The Bangko Sentral ng Pilipinas (BSP), the Philippine central bank, has introduced a new set of artificial intelligence (AI) governance principles for banks and other BSP-supervised financial institutions (BSFIs).
Issued through a memorandum, the guidance paper, Governance Principles for Artificial Intelligence in Financial Services, encourages financial institutions to establish AI governance and risk management frameworks tailored to their operations and risk exposure. The BSP said the guidance is intended to help financial institutions harness AI to improve financial services while protecting consumers and maintaining trust in the country’s financial system.
Deputy Governor Lyn I. Javier said AI is becoming increasingly embedded across financial institutions’ operations, making governance essential. “AI is spreading across BSFI operations, and STARS provides them with principles that can help them innovate while mitigating unintended consequences from the use of the technology,” Javier said.
“We want BSFIs to take advantage of AI, especially to serve their customers, and do so while being guided by developing global standards,” she added.
The guidance is built around five principles collectively known as STARS: sustainability, transparency, accountability, responsibility and security.
Rather than prescribing a uniform compliance model, the BSP said institutions should apply the principles according to the nature, scale, complexity and materiality of their AI systems, as well as their overall operational risk profile.
The memorandum applies to all BSP-supervised financial institutions, including outsourced service providers supporting AI-related activities under a shared responsibility model.
Although voluntary, the BSP said the principles represent its minimum supervisory expectations for AI adoption and encouraged institutions to integrate them into governance frameworks, risk management strategies and operational processes.
The central bank also clarified that risks arising from emerging technologies continue to fall under its existing Information Technology Risk Management framework, which covers areas such as information security, outsourcing and project management.
In the memorandum, the BSP acknowledged that AI presents opportunities alongside risks that require proper oversight.
“As Artificial Intelligence (AI) continues to advance and integrate into the financial sector, financial institutions must establish effective controls and safeguards against the attendant risks of AI adoption, such as data privacy concerns, bias leading to unfair and discriminatory practices, and misuse of technology, among others,” the memorandum stated.
The BSP recommended that financial institutions formally establish their own AI governance frameworks in line with the guidance paper.
“It is recommended that financial institutions formally develop their own AI Governance Framework, proportionate to the nature, extent, scale, complexity, and materiality of their AI systems, as well as the institution’s overall operational complexity and risk profile, following the principles put forth in the guidance paper,” it said.
“By ensuring that these principles are embedded in the overall governance frameworks of BSFIs, AI can be harnessed efficiently and safely for the benefit of various stakeholders. Ultimately, the ethical and responsible use of AI can foster trust, strengthen resilience, and promote sustainable innovation within the financial ecosystem.”
According to the BSP, the framework aligns with international guidance developed by organisations including the Organisation for Economic Cooperation and Development (OECD), the Association of Southeast Asian Nations (ASEAN) and the Financial Stability Institute (FSI).
Industry reports indicate the guidance also outlines controls across the AI system lifecycle, from planning and development through validation, deployment and continuous monitoring. It recommends independent validation of AI systems before deployment and ongoing testing against threats such as adversarial attacks, data poisoning and model bias.
The BSP said it will continue monitoring developments in AI and may introduce additional regulations as the technology evolves.
