The Philippines is preparing its first national artificial intelligence (AI) governance framework, led by DEPDev, alongside BSP’s guidance for financial institutions, to ensure ethical, transparent, and accountable use of AI across sectors, particularly in finance where risks of bias, fraud, and systemic instability are most pronounced.
The proposed framework seeks to address risks such as algorithmic bias, data privacy breaches, and misuse of AI in critical sectors.
It will require institutions to conduct AI impact assessments, disclose AI use in consumer‑facing applications, and establish accountability mechanisms; building public trust while enabling innovation.
Regulating AI in the Country
The Philippine Department of Education and Development (DEPDev) has announced plans to roll out a national artificial intelligence governance framework by late 2026, designed to regulate the use of artificial intelligence across sectors.
The framework will establish standards for transparency, accountability, and ethical use of AI, while also mandating risk assessments for institutions deploying AI systems.
DEPDev’s plan emphasizes three pillars: ensuring AI tools are safe and reliable, protecting data privacy, and aligning AI adoption with national development goals.
The proposal embodies the government’s recognition that AI is no longer a niche technology but a mainstream driver of productivity, education, and finance.
According to DEPDev Secretary Arsenio Balisacan, the framework is set for release in September 2026 pending final approval by President Marcos. It will cover AI use in education, health, and public infrastructure, and aims to shorten government processes, improve project monitoring, and enhance efficiency in service delivery.
Balisacan emphasized that the framework adopts a human‑centered, rights‑based approach, aligning with the National Innovation Agenda and Strategy. The plan is intended to close the gap between the Philippines and regional peers in AI preparedness, turning AI into a growth driver for the economy.
Why the Philippines Needs AI Governance
The Philippines is at a crossroads in its digital transformation journey. AI adoption is accelerating, but without a governance framework, risks multiply.
Algorithms used in lending or hiring can inadvertently perpetuate bias, while opaque AI systems can erode public trust. Data privacy is another pressing concern, as AI thrives on large datasets that often include sensitive personal information.
In a country where remittances and digital finance are lifelines, weak governance could undermine confidence in financial systems and expose consumers to fraud.
Moreover, international partners—whether investors, banks, or regulators—are increasingly demanding compliance with global standards.
Without a framework, the Philippines risks being viewed as a laggard, potentially discouraging investment and limiting access to global markets. Governance is therefore not just about ethics; it is about competitiveness, credibility, and safeguarding national interests.
Rapid Growth of AI Use Worldwide
Globally, AI governance is becoming the norm.
The European Union’s AI Act is the most comprehensive, classifying AI systems by risk and imposing strict requirements on high‑risk applications such as biometric surveillance or credit scoring.
The United States has also taken a principles‑based approach with its AI Bill of Rights, emphasizing fairness, transparency, and accountability.
Singapore has developed its Model AI Governance Framework, focusing on explainability and human oversight, while Japan has issued guidelines that balance innovation with consumer protection.
These frameworks differ in scope and enforcement, but they share a common goal: ensuring AI adoption does not compromise rights or stability.
For the Philippines, synchronizing with these global trends is critical as it shows international partners that the country is serious about responsible innovation and positions it to participate in cross‑border digital trade and finance without being seen as a regulatory weak link.
DEPDev’s Mandate
The Department of Education and Development (DEPDev) is a relatively new institution, but its mandate is broad and strategic.
It is tasked with promoting digital literacy, regulating emerging technologies, and ensuring that innovation aligns with national development goals. DEPDev’s role in AI governance is particularly important because it bridges education, technology, and regulation.
Through spearheading of the AI governance framework, DEPDev is not only setting rules but also shaping the country’s digital future. Its mandate includes fostering innovation ecosystems, supporting research and development, and ensuring that AI adoption contributes to inclusive growth.
As both regulator and enabler, DEPDev acts as a central authority in the Philippines’ digital transformation, ensuring that governance does not stifle innovation but rather channels it toward national priorities.
Level of AI Adoption Across Sectors
AI adoption in the Philippines is uneven but growing rapidly.
In education, AI is used for personalized learning platforms, automated grading, and language translation, helping to address overcrowded classrooms and resource gaps. For the healthcare sector, AI supports diagnostics, telemedicine, and predictive analytics, offering solutions to shortages of medical professionals and rural healthcare access.
AI also powers fraud detection, credit scoring, and customer service chatbots for finance, making financial services more efficient and accessible. Even in government, AI is being explored for public service delivery, disaster response modeling, and data analysis.
However, adoption is often fragmented, with pilot projects rather than systemic integration. This urges the need for governance to ensure that AI systems are fair, accountable, and secure, and that adoption is not limited to isolated initiatives but becomes part of a coherent national strategy.
AI and Finance Hand-in-Hand
The financial sector is one of the most advanced in AI adoption.
Banks and fintechs use AI for transaction monitoring, detecting unusual patterns that may indicate fraud or money laundering. AI also supports credit scoring, enabling institutions to assess risk more accurately and extend credit to previously underserved populations.
Customer service chatbots powered by AI handle millions of inquiries, improving efficiency and accessibility. Governance in this sector is overseen by BSP, which requires institutions to adopt risk‑based frameworks and comply with AML/CFT standards.
Yet, as AI becomes more sophisticated, governance must evolve to address new risks. Algorithmic bias in lending could exclude vulnerable groups, while vulnerabilities in AI‑driven fraud detection could be exploited by criminals.
The challenge is to harness AI’s benefits while mitigating its risks, ensuring that financial innovation strengthens rather than undermines stability.
BSP Encourages BSFIs to Strengthen Governance
The Bangko Sentral ng Pilipinas (BSP) has issued Memorandum No. M‑2026‑031, encouraging banks and supervised financial institutions (BSFIs) to adopt AI governance frameworks.
BSP recognizes that AI is transforming financial services, but without proper oversight, it could expose institutions to systemic risks. It also aims to safeguard the integrity of the Philippine financial system by requiring BSFIs to establish governance structures, conduct risk assessments, and ensure transparency in AI use.
This move also aligns with FATF recommendations, which emphasize the importance of monitoring emerging technologies in AML/CFT compliance. The central bank’s proactiveness portrays its role as both regulator and enabler: seeking to foster innovation while ensuring that financial stability and consumer protection are not compromised.
Encouraging AI governance is therefore both a defensive measure against risks and an offensive strategy to position the Philippines as a credible player in global finance.
AI in Money Handling Requires Security
BSFIs also play a major role in ensuring that AI use is governed responsibly.
They must integrate AI governance into their risk management frameworks, ensuring that AI systems are transparent, accountable, and secure. This includes conducting regular audits of AI models, disclosing AI use to consumers, and establishing mechanisms for redress in case of harm.
BSFIs must also train staff to understand AI risks and ensure that governance is embedded in institutional culture. By doing so, they not only comply with BSP directives but also build trust with consumers and investors.
The role of BSFIs is not passive; they are frontline actors in implementing governance, demonstrating to regulators and the public that AI adoption is both ethical and effective. Their success in this role will determine whether AI strengthens or undermines the financial sector.
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