Regulatory Updates Newsletter : June 2025
- Staff Correspondent
- Jun 30
- 6 min read
Welcome to the June 2025 edition of our regulatory newsletter, where we bring you key updates shaping the global landscape of AI governance, financial regulation, compliance, and financial crime enforcement. This month’s coverage spans developments from the United States, United Kingdom, European Union, India, Nigeria, Australia, Singapore and others.
From the FCA’s insights on AI-enabled consumer guidance to the Fed’s stress test results, MAS’s clampdown on offshore crypto entities, and RBI’s latest AML fines, the June updates reflect how regulators are responding to innovation, emerging threats, and systemic risks.
UK FCA Launches Once-in-a-Generation Advice Reforms to Support Financial Wellbeing
On 30 June 2025, the Financial Conduct Authority (FCA) launched a landmark package of reforms designed to expand access to financial advice and help millions better manage their pensions and investments. These measures are reinforced by FCA Consultation Paper CP25/17, which sets out proposals to reshape how firms support consumers during key financial decision points.
Key Features:
A new simplified advice regime allowing affordable, streamlined support for mass-market investment products.
Clarification and adjustment of the advice/guidance boundary, enabling more firms to provide tailored information without falling foul of regulatory constraints.
Creation of a "Targeted Support" category to bridge the gap between guidance and full regulated advice.
Enhanced flexibility for digital delivery channels, encouraging scalable, tech-enabled engagement.
Stronger protections and disclosures for retirement products, particularly drawdown, focusing on charges, risks, and longevity considerations.
Implications:
Financial institutions should revisit and potentially re-engineer advice and customer support models.
Compliance teams must assess new expectations around disclosures, customer communications, and advice boundary controls.
Firms offering digital pensions or investment tools should prioritize transparency, consumer comprehension, and suitability testing.
Additional Resource: CP25/17 Consultation
U.S. Federal Reserve Publishes 2025 CCAR Stress Test Results
The Federal Reserve released the results of its 2025 Comprehensive Capital Analysis and Review (CCAR), with all 31 participating banks demonstrating strong capital resilience.
The aggregate minimum Common Equity Tier 1 (CET1) capital ratio under the severely adverse scenario reached 11.6%, the highest on record.
The projected CET1 capital drawdown of just 1.8% represents the smallest decline ever recorded, driven by higher pre-provision net revenue (PPNR), lower credit losses, and strong fee income.
Aggregate trading and counterparty losses fell to $44 billion, the lowest since the Fed began tracking them, while other comprehensive income (OCI) gains rose to $58 billion—with 60% attributed to JPMorgan and Wells Fargo.
Exploratory market scenarios included:
Credit and liquidity shocks to nonbank financial institutions (NBFIs), resulting in a 1.6% CET1 decline.
Equity dislocation shocks to hedge funds, yielding $33.3 billion in losses, primarily through trading and CVA exposures.
Next steps: Banks will release shareholder payout plans on July 1. Regulatory observers await the Fed's decision on whether to shift to a two-year average for stress capital buffer (SCB) calibration and reforms to the leverage ratio framework.
UK FCA Publishes Research on LLMs in Consumer Financial Advice
In June, the Financial Conduct Authority (FCA) released a detailed research note titled "Money Talks," summarizing the findings from two pilot projects that tested the use of large language models (LLMs) for delivering retail financial guidance.
Pilot 1: Used generative AI to help consumers understand mortgage options.
Pilot 2: Tested an LLM-powered chatbot providing guidance on budgeting and savings.
Consumers reported improved understanding of complex terms and appreciated the plain-language delivery. However, hallucinations and oversimplification remained concerns.
The FCA emphasized the importance of transparency, explainability, and robust human oversight in deploying LLMs.
Implications: Firms exploring AI for client engagement must build governance frameworks to mitigate risks, ensure clarity in AI-generated outputs, and prepare for further FCA scrutiny and potential regulation.
EBA June 2025 Risk Assessment Flags Geopolitical and Sectoral Vulnerabilities
In June 2025, the European Banking Authority (EBA) published its Risk Assessment Report, highlighting macro-financial vulnerabilities in EU/EEA banks based on supervisory data and economic modeling.
Key Findings:
Geopolitical risks: Banks reported over €500 billion in exposures to high-risk jurisdictions as of mid-2024. Direct and indirect impacts—including sanctions, defense spending, and cyberattack risks—have amplified operational and market vulnerabilities.
U.S. manufacturing exposure: EU banks remain heavily exposed to U.S. manufacturing and related export sectors such as chemicals, pharma, and industrial machinery, creating potential trade-linked credit concentration risks.
Macroeconomic outlook: Falling inflation and lower interest rates have supported real estate and consumer credit growth, but persistent geopolitical uncertainty continues to fuel market volatility and lender caution.
Other metrics: Loan volumes rose 2.2%, NPL ratios edged up to 1.88%, and sector-wide CET1 and LCR remain strong (~16% and 168%, respectively). However, profitability pressure and elevated operational losses (especially cyber-related) remain concerns.
Implications:
Credit & market risks: High exposure to volatile geographies and trade-linked industries may trigger future downgrades. Banks should diversify counterparty portfolios and stress test these risks.
Operational & cyber resilience: 79% of banks cited cyber/data threats as top operational risks. Reinforcing ICT systems, sanctions compliance, and incident response is urgent.
Macroprudential stress testing: Supervisors may revisit scenario assumptions, integrating geopolitical shocks into Pillar 2 guidance.
Strategic action: Banks are urged to integrate these risks into credit, capital, and technology strategy—particularly around supply chains and digital infrastructure.
RBI Fines Regional Banks for AML/KYC Failures
The Reserve Bank of India (RBI) fined multiple co-operative banks for breaches related to KYC, AML, and credit governance norms. Notable cases include:
Poornawadi Nagarik Sahakari Bank and Ratanchand Shah Sahakari Bank (Maharashtra).
Adilabad District Co-operative Bank (Telangana).
The RBI also revealed that during FY25 it imposed penalties totaling INR 54.78 crore across 353 regulated entities.
Implications:
Regional and co-operative banks must urgently upgrade compliance protocols, improve customer due diligence, and fortify credit monitoring systems to avoid recurring enforcement.
Nigeria’s EFCC Urges AI Integration in AML Compliance
The Economic and Financial Crimes Commission (EFCC) of Nigeria has urged banks to embrace AI and machine learning to modernize anti-money laundering (AML) systems. EFCC Chairman Ola Olukoyede called traditional compliance "no longer sufficient," citing recent crypto-related scams as justification.
Key initiatives:
Adoption of AI for fraud detection, transaction monitoring, and false positive reduction.
Preparation for real-time AML surveillance under forthcoming CBN guidance.
Implications:
Nigerian financial institutions must upgrade their tech stack to remain compliant and proactively prevent financial crime. Investment in staff training and RegTech partnerships will be crucial.
MAS Cracks Down on Offshore-Only Crypto Service Providers
In late June, the Monetary Authority of Singapore (MAS) clarified that crypto firms serving only overseas clients must apply for a license or exit the market.
Licenses for such offshore-only models will "generally not be granted."
Firms that fail to comply will face regulatory action, and must cease operations.
Implications:
Offshore-focused exchanges must restructure or withdraw from Singapore.
The announcement reaffirms MAS's strict AML/CFT stance and boosts investor protection.
Summary of Other Notable Updates
Jurisdiction | Regulator | Update | Link |
Australia | APRA | APRA Executive Director Chris Gower emphasized resilience and forward-looking risk management in a speech to the Australian Finance Industry Association, urging firms to enhance scenario testing, particularly around liquidity, climate, and technology disruption risks. | |
United States | SEC | SEC extended the deadline for daily customer reserve computations under Rule 15c3-3 to June 30, 2026, allowing broker-dealers more time to upgrade systems and enhance investor protections. | |
United Kingdom | FCA | FCA announced continuation of its mortgage market review to boost home ownership and support economic growth, with potential rule changes around mortgage accessibility and innovation in home financing. | |
European Union | EBA | EBA finalized three technical standards under CRR3 for operational risk capital. The new Business Indicator framework harmonizes reporting across EU banks and enhances FINREP data granularity for supervisory use. Implementation is due by March 2026. | |
United Kingdom | UK Government | The Data (Use and Access) Act 2025 enables wider lawful processing of personal data for AI training and innovation, with built-in safeguards aligned with UK GDPR. | |
South Africa | FATF | FATF confirmed South Africa has largely implemented its AML/CFT reforms. An on-site visit is scheduled to verify sustainability ahead of possible grey list removal. |
Stay informed with our regulatory updates and join us next month for the latest developments in risk management and compliance!
For any feedback or requests for coverage in future issues (e.g. additional countries or topics), please contact us at info@riskinfo.ai. We hope you found this newsletter insightful.
Best regards,
The RiskInfo.ai Team
コメント