Over the weekend, the Securities and Exchange Commission issued a reminder to the public not to let others use their bank accounts, e-wallets and similar financial accounts.  If you think you’re being a Good Samaritan by helping out a family member or a friend, what you don’t know is that you could be exposing yourself to being a “money mule” and will be liable under the Anti-Financial Account Scamming Act (AFASA).

To keep you and the people around you honest, here are some helpful facts to help you better protect your financial information.

Is it a crime to be a ‘money mule’?

Most of us are more familiar with drug mules, which has landed guilty (and sometimes innocent ones too) in legal trouble.  Under AFASA or Republic Act No. 12010, being a money mule is also a criminal offense and it carries a penalty of up to 14 years in prison and up to P5 million in fines.  

What makes someone a ‘money mule’?

Let’s say you lent your credit card to a friend so they can pay their hospital bill.  If you went to the hospital and swiped your card to pay for the charges, that’s not being a money mule.  You’re just a friend that decided to extend a loan via your credit card.

If we check AFASA, the following are considered "money muling" particularly when the funds are "known to be derived" from scams:

1.  Using, borrowing or allowing the use of a financial account

2. Opening a financial account under a fake name or using someone else's identity

3. Buying or renting a financial account

4. Selling or lending a financial account

5. Recruiting, hiring, or convincing someone to do the actions listed above

So no scam, no foul?

Technically yes, but how can you be 100 percent sure?  Once you give someone access to your financial accounts – from bank accounts to e-wallets to credit cards – it will be difficult for you to follow the money trail.  Worse, you probably said yes to one time use, but now that they have the access, what stops them from using it again, and again? And unknowingly or knowingly for scams and other crimes?

But we’re family or we’re old friends so I can trust them right?

Maybe you can but even family members and long-time friends can be scammed and without intending to, they could take you along for the ride.  How many times have family members all lost money together in the same scam?  That’s because they wanted to share the ‘great opportunity’ with one another.  How many friendships have turned sour because the one they trusted turned out to have been scammed too?

What’s a safe way to let someone use my credit card?

Treat your credit card like cash, because it works just like cash.  If your available credit line is P50,000, handing over your credit card for someone else to use is like giving them P50,000.  Quite risky don’t you think?  The legal way is to add them as a user, which means going to your bank and applying for them as supplementary cardholders to your account.  With supplementary cards, you can assign a credit limit as little as P5,000 to manage your credit risk or exposure.  A supplementary card is ideal to give to your spouse, or kids, or parents.  

How about opening a joint account with family or friends?

This actually happens pretty often between spouses, parents and their children, even men and women dating with long-term plans.  A joint-account means both parties own the account, so each one can freely make deposits and withdrawals.  If checks were issued from the account, and they bounced, both parties are also liable.  It’s best to stay on top of joint accounts and ensure it is only being used as planned with transparent money trails.

Can I co-sign a loan with a family member or friend?

This is also a common practice, as banks and financial institutions minimize their risk by asking for co-obligors.  When you co-sign a loan, or become a guarantor, you need to know that in the event the original borrower fails to pay, then you are next in line to settle the outstanding balance.  I recommend considering all the scenarios and discussing the options with the one who needs the loan before you say yes or no.

I’m being invited to register as shareholder for a new company at no cost.

While this seems like you hit a jackpot, you need to ask why.  Of all the people they can approach, why are they making you this offer?  Are you an influencer whose following can help boost sales of their products or services?  Or you have good credit standing and they need shareholders with no negative records with banks?  When it comes to money, always remember this warning: if it’s too good to be true, it probably is.