HEAVIER SANCTIONS VS INVESTMENT FRAUD
MANILA – President Rodrigo Duterte signed into law a measure imposing heavier sanctions against individuals involved in investment scams.
Duterte signed on May 6, 2022, Republic Act 11765, or the Act Affording More Protection to Consumers of Financial Products and Services also known as “Financial Products and Services Consumer Protection Act.”
The law aims to ensure that appropriate mechanisms are in place to protect the interest of consumers of financial products and services under the conditions of transparency, fair and sound market conduct and fair, reasonable and effective handling of financial consumer disputes, which are aligned with global best practices.
It identified financial consumers as a person or entity or their duly appointed representative, who is a purchaser, lessee, recipient or prospective purchaser, lessee or recipient of financial products or services.
Financial products or services, on the other hand, refers to those developed or marketed by a local financial service provider, including savings, deposits, credit, insurance, pre-need and health maintenance organization (HMO) products, securities, investments, payments, remittances and other similar products and services.
This also includes digital financial products or services that pertain to the broad range of financial services accessed and delivered through digital means.
The law defines investment fraud as a form of deceptive solicitation of investments from the public, which includes Ponzi schemes and other forms of scheme involving the promise or offer of profits or returns that are sourced from the investments or contributions made by the financial consumers, boiling room operations and the offering or selling of investment without a license or permit from the Securities and Exchange Commission (SEC).
It identified the Bangko Sentral ng Pilipinas, SEC and Insurance Commission as the bodies that will enforce the provisions of the law on all financial service providers, while the Cooperative Development Authority will be the implementing arm of the act with respect to cooperatives.
The law prescribed imprisonment of not less than one year but not more than five years, or by a fine of not less than P50,000 but not more than P2 million, or both, at the discretion of the court, to the violators of the act.
“If the violation is committed by a corporation or a juridical entity, the directors, officers, employees or other officers who are directly responsible for such violation shall be held liable thereto,” it stated.
“For persons found responsible for investment fraud, the SEC may impose a fine of no less than P50,000 nor more than P10 million for each instance of investment fraud plus not more than P10,000 for each day of continuing violation in addition to the other administrative sanctions under Section 54 of Republic Act 8799,” it added.