10-08-2026 
|
Getting your Trinity Audio player ready...
|
TL;DR: As the Philippines accelerates its digital transformation, technology is becoming a double-edged sword in the fight against corruption. Digital tools are helping authorities trace suspicious transactions, but crypto and digital wallets are also giving bad actors new ways to fragment, move, and conceal illicit funds. The ongoing flood control scandal shows how crypto has become part of the financial trail, underscoring the need for stronger oversight, KYC, and transaction monitoring.
Key Takeaways:
- Technology is giving investigators better tools to follow dirty money while simultaneously giving criminals more sophisticated ways to hide it.
- Stricter banking controls are pushing illicit funds into crypto, where multiple wallets, blockchains, and platforms can make transactions harder to trace.
- The flood-control scandal has exposed how digital assets, including crypto wallets and stablecoins, can become part of the financial trail in alleged corruption cases.
- Authorities are pushing for tighter oversight of VASPs to connect blockchain transactions with verified identities.
The Philippines is known globally as among the countries with the friendliest people, but the republic also makes global headlines for the wrong reason—corruption. This issue dates back to the Spanish colonial era and has now become harder to contain as the nation becomes increasingly digital.
Corruption is deeply embedded in Filipino culture that it has almost become the norm, with only 3 in 10 Filipinos believing that bribery is “never justifiable,” according to findings released by the World Values Survey in late September.
The country of 117.7 million people, under the presidency of Ferdinand “Bongbong” Marcos Jr., vowed to eliminate graft and corruption while efforts to modernize public infrastructure and services are underway. But while digital transformation is helping the country combat corruption by enabling authorities to speed up investigations and track bad actors, it has also unraveled how graft is rapidly evolving alongside technological advancements.
Orchestrating complex, fragmented web of digital transactions
Paper trail is the biggest enemy of extortionists, as it allows law enforcement to track them down with ease. This forces offenders to break down large sums of money they illegally obtained into small transactions so as to avoid triggering the country’s Anti-Money Laundering Act (AMLA).
Criminals often rely on physical, systemic, and trade-based schemes to move illicit funds, such as depositing amounts not exceeding the PHP500,000 ($7,970) threshold in a single banking day, setting up businesses as fronts and combining the illegal funds with their revenue to give the impression of clean money, or purchasing monetary instruments like stocks, bonds, and foreign banknotes.
While these methods remain rooted in the traditional financial (TradFi) system, stringent anti-money laundering (AML) requirements have made banks increasingly vigilant about suspicious transactions and money movement, making it more challenging for bad actors to embezzle funds.
The growing adoption of cryptocurrencies and digital wallets, however, is opening another channel for criminals, which Philippine authorities uncovered during the ongoing investigations against companies and individuals mired in the flood control scandal.
According to a September 30 report by Chainalysis, the Philippines, alongside Thailand and Vietnam, has the fastest-growing crypto activity in the Southeast Asian region, registering 5.4 million small-value peer-to-peer (P2P) transfers during the 2026 period, which accounts to 14.4% of the global trade.
This growing crypto activity not only promotes financial inclusion and offers new investment diversification for Filipinos, but also creates a larger ecosystem for bad actors to exploit. Unlike traditional banking channels, where AML controls and transaction monitoring are more established, crypto offers launderers various ways to move assets between wallets and blockchains, routing them through decentralized finance (DeFi) platforms, and utilizing crypto mixers to conceal the flow of funds, making the trail increasingly difficult to follow.
“The growing ubiquity of crypto has made it a tool for laundering proceeds from various off-chain crimes, such as narcotics trafficking and fraud. In 2024, money laundering in crypto encompasses all crime — not just that which is inherently tied to the crypto ecosystem,” Chainalysis previously said in a separate report, as quoted by CNBC.
In the Philippines, crypto has found its place in corruption.
The Philippines’ flood-control fiasco
Filipinos have been hailed for their resiliency to calamities, but 2025 marked the year when the country decided to drop the mask as a badge of honor, refusing to no longer romanticize this trait, and face the reality of decades-long government neglect and corruption.
During his 2025 State of the Nation Address (SONA), Marcos dropped a bombshell by publicly shaming officials and announcing an investigation into anomalous funds tied to flood-control projects, with losses amounting to some PHP118 billion ($1.88 billion) in government money.
But independent global environmental organization Greenpeace Philippines, citing estimates from Senate inquiries, said the losses could be around PHP560 billion ($8.9 billion) in 2025 alone, and as much as PHP1.089 trillion ($177.35 billion) in total since 2023.
Dozens of high-ranking officials have already been publicly implicated since then, and on October 4, crypto surfaced as another thread in the investigation after reports emerged that the Philippine Court of Appeals froze 25 crypto wallets tied to a “prominent lawmaker,” whose identity is unidentified due to confidentiality rules.
The crypto wallets were among 116 financial accounts and other assets placed under restraint in a September 21 order unveiled by the Anti-Money Laundering Council (AMLC), crypto.news reported.
But while the order confirms that crypto is part of the financial trail, it leaves key details about the frozen crypto wallets undisclosed, including what cryptocurrencies are being held in them and their value, blockchain addresses, and the crypto exchanges involved.
The AMLC also emphasized the complexity of the transactions, noting that the suspected funds moved across individuals, corporations, bank accounts, a money service business, and a virtual asset platform, with multiple recipients and financial channels, which made it harder for authorities to trace.
The council has linked the funds to alleged corruption and plunder cases involving the lawmaker, and virtual asset service providers (VASPs) and multiple wallets were among the channels investigators examined.
The latest wallet freeze is not the first time digital assets have been used to trace funds allegedly linked to the flood control scandal. Earlier inquiries had already turned investigators’ attention to USDT transactions, with officials examining whether funds were converted into stablecoin and passed through intermediaries.
The crypto wallet freeze order will remain in effect for 20 days, and during that period, the appeals court must conduct a summary hearing before deciding whether the order should be modified, lifted, or extended.
Crypto’s traceability problem needs stronger oversight
Days following the wallet freeze, the Philippine central bank said it is looking to tighten supervision of crypto transactions to ensure proper identification of individuals behind the movement of digital assets, the Philippine Star reported.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said in an interview with Bankero Unfiltered that they want crypto transactions to be handled through regulated VASPs as these services have know-your-customer (KYC) rules put in place, making it easier for local authorities to verify user identities and trace the origin and destination of funds.
Explaining the need to establish heightened monitoring, Remolona said tracing crypto activity can reveal a wallet’s associated IP address, but not necessarily the identity of its controller.
“Crypto instruments have to be traded from a VASP because they would have KYC. We kind of know who’s doing what,” Remolona explained. “But a crypto instrument, it just goes into an individual’s wallet. All you get is the IP address. You don’t know who’s really doing it. That’s very dangerous.”
The proposed stringent monitoring comes at a time when Binance is making efforts to re-enter the Philippine market through the Securities and Exchange Commission’s (SEC) Strategic Sandbox (StratBox), which was established to help companies and exchanges test innovative crypto-related services that comply with KYC and Customer Due Diligence requirements.
FAQs:
How is crypto being used in corruption in the Philippines?
Crypto can provide another channel for moving illicit funds, allowing bad actors to transfer assets across wallets, exchanges, and blockchains and potentially make the money trail harder to follow.
How did crypto become part of the Philippines’ flood control scandal?
Crypto has emerged as part of the financial trail under scrutiny, with authorities identifying wallets linked to a prominent lawmaker and examining USDT transfers and the possible use of intermediaries to move funds after conversion to stablecoins.
Can Philippine authorities trace crypto transactions?
Yes. Blockchain transactions are generally traceable, but identifying the person controlling a wallet can be difficult. BSP says they can easily connect transactions to individuals when assets move through regulated VASPs with KYC requirements.
Why is the Philippines tightening oversight of crypto?
The Bangko Sentral ng Pilipinas is pushing crypto users toward regulated VASPs, giving authorities greater visibility into who is moving funds and where those funds originate and end up.
Watch | Philippine Blockchain Week 2026: What’s working now?
