AI Regulation Tracker / Regulator guidance

The Philippines' Central Bank Tells Banks How to Govern AI, and It Spells STARS

Regulatory summary: On June 24, 2026, the Bangko Sentral ng Pilipinas (BSP) issued Memorandum No. M-2026-031, transmitting a guidance paper titled Governance Principles for Artificial Intelligence in Financial Services.

Bangko Sentral ng Pilipinas issued a voluntary guidance paper for banks and fintechs, building AI stewardship around five principles. It is non-binding today, but the central bank signaled that binding rules follow if firms do not self-govern.

Primary source

By Anthony Guerriero, Founder, The Leveraged Years · Reviewed by The Leveraged Years Editorial Desk · Published July 9, 2026 · Last updated July 9, 2026

The Philippines' Central Bank Tells Banks How to Govern AI, and It Spells STARS regulation briefing

The Leveraged Years AI Regulation Tracker

Key takeaways

The BSP moved from silence to a stated, structured governance expectation for AI in financial services. There is now a named five-principle framework (STARS) that firms can be measured against, and an explicit signal that formal regulation may follow.
Bank and EMI compliance and risk officers, model governance and model risk management teams, board directors and board risk committees, Data Protection Officers, and financial-services counsel at any BSFI deploying or procuring AI, from credit scoring and fraud detection to chatbots and generative tools.
Status: Live and issued.
Stand up or refresh an AI inventory, assign a named accountable human owner per material AI system, and draft a board-level AI governance policy mapped to STARS before the BSP converts guidance into binding rules.

Regulatory Briefing

Bindingness: Voluntary/non-binding BSP guidance. The paper sets expectations and good-practice principles; it does not impose new enforceable requirements or penalties as of this issuance.
Scope: All BSP-supervised financial institutions (BSFIs), including universal, commercial, thrift, rural, and cooperative banks, plus supervised non-bank financial institutions, electronic money issuers, and other fintech players under BSP oversight. Application is proportionate to each firm's AI footprint.
What Changed: The BSP moved from silence to a stated, structured governance expectation for AI in financial services. There is now a named five-principle framework (STARS) that firms can be measured against, and an explicit signal that formal regulation may follow.
Who This Affects: Bank and EMI compliance and risk officers, model governance and model risk management teams, board directors and board risk committees, Data Protection Officers, and financial-services counsel at any BSFI deploying or procuring AI, from credit scoring and fraud detection to chatbots and generative tools.
Current Status: Live and issued. Guidance paper transmitted via Memorandum M-2026-031. No compliance deadline attaches because the paper is non-binding.
Effective Date: Memorandum dated June 24, 2026; publicly reported by Philippine financial press on June 29 and 30, 2026.
Primary Source: https://www.bsp.gov.ph/Regulations/Issuances/2026/M-2026-031.pdf
Secondary Analysis: BusinessWorld, BSP sets governance principles for banks' responsible, ethical AI use (June 30, 2026); The Manila Times, BSP readies banks for wider AI use (June 30, 2026); Philippine Daily Inquirer; Philstar; Manila Bulletin (June 29, 2026); BusinessMirror (July 7, 2026).
Workflow Impact: Model risk and compliance teams should map existing AI inventories to the five STARS principles, identify governance gaps (especially human-in-the-loop accountability and explainability), and prepare a proportionality rationale that documents why controls fit each system's materiality.
Operational Next Step: Stand up or refresh an AI inventory, assign a named accountable human owner per material AI system, and draft a board-level AI governance policy mapped to STARS before the BSP converts guidance into binding rules.
Last Verified: July 9, 2026

Date	Jurisdiction	Rule	Affected professionals	Status or effective date
2026-07-09	Philippines	The BSP moved from silence to a stated, structured governance expectation for AI in financial services. There is now a named five-principle framework (STARS) that firms can be measured against, and an explicit signal that formal regulation may follow.	Bank and EMI compliance and risk officers, model governance and model risk management teams, board directors and board risk committees, Data Protection Officers, and financial-services counsel at any BSFI deploying or procuring AI, from credit scoring and fraud detection to chatbots and generative tools.	Live and issued. Guidance paper transmitted via Memorandum M-2026-031. No compliance deadline attaches because the paper is non-binding.

Frequently Asked Questions

Is BSP Memorandum M-2026-031 mandatory?

No. It is voluntary and non-binding guidance. It sets expectations and good practices but imposes no new enforceable obligations or penalties as of its June 24, 2026 issuance. The BSP has signaled it may issue binding regulation later.

What does STARS stand for?

Sustainability, Transparency, Accountability, Responsibility (Social Fairness), and Security. These are the five governance principles the BSP wants supervised institutions to build their AI stewardship around.

Who does this apply to?

All BSP-supervised financial institutions, including banks of all classes, supervised non-banks, electronic money issuers, and fintech firms under BSP oversight, with controls scaled proportionately to each firm's AI footprint.

Is there a compliance deadline?

No. Because the paper is non-binding, there is no fixed deadline. The practical timeline is set by the BSP's stated intent to issue formal regulation if the industry does not self-govern.

What is the single most important control the BSP emphasized?

Human accountability. The guidance stresses keeping humans in the loop, with a named person or function ultimately accountable for AI-driven decisions. An algorithm cannot be the responsible party.