The Bangko Sentral ng Pilipinas (BSP) just gave banks the power to freeze suspicious funds for up to 30 days, with no court order needed.

On paper, it sounds like a practical move to keep scammers from hopping between accounts or laundering money through mule networks. But in reality? It also raises uneasy questions about financial autonomy, due process, and whether banks are now part-time police officers.

This authority comes via BSP Circular No. 1215, which implements key parts of the Anti-Financial Account Scamming Act (AFASA). Signed into law in 2024, AFASA targets all the usual suspects, such as money mules, phishing scams, and good old-fashioned economic sabotage. But it’s the freezing part that’s caught the most attention. To me, at least.

Under the new rules, banks and other BSP-supervised institutions can now temporarily hold disputed or suspicious funds for up to 30 calendar days. The funds are essentially locked in place. Not withdrawn, not transferred, not touched.

The idea is to “buy time” for a coordinated verification process.

Banks, e-wallets, and clearing operators must work together to determine whether a flagged transaction is legitimate or part of a scam. If the transaction is found to be clean, the freeze can be lifted even before the full 30 days. However, if suspicions remain, a court order is needed to extend the freeze.

It sounds reasonable. Well, until it’s your money that gets caught in the crossfire, no less.

So… What Counts as “Suspicious” Now?

Let’s be honest. Scams are real. Filipinos have lost billions of pesos in recent years to scams ranging from fake job offers, online investment “gurus,” and love scams that turn into nightmares.

But while most people would agree on the need to stop fraudsters, giving banks the power to freeze accounts without judicial oversight does feel like a slippery slope.

The challenge lies in how BSP lets the banks determine which transactions and funds are suspicious enough to freeze.

The circular outlines some scenarios, like transactions with no clear economic purpose, or funds coming from unknown or potentially illegal sources, or those facilitated by unauthorised access to someone’s sensitive information.

But the language used is vague, and the interpretation of what’s “unusual” can be highly subjective. In the age of AI and automated fraud systems, false positives are far from rare.

The risk is real. What if a completely legitimate transaction gets flagged just because it doesn’t fit a system’s pattern?

Singapore Tried It First

The funny thing is, this move bears a striking resemblance to Singapore’s Protection from Scams Bill, where police can issue Restriction Orders if they believe someone might fall victim to a scam.

In a previous piece, I questioned whether that law truly protected consumers or merely gave authorities too much leeway to intervene in personal finances.

In the Philippines, the model is somewhat different, but the concern is the same.

Instead of the police, it’s your bank that now holds the power to pause your access to funds. While that might seem less intrusive, it places banks in an unusual position: part service provider, part crime stopper. In practice, it blurs the line between private institutions and public enforcement.

And once a transaction is flagged, it’s the recipient who bears the burden of proof. If your account receives money that a bank deems suspicious, it’s up to you to prove your innocence.

You must submit documents, explain the source, and justify the transaction’s legitimacy. Until then, your money sits frozen.

Sure, There Are Rules, But Who Watches the Watchers?

To be fair, the BSP has put some structure in place to prevent the arbitrary freezing of the funds.

Banks are required to log the exact date and time they receive a complaint or fraud alert. These logs serve as the official record for whether they acted in time or whether they held funds too long.

Institutions must also allow account holders to challenge a freeze at any point. If the recipient provides sufficient evidence to prove that the transaction was legitimate, the funds must be released, even before the 30-day period ends.

Furthermore, the BSP has clarified that banks acting in good faith will not be held liable for temporarily holding funds. However, anyone who files a malicious or baseless complaint that leads to a wrongful freeze could be prosecuted under the AFASA.

There’s also a reporting mechanism in place. All institutions are now required to submit a monthly “Report on Temporarily Held Funds”. This adds a layer of accountability, but it doesn’t solve one glaring gap.

What’s missing from this regulatory framework is an independent appeals process.

Right now, if you believe your funds were frozen unfairly, your only recourse is your bank. There’s no separate review body, no ombudsman, no court intervention unless the freeze is extended beyond the 30 days.

For many, that feels like a one-sided conversation.

Power to Protect or Power That Overreaches?

Here’s what makes me pause.

When institutions are granted more authority to fight crime, there’s always the risk of collateral damage. Not because banks are malicious, but because automated fraud detection systems are built on probability, not certainty. And not every red flag means fraud.

This is where things start to feel a little unbalanced. The BSP’s intent is clear and commendable, which is to stop scammers before they drain accounts or send stolen funds offshore. But clarity in intent doesn’t always mean clarity in execution.

Just look at what happened to Bank of America (BoA) during the COVID-19 pandemic. In 2020, BoA froze thousands of customer accounts as part of its fraud prevention campaign targeting unemployment benefit scams. But the implementation was deeply flawed.

Many people were locked out of their accounts without warning, sometimes for weeks or months, unable to access their essential funds. The bank eventually faced a class-action lawsuit and a USD $225 million penalty from U.S. regulators for violating consumer protection laws like the Electronic Fund Transfer Act and the Dodd-Frank Act.

This case shows what can go wrong when institutions overcorrect in the name of security. Even a well-intended freeze policy can turn into a compliance nightmare and spark public outrage if it lacks transparency, due process, and proper safeguards.

As with any system that operates on discretion, the risk of misuse or simple error is never zero.

Without clearly defined criteria or a neutral appeals process, it becomes difficult to draw the line between necessary intervention and overreach.

Protection and Trust Must Go Hand in Hand

Despite these concerns, I actually believe the regulation is a step in the right direction. But like Singapore’s scam law, it needs refining. One way to improve public trust is by setting clearer standards on what constitutes “suspicious” activity.

The BSP could also establish an independent review mechanism for freezes that are contested by account holders. This would offer a much-needed check on the system and help avoid perceptions of bias or arbitrary decision-making.

Another idea worth exploring is giving users the option to enrol in voluntary scam protection programs, essentially allowing them to pre-authorise certain freezes or transaction checks based on risk profiles. That way, users retain some control while still benefiting from the protective features the system offers.

Trust in financial institutions runs deep in the Philippines, but that trust can erode quickly if people feel their access to money is being dictated by opaque systems. Scam prevention must not come at the cost of financial freedom.

Because if there’s one thing worse than losing your money to a scammer, it’s losing access to your own money.

Even when you’ve done nothing wrong.

Featured image: Edited by Fintech News Philippines, based on image by Who is Danny via Freepik.