Section 7Sec./Art. 7

Temporary Holding of Funds Subject of a Disputed Transaction. - Institutions shall have the authority to temporarily hold the funds subject of a disputed transaction within the period prescribed by the BSP, which shall not exceed thirty (30) calendar days, unless otherwise extended by a court of competent jurisdiction: Provided, That Institutions shall promptly notify the BSP whenever it temporarily holds the funds subject of a disputed transaction.

A transaction shall be considered disputed if the Institution, based on information obtained from another Institution, a complaint, from an aggrieved party, or a finding under its own FMS, has reasonable ground to believe that such transaction appears to be:

(a) Unusual;

(b) Without clear economic purpose;

(c) From an unknown or illegal source, or unlawful activity; or

(d) Facilitated through social engineering schemes.

Where such belief arises from a finding under its won FMS, the Institution shall perform acts as may be legally warranted to preserve the integrity of the Financial Account.

No administrative, criminal, or civil liability shall be imposed, against an Institution or its directors, trustees, officers, and employees for holding funds subject of a disputed transaction when done in accordance with BSP rules and regulations.

The BSP shall issue rules and regulations on: the circumstances under which Institutions are required to exercise such authority to avoid probable fraud; the grounds for, procedure, and period of holding funds; the period wherein the Institutions should notify the BSP whenever it holds funds; the verification and validation process; the release of funds subject of a disputed transaction; and other actions that may be undertaken by the Institutions and Account Owners during the period of temporary holding of funds.