Why the Philippines is one of Asia's most exciting financial markets, and why fraudsters have taken note

This is Part 1 of a three-part series on the Philippines’ compliance landscape, written by Iain Armstrong, Executive Director of FCC Strategy at ComplyAdvantage. In this article, Iain examines why the Philippines has become one of Asia’s most dynamic financial markets, and why it has caught the attention of global fraudsters. 

Few markets in Asia are as interesting to me right now as the Philippines. Digital payments saw a meteoric rise from roughly 1% of retail transaction volume in 2013 to 57.4% in 2024, and they continue to rise. 

The country came off the Financial Action Task Force’s grey list in February 2025. And underpinning much of it is one of the world’s strongest remittance corridors: OFW cash remittances reached a record US$35.63 billion in 2025, around 7.3% of GDP, with most now arriving via digital channels rather than over the counter. 

Those inflows give the market something many of its neighbors lack: a large and continuous flow of real money moving into ordinary people’s accounts, and they have helped make the Philippines unusually fertile ground for financial innovation.

But ‘fertile’ means fertile for everyone – and as any farmer will tell you: weeds grow fastest in fertile soil. The same conditions that promote innovation, e.g., mass digital onboarding, instant rails, and a growing middle-income population that is becoming increasingly at ease with moving money electronically, are also those that attract fraudsters.

The flipside of fast adoption

History has shown that when digital innovation is exploding in a given market, strong customer due diligence can quickly become a casualty in the race for slicker, faster, lower-friction onboarding journeys, and the numbers bear that out. 

Over the course of 2023 and 2024, the registered e-money base fell from around 324 million to 197 million, a 39% reduction, which the Bangko Sentral ng Pilipinas (BSP) has attributed to the systematic deactivation of unverified accounts. These are cumulative registered accounts rather than unique users, and transaction volumes kept rising throughout, so this was primarily a case of housekeeping rather than a fall in usage. But the scale of it provides a sense of how many accounts were opened without being held to scrutiny.

And this is where the fraudsters come calling – typified in the issue of resold accounts: a real person opens an account, passes verification against real documents, then sells or hands it on. And perhaps, driven by a lack of obligation to keep customer records current, institutions increasingly cannot trust each other to know that account holders are who they say they are. 

The Anti-Money Laundering Council’s own Typologies Brief on Money Mules, published in December 2022, documented Philippine mules moving proceeds through electronic cash cards, ATMs, and over-the-counter withdrawals, spotted through suspicious transaction report analysis and clear geographic clustering. Muling is not a new phenomenon, but the problem’s surface area is growing rapidly. 

It’s also worth remembering that instant payment systems were designed to let people pay one another quickly and at scale. Policing fraud was not a job built into the design of these rails, so the mule problem is less a flaw in the system than a by-product of what it was built to do.

Enter AFASA

The Anti-Financial Account Scamming Act (AFASA), signed on 20 July 2024, makes the financial account itself the object of the offense: using, lending, buying, selling, or renting an account, or recruiting others to do so, now carries a term of imprisonment of 6 to 8 years and a fine. The implementing BSP circulars – such as Circular 1215 – require institutions to run real-time fraud monitoring and a coordinated verification process that can place a temporary hold on disputed funds, shifting liability to institutions that cannot show adequate controls on a negligence basis rather than a blanket one. The requirement is now a live concern, having come into force in June 2026.

It’s worth considering AFASA’s definition of a disputed transaction. The implementing rules treat a transaction as disputed when an institution has reasonable grounds to believe it is unusual for that customer, lacks a clear economic purpose, is drawn from an unknown or illegal source, or is facilitated through social engineering. Note that these are statements about behavior, and behavior surfaces only in what accounts do over time, rather than in what the customer stated at onboarding.

This is important, particularly for new market entrants. Singaporean and Indonesian FinTech groups have taken a well-worn route into the country’s financial services industry, buying small rural bank charters and building nationwide digital platforms on top of them, reaching customers far beyond the provincial areas for which the licenses were originally intended. The BSP has now moved to close that gap. Under Circular 1240, issued on 21 September 2026, any thrift, rural, or cooperative bank that it judges to be operating like a digital bank must hold PHP 1 billion in capital and meet the prudential standards of one, with six months to comply. Importantly, it applies that same PHP 1 billion threshold to an acquisition intended to turn one of these banks into a technology-driven model – aimed squarely at the route described above. 

The compliance implications for acquirers can be uncomfortable: inherit a customer book you know very little about, built to a verification standard not set by you, just as the standards for these institutions have risen. 

Understanding your customers by observing their behavior

So the momentum for compliance teams in the Philippines is, for now at least, much more focused on identifying who is actually transacting on accounts that may have successfully cleared the hurdles of onboarding but are no longer controlled by the people who opened them. In practice, that means a consolidated approach to financial crime risk management that encompasses (1) screening a customer base for risk indicia, (2) scoring each customer from what is genuinely known about them, and (3) monitoring transactions in real-time for exactly the signals now explicitly prompted by AFASA: the unusual, the unexplained, and the socially engineered.

Bringing those controls together on a single footing, rather than bolting together separate components one at a time, is how financial institutions can turn AFASA compliance into a workable defense. ComplyAdvantage has employed exactly this kind of thinking in developing our platform, which unites transaction monitoring, fraud detection, customer risk scoring, and name screening into a single view. For institutions entering the promising Philippine market, an integrated framework provides the clarity and control needed to satisfy regulatory requirements and combat financial crime.