself produce an AMLA freeze order. Where the facts indicate organized fraud, money laundering, or the movement of proceeds through related accounts, the matter may also require referral to law enforcement or the Anti-Money Laundering Council.
Recommended Internal Procedure for Businesses
A business should adopt a written incident-response procedure containing the following measures:
- Immediately suspend affected credentials, payment instructions, and access devices.
- Notify the source financial institution through its official fraud channel.
- Obtain and preserve the transaction reference number and account records.
- Submit a sworn complaint or formal written incident report with supporting evidence.
- Request referral to the receiving institution and temporary holding of disputed funds.
- Designate a single officer to coordinate the verification process.
- Report the incident to appropriate law-enforcement authorities when criminal conduct is indicated.
- Track all deadlines, communications, case numbers, and submitted documents.
- Obtain legal advice when substantial funds, insider involvement, repeated transactions, or possible money laundering is involved.
Conclusion
AFASA gives defrauded businesses a defined procedure for seeking rapid, cross-bank examination of disputed electronic transfers. The most important steps are prompt reporting, complete transaction details, preservation of evidence, an express request for temporary holding, and active participation in coordinated verification.
The process is subject to statutory conditions and a 30-calendar-day maximum holding period unless a court grants an extension. Businesses should act immediately, provide accurate evidence, and recognize that recovery depends on the availability of the funds and the results of the institutions’ verification.
About Nicolas and De Vega Law Offices
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