THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to release regulations on the temporary holding of funds involved in disputed transactions, in line with the implementation of Republic Act No. 12010 or the Anti-Financial Account Scamming Act.
A draft circular posted on the central bank’s website contain the proposed guidelines, which, if approved, will amend sections of the Manual of Regulations for Banks, the Manual of Regulations for Non-Bank Financial Institutions, and the Manual of Regulations for Payment Systems.
“[With] the increased use of electronic commerce and digital financial services, there is a need to promote awareness on the proper use of financial accounts and to protect the public from cybercriminals and criminal syndicates who target financial accounts or lure account owners into becoming accessories or perpetrators of fraudulent activities,” the BSP said.
“The State shall undertake measures to protect all persons from cybercrime schemes by regulating the use of financial accounts and preventing their use in fraudulent activities,” it added.
The proposed regulations will apply to all BSP-supervised institutions (BSIs), automated clearing house (ACH) participants, and clearing switch operators (CSOs) involved in the electronic transfer of funds from one financial account to another financial account.
However, it will not apply to erroneous transactions and credit card issuers, acquirers and transactions.
The rules define disputed transactions as electronic transfers that a BSI has reasonable grounds to believe — based on a complaint, the findings of a BSI’s fraud management system (FMS), or an initial holding request — are unusual; have no clear economic purpose; are from an unknown or illegal source, or unlawful activity; and are facilitated through social engineering schemes.
Based on the draft rules, BSIs may temporarily hold disputed funds for a maximum of 20 calendar days, inclusive of the initial and extended holding periods. The period for holding may only be extended by a court of competent jurisdiction, it added.
“Once the disputed funds in the beneficiary accounts have been held, the equivalent amount shall be considered credited but may not be withdrawn during the holding period,” the BSP said.
“Simultaneously with the temporary holding of disputed funds, BSIs shall initiate a coordinated verification process to validate a disputed transaction,” it added.
The verification process may be initiated through a complaint-initiated holding, an FMS-initiated holding or a request-initiated holding.
“Immediately and simultaneously from receipt of a complaint or FMS finding involving an outgoing transaction, the OFI (originating financial institution) shall, in accordance with the periods prescribed under the industry protocol,” it added.
BSIs must establish and implement their own policies, systems, and procedures for verification of disputed transactions, in line with the agreed industry protocol and other pertinent requirements.
“All BSIs, ACH participants, and CSOs shall collaborate and establish an integrated and holistic industry protocol for the temporary holding of disputed funds and coordinated verification of disputed transactions,” the draft rules read.
They must also subscribe and adhere to the industry protocol to ensure timely, efficient, and effective temporary holding of disputed funds and coordinated verification, it added.
The industry protocol ensures the clear and specific roles and responsibilities of each party in the temporary holding of funds, as well as enables a timely and streamlined system and procedure.
It will also “institutionalize a secure, real-time or near-real-time, automated system for tracing disputed transactions.”
The protocol must also have the capability to “generate and record a visible disputed transaction chain, trigger the temporary holding of disputed funds, and induce timely alerts for involved BSIs, ACH participants, and CSOs.”
Under the draft rules, BSIs must also “actively and regularly engage with their client account owners on proactive measures to safeguard their personal and financial information and ensure the security and integrity of their financial accounts.”
BSIs must communicate with account owners to protect their sensitive identifying information, such as usernames, passwords, one-time passwords, and the like.
“These include using strong and unique passwords, refraining from sharing credentials, and exercising caution to avoid falling victim to social engineering schemes.”
Account owners must also report any disputed transactions to BSIs and cooperate in any investigations and verification of the said transaction. — Luisa Maria Jacinta C. Jocson
BSP drafts rules on holding of funds involved in disputed transactions
Philippines Pandemic
Post a Comment