BSP warns banks against auto loan fraud

Published September 29, 2021, 5:21 PM

by Lee C. Chipongian

For the second time in 30 days, the Bangko Sentral ng Pilipinas (BSP) released another advisory on the “increasingly prevalent” modus operandi by organized carnapping syndicates using auto loans to dupe car buyers.

The central bank reissued the warning to all BSP supervised financial institutions (BSFIs), their clients and the general

(FILE PHOTO / MANILA BULLETIN) Car buyers beware of suspicious transactions
public, and instructed all banks to reinforce its customer identification and verification procedures as part of customer due diligence.

The BSP said the so-called assume balance/pasalo scheme, also known as the “pasalo-benta” is a modus targetting car buyers looking to save money on their car purchase and sellers who need to transfer their liabilities. This scheme is the act of selling a vehicle by way of assuming the mortgage loan and using falsified documents.

“Under this scheme, a syndicate member would buy a vehicle from a seller with an agreement to assume payments for the auto loan. However, the syndicate member has no intention of paying the remaining amortizations and will sell/dispose of the vehicle to an end-buyer to gain profit using falsified documents, giving the end-buyer no rights over the vehicle. As a result, the original seller defaults on his/her auto loan and the car gets repossessed1 leaving the end-buyer with nothing,” said the BSP.

Other types of car-related illegal activities are the “rent-tangay”, the “rent-sangla” and the “labas-casa” scheme.

The rent-tangay scheme is a rental contract but vehicles will not be returned after the lapse of the contract, while the rent-sangla/benta scheme is the pawning or selling of a vehicle. The labas-casa scheme is another loan accommodator scheme where a carnapper will pose as a legitimate business and use an “artista” who will acquire an auto loan from a car dealership using spurious documents.

The Philippine National Police has also warned the public against syndicates that acquire high-end motor vehicles through auto loans under fictitious circumstances. To deceive banks and avail of auto loans, syndicates fabricate conduction stickers, plate numbers, identities, and present falsified documents such as identification cards and employment certificates. “Carnapping syndicates sometimes resort to identity theft by using an actual person’s name, address, and company profile, but with a different photo,” said the BSP.

The BSP memo, signed by BSP Deputy Governor Chuchi G. Fonacier and issued on August 26, cautioned banks to strictly observe and strengthen the implementation of Anti-Money Laundering (AML) regulations.

Fonacier said BSFIs should particularly pay stricter attention on customer identification and verification procedures.

She also reminded banks to conduct continuous monitoring of customers and their transactions, to report all suspicious transactions, and to continue AML training program including controls relating to partner/accredited car dealers.