As the regulatory landscape continues to evolve, financial institutions and businesses worldwide are navigating critical updates that shape compliance requirements, market stability, and operational resilience. From enhanced frameworks for financial crime prevention to strengthened prudential measures and emerging standards for sustainable finance, regulatory bodies are responding to dynamic risks and opportunities. This week’s updates underscore the increasing need for institutions to stay proactive, aligning with evolving policies to ensure transparency, security, and long-term regulatory compliance.
Business Line | Country | Regulator | Regulatory Update | Summary |
All | British Virgin Islands | BVIFSC | The British Virgin Islands Financial Services Commission (FSC) and Financial Investigation Agency (FIA) have jointly released comprehensive guidance titled “An Effective Approach to Ongoing Monitoring.” This guidance aims to assist financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) in fulfilling their obligations for continuous customer monitoring under the Territory’s anti-money laundering, counter-terrorism financing, and counter-proliferation financing (AML/CFT/CPF) frameworks. The guidance outlines best practices, including the creation of base customer profiles, effective transaction monitoring systems, and identification of trigger events and red flags. It emphasizes the importance of compliance with AML/CFT/CPF regulations to mitigate risks, including unusual transactions and breaches of financial sanctions. The guidance also highlights the role of robust oversight, risk awareness, and appropriate integration with broader AML controls, helping supervised entities adopt effective risk mitigation strategies while adhering to regulatory requirements. | |
Global | PRI | The Principles for Responsible Investment (PRI) has launched a report highlighting the social dimensions of the transition to a net-zero economy, presented at its annual conference, PRI in Person, in Toronto. The report emphasizes a government-wide approach to addressing socioeconomic impacts of the transition, urging policies that reduce emissions while ensuring affordable living and addressing social disparities. It calls for broader stakeholder engagement and respect for fundamental rights to secure collective societal benefits. PRI underscores the critical role of investors in shaping socially conscious policies by engaging policymakers beyond capital allocation. This framework aligns with growing global demands for stronger climate action and addresses public concerns about the costs of transition policies. With this initiative, PRI aims to position the economic transition as a primary public policy goal, fostering sustainable and inclusive growth worldwide. | ||
Global | UNEPFI | Practical Guide to 1.5°C Compliance for Financial Institutions | As global efforts to combat climate change intensify, financial institutions are under increasing regulatory pressure to align their strategies with the 1.5°C target set by the Paris Agreement. This regulatory update underscores the evolving frameworks requiring institutions to adopt climate scenario analysis, assess climate risks across their portfolios, and demonstrate credible transition plans. It emphasizes the importance of integrating climate considerations into investment decisions, financing activities, and operational strategies. Additionally, institutions are being called to ensure transparent reporting on their climate alignment and transition progress, with regulators urging robust methodologies for assessing emissions, climate risks, and the impact of transition finance. The guidance serves as a call to action for financial institutions to play a proactive role in financing a low-carbon future while managing regulatory compliance and stakeholder expectations. | |
Ireland | GOV.IE | Public Consultation on Updated Complaint Handling Procedures for OECD Guidelines | The Ireland National Contact Point (NCP) has initiated a public consultation to refine its complaint handling procedures in alignment with the updated OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. These guidelines, revised in 2023, aim to address pressing social, environmental, and technological challenges and establish a robust framework for responsible business practices. The updated procedures include enhanced clarity on complaint publication transparency, timelines for assessments, follow-ups, mediation roles, and risks of reprisals. Additionally, the establishment of the NCP Advisory Body is a key development to strengthen governance. Stakeholders are invited to submit their views by 12 February 2025, ensuring alignment with the evolving global standards for responsible business conduct. | |
United Kingdom | FCA | The UK Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have outlined the next steps in advancing open banking, focusing on the establishment of a new independent company to coordinate variable recurring payments (VRPs). Open banking in the UK has seen significant success, with over 11.7 million active users and 22.1 million payments made monthly. Key progress in 2024 included enhanced fraud analysis, consumer protections, and the development of VRPs, which offer consumers better control over regular payments and businesses more competitive payment solutions with reduced fees. As part of the initiative, Open Banking Limited will lead efforts to create a central operator for VRPs, enabling their integration into services such as utility payments, government transactions, and financial services. The FCA and PSR emphasize continued collaboration across the industry in 2025 to realize these advancements, which align with the UK’s National Payments Vision and growth agenda. | ||
United Kingdom | BOE | PRA Response on Supporting Economic Growth and Competitiveness | The Prudential Regulation Authority (PRA) has outlined its recent initiatives and future plans to support the UK Government’s focus on sustainable economic growth and competitiveness in financial services. The PRA emphasized its primary objectives of promoting financial stability and safety while highlighting its secondary objectives of fostering competition and economic growth. Key actions include tailoring the Basel 3.1 banking regulation to reduce capital requirements for SMEs and infrastructure projects, implementing the Solvency UK regime to simplify insurer capital requirements, and removing the bonus cap for banks to enhance international competitiveness. Future initiatives include simplifying prudential regimes for small banks, creating a “Matching Adjustment Investment Accelerator” to expedite insurer investments, improving the framework for Insurance Special Purpose Vehicles (ISPVs), and reducing regulatory data reporting burdens. The PRA aims to collaborate with industry and government to further enhance the attractiveness of the UK as a financial hub. | |
Banking | European Union | SRB | Updated Operational Guidance on Continuity in Resolution for 2025 | The Single Resolution Board (SRB) has published its updated operational guidance on Operational Continuity in Resolution (OCIR) for 2025, detailing expectations for banks to ensure service continuity during resolution and restructuring. The guidance emphasizes identifying critical and essential services, robust risk assessments, and ensuring resolution-resilient contracts with third parties and intra-group entities. Key updates include enhanced mapping of interconnected services, governance structures for intra-group providers, and financial resilience measures for unregulated service providers. Additionally, banks are advised to develop comprehensive staff retention and succession plans to maintain operational continuity. The guidance underscores the importance of robust management information systems (MIS) for resolution preparedness and post-resolution restructuring. This update aligns with the SRB’s objective to enhance banks’ resolvability and stability during financial stress. |
European Union | EBA | Opinion on Pillar 2 Requirements and Output Floor Interaction | The European Banking Authority (EBA) has released an opinion on the interaction between Pillar 2 Requirements (P2R) and the output floor under the CRD6 framework, effective from January 2026. The opinion clarifies that institutions becoming bound by the output floor will have a temporary cap applied to their P2R to prevent double-counting risks already covered by the output floor. Competent authorities are advised to review and adjust P2R during the next Supervisory Review and Evaluation Process (SREP) cycle to eliminate overlaps and ensure that any arithmetic increases in risk-weighted assets (RWA) due to the output floor do not inflate P2R requirements. The EBA highlights the importance of early communication from institutions to competent authorities for smoother transitions and emphasizes robust Pillar 3 disclosures to reflect these adjustments transparently. | |
Hong Kong | HKMA | Revised Supervisory Policy Manual Aligns with Basel III and Climate Risk Compliance | The Hong Kong Monetary Authority (HKMA) has issued a revised Supervisory Policy Manual (SPM) module CA-G-5 on the “Supervisory Review Process” as a statutory guideline under the Banking Ordinance. This update incorporates key changes to align with the Basel III final reform package, as reflected in the Banking (Capital) (Amendment) Rules 2023, and introduces provisions for managing climate-related financial risks. While the revised module takes immediate effect, the compliance date for climate-related provisions has been deferred to no earlier than January 1, 2026, allowing institutions adequate preparation time. This revision underscores HKMA’s commitment to integrating global regulatory standards with local supervisory practices, particularly in addressing climate-related risks. | |
Japan | JFSA | Proposes Amendments to Capital Adequacy Regulations Reflecting Basel III Recalibrations | The Financial Services Agency (FSA) of Japan has announced proposed amendments to its Capital Adequacy Ratio Regulations under the finalized Basel III framework. These updates aim to recalibrate the level of interest rate shock used to measure interest rate risk in the banking book (IRRBB), aligning with the Basel Committee on Banking Supervision’s recommendations issued in July 2024. Additionally, transitional measures for market risk measurement methods have been revised. The amendments apply to banks, holding companies, and various cooperative financial institutions, reflecting changes in both Pillar 1 (minimum capital requirements) and Pillar 3 (disclosure requirements). Stakeholders are invited to submit their feedback on these proposals by 18 February 2025, with details outlined in the associated appendices. | |
United Kingdom | BOE | The Prudential Regulation Authority (PRA) has detailed its 2025 supervisory priorities for UK deposit takers to strengthen resilience, governance, and risk management frameworks. Thematic priorities include improving credit risk management, enhancing data aggregation and reporting capabilities, and ensuring operational resilience against cyber threats and third-party risks. A particular focus is on liquidity planning due to changes in market dynamics and the transition to the Bank of England’s repo-led operating framework. The PRA also announced a 12-month delay in implementing Basel 3.1 standards, now set for January 2027, with transitional periods shortened to meet the original 2030 completion timeline. Further initiatives include simplifying capital frameworks for small deposit takers under the “Strong and Simple” regime. Firms are urged to integrate these updates into their strategic and operational planning for 2025. | ||
United Kingdom | BOE | 2025 Priorities for International Banks and Investment Firms | The Prudential Regulation Authority (PRA) has released its 2025 supervisory priorities for international banks and designated investment firms operating in the UK. Key focus areas include strengthening governance, risk management, and controls, particularly in response to global interest rate volatility, geopolitical risks, and technological advancements like AI. The PRA emphasized the need for firms to address counterparty credit risk and enhance data accuracy for holistic risk management. Additionally, the PRA will focus on financial resilience, requiring firms to improve stress testing, liquidity preparedness, and contingency planning, as the Bank of England transitions to a demand-driven repo framework. Firms are also expected to demonstrate operational resilience by March 2025, ensuring their ability to recover from disruptions, including cyber threats and third-party risks. The PRA’s supervisory approach will be complemented by ongoing consultations, including changes to Basel 3.1 implementation timelines and updates to branch and subsidiary supervision policies. | |
Investment | Canada | BCSC | The Canadian Securities Administrators (CSA) have issued a proposal to amend National Instrument 23-101 Trading Rules (NI 23-101) to lower the trading fee cap for U.S. Inter-listed Securities to CAD 0.001 per share, aligning with the recent U.S. Securities and Exchange Commission (SEC) reforms. This proposed change aims to maintain competitive equity market structures between Canada and the U.S. by harmonizing trading fee caps for securities priced at CAD 1.00 or more. The amendments also include related updates to definitions and the repeal of redundant provisions. Public comments are invited until March 24, 2025, with the changes anticipated to come into effect following the SEC’s implementation of its rules. These amendments are part of the CSA’s ongoing efforts to support the competitiveness and alignment of Canadian and U.S. equity markets while minimizing potential market distortions. | |
European Union | ESMA | The European Securities and Markets Authority (ESMA) has announced that the new Designated Publishing Entities (DPE) regime for reporting Over the Counter (OTC) transactions under MiFID II will become fully operational on 3 February 2025. This change transfers the responsibility for post-trade transparency reporting from Systematic Internalisers (SIs) to DPEs, aiming to reduce disproportionate requirements previously placed on investment firms that opted into the SI regime. Additionally, ESMA has discontinued the quarterly publication of SI data ahead of the mandatory end of the SI regime on 1 February 2025, alleviating administrative burdens. Investment firms will no longer need to perform SI calculations but can still opt into the SI regime voluntarily if desired. ESMA will maintain a public register of DPEs to support market participants in identifying reporting entities. | ||
European Union | European Union | Updated Transparency Rules for OTC Derivatives with New Data Requirements | The European Commission has adopted a Delegated Regulation supplementing MiFIR (Regulation 600/2014) to specify new identifying reference data requirements for Over the Counter (OTC) derivatives, effective from September 1, 2026. The regulation introduces the ISO 4914 Unique Product Identifier (UPI) for OTC interest rate and credit default swaps, alongside additional data attributes to enhance transparency. The new rules address limitations of previous identifiers, such as ISO 6166 (ISIN), and aim to streamline global reporting by facilitating cross-border data aggregation. These changes align with EU goals of improving transparency in derivatives markets and reducing regulatory fragmentation. | |
United Kingdom | FCA | The UK Financial Conduct Authority (FCA) has updated its thematic review (TR19/4) on money-laundering risks in capital markets, incorporating findings from recent stakeholder discussions as of January 2025. The report highlights key vulnerabilities and areas where firms need to improve, particularly in customer risk assessments, due diligence, and anti-money laundering (AML) transaction monitoring. While the nature of capital market firms mitigates some risks, many firms were found to have limited awareness of their exposure and obligations, such as filing Suspicious Activity Reports. The FCA emphasizes the importance of first-line accountability for money-laundering risks, moving beyond a compliance-focused approach. The review includes typologies to assist firms in refining their risk assessments, monitoring, and training practices, urging them to re-evaluate their AML strategies accordingly. | ||
United Kingdom | FCA | Comprehensive Review on Money Laundering Through Markets (MLTM) | The Financial Conduct Authority (FCA) has released an updated review on Money Laundering Through the Markets (MLTM) as part of its ongoing effort to combat financial crime in capital markets. This report builds upon the 2019 thematic review (TR19/4) and provides insights into the evolving threats of MLTM, with a focus on vulnerabilities in transaction chains, governance gaps, and inefficiencies in transaction monitoring (TM). Key findings indicate that firms often struggle with visibility across transaction chains, effective TM integration with Know Your Customer (KYC) processes, and underutilization of Suspicious Activity Reporting (SAR) mechanisms. The FCA emphasizes the importance of tailored risk assessments, robust governance, and collaborative efforts between transaction surveillance and monitoring teams. Firms are urged to address these challenges by enhancing systems, controls, and staff training, while leveraging newly enacted information-sharing provisions under the Economic Crime and Corporate Transparency Act (ECCTA) 2023. |
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