As Filipinos welcome 2025, a wave of festive cheer sweeps across the country. However, beneath the surface of celebration, a sinister threat lurks: financial scams.
Capitalizing on the excitement and optimism of the new year, fraudsters may employ a range of tactics to exploit unsuspecting individuals. From sophisticated phishing attacks masquerading as holiday greetings to alluring scams promising unrealistic returns, these criminals thrive on lack of awareness and vulnerability.
In a rapidly digitalizing economy, where online transactions and e-commerce have become a norm, the risk of falling victim to financial fraud has become apparent.
Towards the end of 2024, the Cybercrime Investigation and Coordinating Center (CICC) issued a warning regarding the most prevalent scams, especially during the holiday period.
This warning aimed to raise awareness about the potential scams that can cause significant financial losses. These include phishing attempts, fake online charities, bogus tech support, fraudulent job offers, online shopping scams, and romance scams that target the vulnerable.
Similarly, the Philippine National Police Anti-Cybercrime Group (PNP-ACG) reminded the public to stay alert for scam messages that disguise themselves as legitimate communications from banks or telecommunications companies, often blending in with genuine message threads.
Beyond these scams, another insidious threat is the recruitment of money mules — individuals who unknowingly or knowingly allow criminals to use their financial accounts (bank accounts, e-wallets, etc.) to receive and transfer illicit funds. These operations often involve complex networks, making it difficult for law enforcement to trace the origins of the funds.
How do money mules facilitate scams?
Money mules are individuals recruited to lend or rent their bank or e-wallet accounts to criminals to receive money from scams or other illegal activities.
The Anti-Money Laundering Council (AMLC) reported that there had been an increase in the number of money mule cases in the country since 2021. AMLC stated that they received a total of 821,279 money mule-related suspicious transaction reports (STRs) with a value of P510.17 billion between the first quarter of 2016 and the first quarter of 2022.
AMLC attributed this to the adoption of digital banking and e-wallets with these platforms providing convenient ways of transferring money.
In the context of scams and other types of financial fraud, money mules obtain, receive, deposit, transfer, or withdraw proceeds from illegal activities. They cover the trails of these proceeds by transferring to multiple accounts. Furthermore, money mules allow scammers to have a broad network of operations, making it difficult for law enforcement to catch them.
Lastly, scammers tend to recruit certain types of people, a lot of them students and the unemployed, and promise them easy money in exchange for the access and use of their financial accounts.
This 2025, we expect this trend to continue as scammers refine their tactics. Victims may be lured by promises of easy money. Once they transfer illicit funds or withdraw funds on behalf of the criminals, they may become entangled in legal issues and may face severe consequences.
Legal framework against money mules and financial fraud
Recently, the government passed a law that criminalized “money mule-ing” activities — the Anti-Financial Account Scamming Act (AFASA). Through this policy reform, a person found guilty of acting as money mule will be penalized.
Individuals guilty of money mule activities may be imprisoned for not less than six years, but not more than eight years or a fine of at least P100,000.00, but not exceeding P500,000.00. By imposing these punishments, this law acts to deter and prevent the further proliferation of money mules.
On top of the legal mechanisms to address money mules, the law also encourages the involvement of banks and financial institutions for its successful implementation.
AFASA mandates banks and financial institutions to ensure that they have adequate risk management controls (e.g., multi-factor authentication and fraud management systems) to protect clients’ accounts and transactions.
Moreover, we can expect stronger coordinated verification systems among financial institutions. The law states that responsible institutions will have the power to hold funds that are subject to disputes.
These funds will be held within a period specified by the Bangko Sentral ng Pilipinas (BSP) and shall not exceed 30 days, unless extended by a court. Upon receipt of a complaint of a disputed transaction, involved institutions will initiate a coordinated verification process among themselves to validate the complaint.
By targeting the mechanisms that facilitate financial fraud, including money mules, AFASA will help disrupt the flow of illicit funds, making it more challenging for scammers to profit from their schemes.
Continued vigilance
While the enactment of AFASA is a significant step towards deterring financial fraud, it remains crucial for each one of us to remain vigilant. Let us remember to never share our bank or e-wallet account details with anyone, enable multi-factor authentication in our mobile banking and e-wallet apps, check the authenticity of online stores and websites, and be wary of offers that seem too good to be true.
We should also monitor our accounts and report suspicious transactions to our banks and e-wallet operators. Additionally, we should be cautious about offers or easy-money schemes in exchange for our financial accounts to prevent us from being co-opted as money mules.
By being informed and adopting safe online practices, we can effectively protect our hard-earned money and enjoy a scam-free new year.
The author is the Enterprise Information Security Officer and Data Protection Officer of the Bank of the Philippine Islands (BPI)
