Accountants can lead the charge against financial scams

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“Every tool carries with it the spirit by which it has been created.” – Werner Heisenberg

THE above quote applies to technological advancements — meaning that such progress also has the capability to harm and destroy depending on how it is being used. Financial scams have evolved with advancements in technology, making it increasingly challenging for law enforcement agencies to detect and apprehend perpetrators.

Last July 20, 2024, Republic Act 12010, otherwise known as the Anti-Financial Account Scamming Act (Afasa), was enacted. This was in response to the clamor for more safeguards from scams and fraudulent practices. In its declaration of policy, the law affirms that the state acknowledges the need to promote awareness on the proper use of financial accounts and protect the public from cybercriminals and criminal syndicates amid the increased use of electronic and digital financial services.

This law is not just about penalties and prohibitions. It’s a call for accountability and vigilance across professions, especially for accountants who are uniquely equipped to make a significant impact in combating financial scams. Afasa takes aim at schemes like money muling, which is the act of using, renting, lending or selling a financial account to facilitate the transfer of funds obtained through illegal means. This includes allowing the use of one’s bank account for transactions without verifying the legality of the funds, renting or selling an account to another party, often for a fee and recruiting others to open accounts for the purpose of money laundering or fraud.

A financial account is one used to avail of products or services offered by institutions, such as credit card accounts, e-wallet, bank deposit accounts and trust accounts.

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Afasa also targets social engineering schemes, defined as acts committed by a person who obtains sensitive identifying information of another person, through deception or fraud, that result in unauthorized access and control over that person’s financial account. These schemes are performed by someone misrepresenting himself or herself as acting on behalf of an institution or making false representations to solicit another person’s sensitive identifying information. It can also be done through the use of electronic communications to obtain another person’s sensitive identifying information.

The penalties are severe, especially for large-scale operations labeled as economic sabotage. And — make no mistake — those who willfully aid or abet the offenses mentioned, such as those who buy, sell or allow the use of their financial accounts for such purposes, will likewise be punished. While scammers are the target of the law, its ripple effect reaches accountants, emphasizing their responsibility to help maintain financial transparency and integrity.

Accountants often occupy positions of trust, managing financial data and ensuring their accuracy. Here’s how we can step up the fight against financial scams in light of Afasa:

– Spotting fraud early. The meticulous nature of accounting work makes professionals in this field well-suited to identify red flags. Irregular transactions, such as bank transfers from unknown origins, or transfers that are way beyond the operational capacity of the business and are without proof of valid and legitimate sources and purpose, can be signs of scams. Prudence would dictate that as an accountant, it pays to be inquisitive and require pieces of evidence to support these transactions.

– Upholding ethical standards. Afasa’s emphasis on avoiding unethical practices aligns with the core values of honesty and integrity in the accounting profession. By refusing to engage in or enable questionable activities, accountants can set a powerful example.

– Driving compliance. With the law requiring the adoption of systems like fraud management systems and multifactor authentication, accountants can take the lead in implementing these measures, ensuring that their organizations meet both legal and operational standards.

To align with the principles of Afasa, accountants should stay educated. Fraud tactics evolve quickly. Regular training helps accountants stay ahead of potential threats. Accountants should also help in strengthening verification processes, such as knowing your client procedures meant to mitigate or entirely eliminate fictitious transactions.

Ensuring that financial records are accurate and transparent is very vital. Work with compliance officers, legal experts and IT teams to help create a more fraud-resistant environment. Accountants should also establish a clear system for reporting suspicious activity, which can make a big difference.

Accountants aren’t just number crunchers — we are stewards of trust in the financial world. With Afasa in place, our role as accountants becomes even more critical. Beyond the technical skills we bring to the table, accountants have the responsibility to champion transparency and protect our organizations from falling prey to scams.

This law serves as both a challenge and an opportunity for the profession. By embracing our unique role, accountants can help ensure a safer financial system for everyone.

Atty. Emmanuel C. Dumayas, CPA, CrFA is the managing partner of Paguio, Dumayas & Associates, CPAs (PrimeGlobal Philippines) and the chairman of the media affairs committee of the Association of CPAs in Public Practice (Acpapp). His opinion does not reflect in any way the views of the said institutions.

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