Ex-DOF chief: Make P200 largest bill to curb corruption

MANILA, Philippines —  Demonetizing P1,000 and P500 bills will make it harder for corrupt officials to conceal and transport illicit funds, former finance chief Cesar Purisima said yesterday.

Removing the value of the banknotes is “not a silver bullet,” but it would strengthen transparency by raising logistical barriers, he maintained.

“Imagine if the largest bills in circulation were only P200. That same P1 billion would have needed 100 suitcases, a convoy of vehicles and a warehouse just to store the cash. The sheer impracticality would make this kind of corruption much harder to hide,” Purisima argued.

About seven vans delivered P1 billion in cash to a congressman, sacked public works engineer Brice Hernandez earlier told the Senate Blue Ribbon committee.

The panel is probing anomalous flood control projects nationwide.

State officials, contractors and engineers have been implicated in ghost and substandard infrastructure projects, as well as anomalous budget insertions.

Last week, the Bangko Sentral ng Pilipinas tightened regulations on large cash dealings by limiting daily withdrawals and similar payouts to P500,000, unless backed by enhanced due diligence measures.

Reinielle Matt Erece, an economist from Oikonomia Advisory & Research Inc., said limiting the largest bill would be unfair as it sacrifices the convenience of the public just to discourage the misdeeds of a few.

“Doing this may deter high-value transactions as it becomes a hassle to transact in smaller amounts. Larger purchases such as vehicles, electronics and wholesale items will be primarily affected by this move,” Erece told The STAR.

Purisima’s demonetization plan would give the public six months to exchange old P1,000 and P500 bills, requiring a valid national ID for bank transactions.

Exchanges of P500,000 or more would need to be deposited into a bank account and reported to the Anti-Money Laundering Council, he noted.

“Corruption will always look for ways to adapt. But it will raise the cost, the risk and the logistical difficulty of hiding and moving dirty money. It will also force billions currently stashed in vaults, basements, under beds and closets back into the banking system where accountability can reach it,” Purisima said.

Other countries that implemented demonetization to fight money laundering include India, Nigeria, Singapore and Canada, as well as the European Union, he noted.

AI vs corruption

Artificial intelligence can help prevent corruption, an expert from the Philippine Institute for Development Studies (PIDS) said, amid inquiries into ghost and substandard infrastructure projects nationwide.

In procurement processes, AI-backed risk-scoring systems can flag corruption before decisions are finalized, PIDS senior research fellow Adoracion Navarro said.

Using predictive analytics to map corruption-prone transactions or sectors can help watchdogs prioritize oversight, he noted.

Natural language processing assists in analyzing financial disclosures, social media and whistleblower complaints for early warning signs, he emphasized.

Al-powered forensic tools also help trace financial flows, identify shell companies and reveal beneficial ownership, Navarro pointed out.

Machine learning is also used in cross-border asset recovery, such as the World Bank’s Stolen Asset Recovery Initiative and algorithms that detect procurement cartels or collusive bidding through pattern recognition, he said.

“(AI can be used in) real-time monitoring of bank transactions using anomaly detection models to spot possible money laundering schemes,” he added.

AI can audit government systems at scale, identifying performance anomalies across agencies, he said.

“Digital assistants and chatbots reduce bureaucratic discretion in frontline services, lowering bribery risk,” he added.

Blockchain and AI integration promote transparent, tamper-proof contracting and registry systems, he maintained.

“Feedback loops can be created where AI insights are integrated into institutions’ learning and reform process,” Navarro said.

Challenges in developing countries include data availability, quality and interoperability, he stressed.

“Technical capacity is often lacking. Al systems require skilled personnel, computational infrastructure and continuous maintenance. Risks of algorithmic bias, opacity and abuse of surveillance tools by corrupt actors themselves,” he said.

Legal frameworks in many countries have not yet adapted to regulate or guide ethical use of Al in governance, Navarro said.

Project NOAH

Climate change experts and University of the Philippines officials yesterday met with Speaker Faustino Dy III following his remark that flood control funds will still be allocated to areas identified by Project NOAH.

“The brief meeting gave the Speaker the opportunity to be briefed about Project NOAH and its crucial role in the country’s disaster risk reduction and management efforts,” the House of Representatives posted on Facebook.

The Nationwide Operational Assessment of Hazards program can identify areas geographically at risk or vulnerable to natural disasters. – Bella Cariaso, Delon Porcalla