Yes. A Philippine bank, e-wallet provider, or other institution supervised by the Bangko Sentral ng Pilipinas (BSP) may temporarily hold money connected to a disputed transfer. However, this does not give the institution unlimited power to freeze an account merely because someone complained. The hold must follow the Anti-Financial Account Scamming Act and BSP rules, normally applies to the identifiable disputed funds, and is subject to notice, verification, challenge, and strict time limits.

The most important distinction is between a temporary hold on disputed funds, a security restriction on account access, and a formal court-ordered freeze. They may feel the same to an account holder, but they have different legal bases, procedures, and remedies.

Can a Bank Legally Hold Funds From a Disputed Transfer?

Section 7 of Republic Act No. 12010, the Anti-Financial Account Scamming Act of 2024, authorizes BSP-supervised institutions to temporarily hold funds involved in a disputed transaction.

A transaction may be treated as disputed when the institution has reasonable grounds to believe that it appears to be:

Unusual;
Without a clear economic purpose;
From an unknown or illegal source or an unlawful activity; or
Facilitated through a social engineering scheme, such as phishing, impersonation, account takeover, or a scam that manipulated someone into transferring money.

The reasonable belief may come from:

A complaint by the person whose account sent the money;
Information from another bank or financial institution;
A fraud alert generated by the institution’s fraud management system; or
The institution’s own investigation and authentic records.

The law covers deposit accounts, transaction accounts, e-wallets, and other financial accounts under BSP jurisdiction. It therefore applies not only to traditional bank-to-bank transfers but also to many electronic money and payment transactions. (Lawphil)

A Temporary Hold Is Not Always a Freeze of the Entire Account

Under BSP Circular No. 1215, Series of 2025, the institution generally holds the disputed funds or their equivalent amount in the beneficiary account. The amount remains credited to the account but cannot be withdrawn during the holding period.

For example, if an account contains ₱80,000 and an incoming ₱20,000 transfer is disputed, the regulatory process is directed at the ₱20,000 disputed amount. It does not automatically authorize an indefinite hold over the entire ₱80,000.

However, a broader restriction may sometimes appear on the account because the institution may also:

Disable online banking access;
Suspend outgoing transfers;
Require password or device re-enrollment;
Block a compromised source account from making further transfers; or
Restrict the account while completing identity and security checks.

BSP rules expressly allow institutions to take measures necessary to preserve the integrity of the source account, including disabling access or transfer functionality when appropriate. The bank should still be able to explain whether it has held a particular amount, restricted a transaction function, restricted the entire account for security reasons, or implemented a court or government order.

How Long Can a Bank Hold Disputed Funds?

The ordinary administrative holding period is divided into two stages.

Stage	Maximum period	What is normally required
Initial hold	5 calendar days	Complaint, fraud-system finding, or holding request identifying the transaction
Extended hold	Additional 25 calendar days	Reasonable grounds and supporting information showing that more time is needed
Total administrative hold	30 calendar days	Coordinated verification among the institutions and account owners
Beyond 30 days	Only with a court order	Order from a court of competent jurisdiction

The first five days are especially important. A source account owner seeking an extension should normally submit a sworn complaint, affidavit, police report, or other supporting document during the initial holding period, subject to exceptions under the applicable industry protocol.

An extension is not supposed to be automatic. The institution must have reasonable grounds to believe that the money is likely to be disputed funds and that additional time is necessary to complete verification. Relevant considerations may include transaction patterns, the parties’ customer profiles, fraud indicators, account behavior, and the documents submitted.

A hold under this process cannot continue beyond 30 calendar days solely because the bank says its investigation is still pending. An extension beyond that period requires judicial authority.

What if the money has already been withdrawn or transferred again?

The receiving institution can only hold funds that remain traceable and available within the financial system.

If the recipient has already withdrawn the money in cash, converted it into another form, or moved it beyond the institutions in the transaction chain, the bank may report that no funds were successfully held. The institutions must still conduct coordinated verification.

When no funds were held, the verification process should ordinarily be completed within 30 calendar days. For meritorious reasons, the originating institution may extend the investigation, but the total verification period should not exceed 60 calendar days.

This is why reporting an unauthorized or fraudulent transfer immediately is critical. A bank complaint filed within minutes or hours has a better practical chance of reaching money that is still in the receiving account than a complaint filed several days later.

What Happens After a Disputed Transfer Is Reported?

1. The sender reports the transaction through the bank’s fraud channel

The complaint should be made through the originating institution’s designated 24/7 fraud-reporting channel whenever available—not merely through a social media comment, a general sales email, or an unofficial branch contact.

The complainant should provide at least:

Name and account number of the source account owner;
Transaction reference number;
Amount and currency;
Date and time of transfer;
Transfer channel, such as InstaPay, PESONet, internal transfer, or e-wallet;
Receiving institution and recipient details, if known;
A clear explanation of why the transfer is disputed; and
Information showing whether the transaction was unauthorized, mistaken, or induced by fraud.

The institution must verify that the person reporting the transaction is the source account owner or an authorized representative.

2. The originating institution identifies the transaction chain

The originating financial institution may send an initial holding request to:

The first receiving institution;
Any institution to which the funds were transferred afterward; and
Other BSP-supervised institutions identified in the transaction trail.

Each receiving institution checks whether all or part of the disputed funds remains in its system.

3. The receiving institution places the initial hold

If the funds remain available, the receiving institution may hold them for up to five calendar days.

For the initial hold, BSP rules allow an institution to rely on the complainant’s allegations, its fraud-management finding, or a holding request from another institution. This allows banks to act quickly before fraud proceeds disappear. It does not mean the complainant’s allegations have already been proven.

4. Both account owners are notified

The sender should receive:

An acknowledgment of the complaint;
A case or reference number;
Information on whether funds were successfully held;
An explanation of the next steps; and
Information about other available legal remedies.

The recipient should receive information about:

The transaction and amount affected;
The general reason for the hold;
The right to challenge the hold;
How to prove the transaction was legitimate;
The possibility of an extended hold; and
The possible return of the funds if the transaction is found illegitimate.

The institution may limit details that would compromise fraud controls or an investigation, but it should not leave the account holder entirely uninformed about the nature and status of the restriction.

5. The parties submit evidence

The institutions may ask about:

The purpose of the payment;
The relationship between sender and recipient;
The source of the money;
Contracts, invoices, chats, or receipts;
Delivery or performance of goods or services;
Whether the sender personally authorized the transfer;
Whether deception, impersonation, or account takeover occurred; and
Whether the account activity matches the account holder’s usual behavior.

Institutions involved in the chain may share relevant account and transaction information during coordinated verification. Bank secrecy and data privacy restrictions do not prevent the information-sharing authorized for this process, although the information must still be securely handled and confined to legitimate verification purposes.

6. The funds are released or returned

At the end of the applicable period, the institution should ordinarily release the held amount to the beneficiary unless:

A court has extended the hold;
The beneficiary has signed a written waiver of any claim to the money; or
The investigation reasonably concludes that the funds are connected to money muling, illegal sources, unlawful activities, social engineering, a transaction with no underlying economic purpose, or similar circumstances.

If the beneficiary proves that the transfer was legitimate, the institution should lift the hold immediately, even before the maximum holding period expires.

Any bank decision to return the money to the sender or release it to the recipient remains without prejudice to other legal remedies. In other words, the bank’s administrative decision does not necessarily prevent either party from pursuing a civil or criminal case.

Rights of the Person Who Sent the Money

A sender disputing a transfer has the right to:

Use the institution’s consumer assistance mechanism without charge;
Receive clear information about actions taken on the complaint;
Obtain a complaint or case reference number;
Be informed whether funds were successfully held;
Submit documents supporting an extension;
Request transaction identifiers and information concerning institutions in the transfer chain;
Escalate an inadequately handled complaint to the BSP; and
Pursue police, NBI, PNP, civil, or other appropriate proceedings.

Under Republic Act No. 11765, the Financial Products and Services Consumer Protection Act of 2022, financial service providers must maintain a free consumer assistance mechanism. For alleged unauthorized transactions or disputed amounts, the provider must also suspend the imposition of interest, fees, and charges pending its final investigation or provide a similar reasonable accommodation.

A complaint does not automatically guarantee reimbursement. Liability may depend on whether the transaction was authorized, how the fraud occurred, whether security credentials were shared, whether the institution employed adequate controls, and whether it exercised the legally required degree of diligence.

Banks are expected to handle depositor accounts with meticulous care. In Banco de Oro Universal Bank, Inc. v. Seastres, G.R. No. 257151, the Supreme Court reiterated that banks must exercise the highest degree of diligence because banking is affected with public interest and involves a fiduciary relationship with depositors. (Supreme Court of the Philippines)

Rights of the Recipient Whose Funds Were Held

A recipient is not presumed to be a scammer merely because an incoming payment was disputed.

The recipient may challenge the hold at any time by submitting evidence such as:

A contract, purchase order, invoice, or official receipt;
Proof of delivery;
Proof that services were performed;
Messages showing the sender agreed to pay;
Loan or repayment records;
Proof of the parties’ relationship;
Documents showing the source and purpose of the funds;
Affidavits or sworn statements; and
Evidence that the recipient had no connection to fraud or money muling.

The receiving institution must evaluate the evidence and promptly inform the recipient whether it is lifting the hold or continuing it pending further investigation.

An institution that improperly holds funds or keeps them beyond the allowable period may face BSP administrative action. Conversely, a bank acting in accordance with BSP rules is protected from liability merely for implementing a proper hold.

Common Disputed-Transfer Scenarios

An unauthorized account takeover

A fraudster obtains a victim’s password, one-time PIN, or device access and transfers money without the victim’s approval.

This is the clearest example of a disputed transaction. The source bank may secure the compromised account, request holds across the transfer chain, and investigate whether its authentication and fraud controls operated properly.

A transfer authorized because of deception

The victim personally entered the OTP or approved the transfer but did so because someone pretended to be a bank employee, government officer, relative, seller, employer, or investment representative.

The fact that the victim clicked “confirm” does not automatically remove the transaction from AFASA. Transfers facilitated through social engineering are expressly included in the law.

Money sent to the wrong account

A sender may accidentally enter an incorrect account number or select the wrong saved recipient.

If the recipient had no right to receive the payment, Article 2154 of the Civil Code of the Philippines may create an obligation to return it under solutio indebiti, meaning payment made by mistake to someone who had no right to demand it.

The recipient should not spend or transfer the money after learning of the mistake. However, the bank’s temporary verification process should still identify the transaction and hear both sides; it is not a substitute for a final court judgment where the facts are genuinely contested. (Lawphil)

A legitimate seller is accused after delivering the goods

A buyer pays for goods, receives them, and later reports the payment as unauthorized or fraudulent to obtain a refund.

The seller should promptly provide the order confirmation, invoice, delivery records, buyer communications, proof of receipt, and any applicable return or cancellation terms. An ordinary disagreement over quality, delay, or contract performance is not automatically a social engineering transaction.

Knowingly filing a completely unwarranted or false report in bad faith may constitute malicious reporting under AFASA. The penalty may include imprisonment of one to five years, a fine of ₱50,000 to ₱200,000, or both. (Lawphil)

A recipient forwarded the money to another person

A person may claim to have received the money only as an intermediary, online worker, cryptocurrency trader, “payment processor,” or favor to an acquaintance.

This creates serious money-mule risk. AFASA penalizes knowingly using, lending, renting, buying, selling, or allowing the use of a financial account to receive, transfer, withdraw, or move proceeds derived from crimes or social engineering schemes. (Lawphil)

Documents That Can Help Resolve the Hold

Document	Why it matters
Transaction receipt or screenshot	Identifies the date, amount, recipient, and reference number
Complete account statement	Shows the transaction in context and any related transfers
Written narrative or chronology	Explains events in a clear, consistent sequence
Sworn affidavit	Supports an extended hold or formally records the party’s version
Police or cybercrime report	Supports allegations of fraud, impersonation, or account takeover
Contracts, invoices, and receipts	Shows the economic purpose of the transfer
Chats, emails, and call records	May prove authorization, deception, or the agreed purpose
Delivery and acceptance records	Helps distinguish a genuine sale from a fraudulent transaction
Proof of relationship	Explains gifts, family transfers, loans, payroll, or reimbursements
Identification documents	Allows the institution to verify the complainant or recipient
Special Power of Attorney	Allows a properly authorized representative to act where required

Keep original files where possible. Do not rely only on cropped screenshots. Preserve full message threads, transaction confirmations, email headers, URLs, phone numbers, usernames, dates, and timestamps.

What to Do if Your Bank Account Was Restricted

Ask the bank to identify the restriction. Request written confirmation of whether it is an AFASA temporary hold, a fraud-security restriction, an AMLA freeze order, a garnishment, or another legal process.
Ask for the exact amount affected. Determine whether only the disputed funds are held or whether account access and transfer functions have also been restricted.
Request the transaction and case reference numbers. Use these references in every follow-up.
Submit evidence immediately. Do not wait until the fifth day if documents are needed to support or challenge an extended hold.
Respond through official channels. Avoid sending identification documents or banking credentials to unofficial numbers, personal email addresses, or social media accounts.
Keep a communication log. Record the date, time, channel, ticket number, employee or unit involved, documents submitted, and response received.
Escalate first within the institution. Address the complaint to its Financial Consumer Protection Assistance Mechanism, fraud unit, or designated consumer assistance office.
Escalate unresolved concerns to the BSP. The BSP Consumer Assistance Mechanism is a second-level remedy after the consumer has first complained to the institution. Complaints may be submitted through the BSP Online Buddy or the alternatives listed on the BSP consumer assistance channels page. (Bureau of Small and Medium Enterprises)

Under BSP Circular No. 1169, Series of 2023, an unresolved consumer dispute may proceed from BSP consumer assistance to mediation or adjudication. BSP adjudication covers qualifying claims that are purely civil and seek payment or reimbursement of not more than ₱10 million, exclusive of legal interest, attorney’s fees, and litigation costs.

Special Considerations for Account Holders Abroad and Foreigners

Foreign citizens and Filipinos living overseas may use the same bank and BSP complaint mechanisms when the institution is under BSP supervision.

Practical difficulties usually involve identity verification and representation rather than nationality. A bank may require:

Video or enhanced identity verification;
Passport and proof of address;
A signed authorization for an informal consumer complaint;
A notarized Special Power of Attorney for formal representation;
A board resolution and secretary’s certificate for a company; or
The foreign equivalent of corporate authority documents.

For BSP mediation or adjudication, a representative generally needs a Special Power of Attorney with authority to appear, settle, sign documents, and bind the account holder. A foreign company may be required to submit the equivalent board or partnership authorization documents.

Where a document is signed abroad, the institution or Philippine authority may require it to be apostilled if it was executed in a country participating in the Apostille Convention. Depending on the country and the receiving institution’s rules, consular notarization or legalization may instead be required. Requirements should be confirmed before paying for notarization, apostille, translation, or courier services. (Philippine Embassy in New Delhi)

Temporary Transfer Hold Versus an AMLA Freeze Order

A disputed-transfer hold under AFASA should not be confused with a freeze order under the Anti-Money Laundering Act.

Issue	AFASA disputed-funds hold	AMLA freeze order
Who initiates it?	Bank, e-wallet, or other BSP-supervised institution	Anti-Money Laundering Council through a petition
Basic ground	Reasonable basis to treat a transfer as disputed	Probable cause that assets are related to unlawful activity
Initial period	Up to 5 calendar days	Generally 20 days
Maximum without further judicial authority	30 calendar days	The Court of Appeals may extend it, subject to a maximum of 6 months
Main remedy	Submit evidence and request lifting from the institution	File the proper motion before the Court of Appeals
Scope	Identifiable disputed funds, with possible security restrictions	Assets and materially linked accounts covered by the court order

Under the AMLA, as amended by Republic Act No. 11521, the Court of Appeals may issue a freeze order after finding probable cause. In its 2025 decision in Manganip v. Republic of the Philippines, the Supreme Court held that materially linked accounts may be included, but the order must follow safeguards, including identification of the covered property and limitation to the amount or value supported by probable cause. An affected account holder may move to lift the order. (Lawphil)

Frequently Asked Questions

Can a bank freeze my account just because someone claims they sent money by mistake?

The bank may initially hold the identifiable disputed funds if the complaint and transaction information provide reasonable grounds under AFASA. The complainant’s allegation is enough to begin urgent verification, but it is not final proof. You must be notified and allowed to establish the legitimate purpose of the transfer.

Can the bank hold all the money in my account?

The AFASA process is principally directed at the disputed amount. A bank may separately restrict broader account access or transfer functionality for security or fraud-prevention reasons. Ask the bank to state the amount held and the legal or contractual basis for any restriction affecting the rest of the account.

Can I withdraw other money while one transfer is being investigated?

Possibly. If only a specific amount is held, the remaining available balance may still be usable. If the bank has disabled the account or transfer function because of suspected compromise, access may remain limited until identity and security checks are completed.

Does the sender automatically get the money back after filing a complaint?

No. The institutions must verify the transaction. The funds may be returned if the recipient waives the money or the investigation reasonably concludes that the funds came from fraud, social engineering, illegal sources, money muling, or a transaction without an underlying economic purpose. Legitimate transfers should be released to the recipient.

What happens after the 30-day holding period?

The institution should release the funds unless a court has extended the hold, the recipient waived the claim, or the verification produced a permissible basis for returning the amount to the source account. A bank cannot continue an AFASA administrative hold indefinitely merely because its internal investigation remains open.

Can I challenge the hold before the five days or 30 days expire?

Yes. A beneficiary may challenge the hold at any time by submitting evidence proving the legitimacy of the transfer. If the evidence sufficiently establishes legitimacy, the bank should lift the hold immediately without waiting for the maximum period to expire.

Should I file a police report?

A police or cybercrime report is particularly helpful where the transfer involved account takeover, phishing, impersonation, threats, identity theft, or an organized scam. It may also support an extension beyond the initial five-day hold. The bank complaint should still be filed immediately rather than delayed until the police report is completed.

Can bank secrecy prevent the banks from tracing the transfer?

No. AFASA allows the involved institutions to exchange relevant information during coordinated verification despite ordinary bank-secrecy and data-privacy restrictions. The information must nevertheless be protected and used only for authorized purposes.

What if the person who complained is lying?

Provide contracts, receipts, delivery records, communications, and other evidence immediately. A person who maliciously files completely unwarranted or false information that causes funds to be held may face criminal penalties under AFASA.

Key Takeaways

A Philippine bank or e-wallet provider may legally hold funds connected to a disputed transfer.
The ordinary initial hold is limited to five calendar days and may be extended by up to 25 more days.
A hold beyond the total 30-day administrative period generally requires a court order.
The process normally targets the disputed amount, although broader account restrictions may be imposed for legitimate security reasons.
Both sender and recipient have rights to notice, information, participation, and submission of evidence.
A recipient can request immediate lifting by proving that the transfer had a legitimate purpose.
A sender should report fraud immediately because funds that have already been withdrawn may no longer be available to hold.
A mistaken payment may create an obligation to return the money under Article 2154 of the Civil Code.
A false complaint filed maliciously or in bad faith can result in criminal liability.
Unresolved complaints should first go through the institution’s consumer assistance mechanism and may then be escalated to the BSP.