Purisima’s ideas on curbing corruption

Former finance secretary Cesar Purisima, who served under the term of former president Benigno “Noynoy” Aquino III, recently posted on his Facebook page a few interesting suggestions on how the government can curb corruption in its financial transactions.

I found his suggestions interesting enough to share with readers of my column. According to Mr. Purisima, “The recent corruption scandals in the Department of Public Works and Highways (DPWH) have once again laid bare a systemic weakness in the Philippines’ fight against graft: the role of cash. Bribes, kickbacks and under-the-table deals thrive in cash precisely because it is untraceable, untaxed and invisible to regulators. As long as cash remains king in illicit transactions, corruption will always find a way.

“If we are serious about curbing corruption, not just in DPWH but across government, we need to go beyond administrative reshuffles and lifestyle checks. We must target the financial lifeblood of corruption: the ease with which large sums of money can be moved around in cash. Fortunately, other countries have shown us the way.”

Global best practices we can adopt

Set limits on high-value cash transactions

In the European Union, cash payments are capped at €10,000, with some countries going much lower (France at €1,000, Spain at €2,500). These restrictions make it significantly harder to deliver bribes in plain envelopes or bags of cash. The Philippines should follow suit by setting reasonable caps on cash payments, forcing large transactions into the banking system where they leave an audit trail.

Mandate reporting of large cash withdrawals

Under the US Bank Secrecy Act, financial institutions must report cash withdrawals or deposits above $10,000 through Currency Transaction Reports (CTR). In the Philippines, the Anti-Money Laundering Act already requires suspicious transaction reporting, but cash withdrawals remain a blind spot. By requiring banks to automatically flag large withdrawals, regulators can monitor the outflows that often precede corruption payoffs.

Reduce the largest denomination in circulation

The European Central Bank phased out the €500 bill, nicknamed the “Bin Laden note” for its popularity in illicit trade. India’s controversial demonetization in 2016 also withdrew its highest-value notes to flush out black money. The Bangko Sentral ng Pilipinas (BSP) should consider reducing the top Philippine denomination from P1,000 to P500 – or even P200. Moving P10 million in P1,000 bills requires just 10,000 notes, but in P200 bills it requires 50,000, dramatically increasing the logistical risk and visibility of large-scale corruption.

Introduce regular demonetization cycles

Countries like Singapore and Switzerland periodically redesign and recall old notes, forcing hoarded cash back into the formal system. A predictable Philippine version – say every seven to 10 years – would prevent illicit cash from sitting safely in vaults indefinitely. Those holding undeclared funds would be compelled to exchange them or lose their value, and authorities could force exchanges by requiring amounts beyond a certain limit to be deposited for a verification period.

Promote digital and traceable alternatives

Perhaps the most powerful long-term solution is to shift away from cash altogether. Sweden, for instance, is well on its way to becoming a cashless society, with most transactions now conducted digitally. For the Philippines, encouraging digital payments, particularly in government procurement and infrastructure projects, would ensure transactions are auditable, transparent and far harder to manipulate.

Time for bold action

Critics will argue that such reforms may inconvenience ordinary citizens who rely on cash. But the truth is that everyday Filipinos rarely deal with transactions in the tens of thousands, much less millions. It is precisely the politically connected and those engaged in large-scale illicit deals who benefit most from an unrestricted cash system.

Purisima pointed out that “the DPWH scandal should serve as a wake-up call. Limiting cash transaction sizes, requiring withdrawal reporting, reducing denominations and introducing periodic demonetization are not radical ideas, they are proven anti-corruption tools adopted by other countries. Pairing these with a stronger push for digital financial inclusion, a unique unified digital ID number (just one number for everything from passports, driver’s license, SSS, GSIS, TIN, PhilHealth etc.) will help modernize our economy while starving corruption of its favorite currency.

“If we want to cut corruption at its source, we must make it materially harder, riskier and costlier to move money in cash. Anything less is just treating the symptoms while allowing the disease to fester.”

Previously, Purisima had also suggested the use of Artificial Intelligence to track various projects of the government, noting that “every year, billions are allocated to various projects, but how much of it is actually new and how much is just being repeated?

“With the controversy over so-called ‘ghost’ flood control projects and the huge sums supposedly spent on infrastructure that either don’t exist or don’t serve their purpose, it’s clear that we need better tools to track where public money is going.

“What if we use AI to compare this year’s budget with previous ones? It could help spot duplicate funding, recycled projects and even questionable allocations that keep showing up without results. It could also help track insertions as it goes through the legislative mill.

“I understand there are tools now that can help make this easier not just for experts but even for ordinary citizens who care about where our taxes go.

“Transparency means knowing exactly how our money is spent. The national budget isn’t above scrutiny, and accountability should be non-negotiable. In fact, we can do more than track spending. We can compare government promises with actual delivery, monitor progress and hold every agency accountable, not just once a year but all the time.”

Just recently, Sen. Bam Aquino filed a bill recommending the use of blockchain accounting for the Department of Budget and Management.