When the Rains Return, Will Accountability Follow?

Every year, the first sustained downpour does more than test the drainage systems — it tests governance. It presents the quality of planning, the integrity of procurement, and the effectiveness of project execution that should have been firmly in place long before the clouds gather.

With only a few weeks before the rainy season officially begins once again, communities across the Philippines brace for a familiar reality: flooded streets, submerged homes, and disrupted livelihoods. Alongside these scenes come equally familiar questions: How long will it take for the truth to come out and for those who misused flood control funds to be held accountable for stealing the nation’s money?

Yet, unfortunately, public attention can ebb and flow. While the government moves forward to pursue accountability from the alleged perpetrators, new issues and developments compete to shift the public’s focus. What was once a high-profile issue may completely slip into the background, overtaken by newer controversies. The challenge now is to keep the public discourse alive and the necessary legal processes to continue with rigor. The risk is not merely forgetfulness, but complacency. When scrutiny fades, accountability often follows. Without sustained scrutiny, the cycle can create space for the previous lapses to quietly resurface and happen again.

It is in these moments, when controls weaken, that institutional safeguards must hold firm.

Over the past year, the Bangko Sentral ng Pilipinas (BSP) has taken deliberate steps to strengthen these safeguards, sharpening and recalibrating its framework governing large-value cash transactions.

BSP Circular No. 1218: tightening control over cash movements

In prior years, there was no regulatory limit or default prohibition on large-value payouts. Banks and other covered persons were only required to report all covered and suspicious transactions to the Anti-Money Laundering Council.

In 2025, the BSP’s sectoral risk assessment and surveillance monitoring identified persistent risks of money laundering, terrorism financing, and proliferation financing arising from cash transactions conducted through banks and other BSP-supervised financial institutions (BSFIs). These disclosed the use and abuse of cash-based transactions to move illicit funds into and out of the financial system. In response, the BSP issued Circular No. 1218 to introduce a more structured and risk-sensitive framework for handling cash transactions. The regulation was further explained under BSP Memorandum No. M-2025-036.

Under the Circular, large-value cash payouts (e.g., withdrawals) of more than Five Hundred Thousand Pesos (PHP500,000), or its equivalent in foreign currency, shall only be made, facilitated, or transacted through non-cash channels. These include check payments, fund transfers, direct credit to deposit accounts, and/or other forms using the digital payment platform of the BSFIs. The payout threshold applies to a single transaction, or an aggregate of cash payout transactions conducted by a customer within one (1) banking day. In other words, the threshold covers all aggregated cash payout transactions of the customer within a banking day. In this case, if a customer needs to withdraw more than PHP500,000 in cash, the customer should present documents to support the transaction and/or its legitimate purpose.

BSP Circular No. 1230: a recalibrated, risk-based approach

On 27 February 2026, the BSP issued Circular No. 1230 as a calibrated refinement of its regulatory approach to large-value cash transactions. It revised the threshold that triggers enhanced due diligence (EDD), raising it from the previous PHP500,000 benchmark under Circular 1218 to PHP1,000,000 per customer per banking day, whether undertaken through a single transaction or a series of transactions within the same day.

According to reports, the BSP explained that this move is based on its latest national risk assessments, surveillance monitoring, and consultations with industry stakeholders. These reviews revealed that a significant number of legitimate transactions, including payroll disbursements, loan releases, and project-related payments, frequently exceed the original Php500,000 threshold. In effect, the original threshold, while well-intentioned, risked capturing routine commercial activity and creating operational friction for businesses without necessarily improving risk detection.

Beyond adjusting the threshold, Circular No. 1230 signals a broader shift towards “risk-based” rather than “threshold-based” control. Under this approach, once the threshold is met, EDD shall be performed at the customer level. Where a customer has already been subjected to appropriate EDD measures, repeating the process for each subsequent transaction is no longer required. This recognizes that customers, particularly businesses, often engage in recurring high-value transactions that are consistent with their normal operations, making repetitive full due diligence both redundant and inefficient.

Despite the higher threshold, Circular 1230 does not dilute the BSP’s stance on oversight. On the contrary, it reinforces several layers of safeguards:

1. Proportionate (risk-based) EDD

Financial institutions are expressly required to apply EDD measures commensurate with the customer’s risk profile, business nature, and transaction patterns. This ensures that high-risk sectors or unusual transactions continue to receive heightened scrutiny, even if they fall below or near the threshold.

2. Institutional discretion to impose stricter limits

BSFIs retain the authority to set lower internal thresholds based on their own risk assessments. This flexibility is particularly important in industries or geographies where cash usage is more susceptible to misuse.

3. Mandatory escalation through filing a suspicious transaction report (STR)

Where a bank fails to satisfactorily complete EDD, or where performing due diligence may “tip off” the client, the institution is required to file an STR and closely monitor the account. This underscores that the framework is not purely procedural; it carries clear escalation pathways for potential misconduct.

4. Focus on red flags and typologies

Financial institutions are further expected to consider alerts, red flags, and known typologies identified by regulators and law enforcement in assessing large or unusual cash activity.

Taken together, these elements reinforce that Circular No. 1230 is not a loosening of vigilance, but a strategic recalibration to redirect regulatory attention toward higher-risk transactions while reducing unnecessary friction for legitimate economic activity.

Beyond compliance: sustaining accountability when scrutiny fades

Ultimately, BSP Circular Nos. 1218 and 1230, together with Memorandum No. M-2025-036, send a clear and consistent message: while business realities may evolve and regulatory thresholds may be recalibrated, the expectation for transparency, accountability, and proper documentation remains constant.

As the rains return and familiar questions resurface, these safeguards hold greater significance. They help ensure that large flows of funds, whether for infrastructure, emergency response, or other public or private purposes, remain traceable and defensible. In an environment where scrutiny is often fleeting, robust financial controls serve as a more enduring line of accountability. The challenge to the public, businesses, and government officials, is no longer simply to comply, but to demonstrate that every significant transaction, particularly those moved in cash, can withstand scrutiny that arises when the floods do; even when the headlines have already moved on.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

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