Regulatory Updates Newsletter : March 2025
- Staff Correspondent
- Apr 1
- 13 min read
Welcome to the March 2025 edition of our regulatory newsletter, where we bring you the latest developments in risk management, financial risk regulations, AI regulation, compliance initiatives, and financial crime prevention across key jurisdictions. This month’s highlights span the United States’ new approach to crypto oversight, the announcement by the EBA to launch a consultation on pushing back FRTB deadlines, and the EU outlines measures for unified anti-money laundering rules, India’s streamlined capital-raising process, Singapore’s focus on commodity finance risk, and new measures in the Middle East to bolster debt markets. Whether you’re in risk, compliance or legal, read on for insights and implications of these updates.
SEC Kickstarts Crypto Regulatory Overhaul with Public Roundtables
The SEC has launched a “Spring Sprint” series of public roundtables to reshape crypto regulation. The inaugural session on March 21 focused on defining when cryptoassets qualify as securities, addressing long-standing ambiguity in digital asset classification. Led by Commissioner Hester Peirce, the SEC’s Crypto Task Force is seeking expert input to draw clear regulatory lines and craft workable registration and disclosure frameworks for crypto firms sec.gov
This first roundtable – titled “How We Got Here and How We Get Out – Defining Security Status” – marked a new collaborative approach, with discussions on tailoring rules for crypto trading platforms, improving transparency, and calibrating enforcement tactics to the unique challenges of digital assets.
Implications
The SEC’s engagement through public roundtables signals a potential shift toward more nuanced and inclusive crypto regulation. By consulting industry and academic experts in an open forum, the Commission may develop more practical, well-defined rules for digital asset classification and oversight, reducing uncertainty for market participants. Firms in the crypto industry should watch for outcomes of these sessions, as they could pave the way for clearer compliance obligations and paths to registration, in contrast to the strictly enforcement-driven approach of the past. In short, U.S. regulators appear to recognize that fostering innovation and protecting investors need not be at odds, and a more tailored regulatory regime for crypto is on the horizon.
EBA Consultation on Relaxing FRTB Deadlines
The European Banking Authority (EBA) has launched a consultation to revise the implementation timeline for the Fundamental Review of the Trading Book (FRTB) regulations. This move aligns with similar relaxations in other jurisdictions, aiming to avoid regulatory fragmentation and operational challenges for banks.
The consultation explores three options: implementing FRTB as planned from January 2026, postponing it by another year (January 2027), or introducing temporary amendments to the market risk framework for up to three years.
Implications
The consultation has several key implications for banks and financial markets. By aligning deadlines with global standards, the EU aims to maintain competitiveness for its banks. A potential postponement offers operational relief, allowing institutions more time to enhance risk modeling and data infrastructure, particularly benefiting smaller banks. The consultation reflects supervisory flexibility, balancing compliance requirements with market stability. However, delays could slow the adoption of advanced risk management practices that are also part of the FRTB guidelines including reporting on new expected shortfall metrics. The potential postponement may reduce immediate compliance costs but prolong uncertainty in market risk reporting standards
UK’s FCA Abandons “Name-and-Shame” Enforcement Proposal
The UK Financial Conduct Authority (FCA) has officially abandoned its controversial "name-and-shame" enforcement proposal, which aimed to publicly disclose the names of firms under investigation based on a "public interest" test. Critics argued that publicizing investigations could unfairly damage firms' reputations before any wrongdoing was established. Instead, the FCA will stick to its existing framework: it will continue to announce investigations only in rare cases (e.g. to prevent immediate harm), but otherwise maintain confidentiality. The letter also outlined that the FCA will focus on other measures to improve enforcement effectiveness, such as streamlining investigation timelines and enhancing cooperation with firms.
On a related note, the FCA and Bank of England have also paused plans for new diversity & inclusion requirements for financial firms, given mixed feedback – signaling a broader inclination to recalibrate policies and build consensus.
Implications
The scrapping of the “name-and-shame” initiative represents a balancing of transparency with fairness. For regulated firms, this is welcome news – it means they won’t be routinely exposed to public scrutiny at the inquiry stage, which could have led to reputational harm even if no wrongdoing is ultimately found. However, firms should not misconstrue this as the FCA going soft on enforcement. In fact, the regulator is still committed to tackling misconduct, just through other means. This could include issuing more anonymized aggregate data on enforcement trends, and warning the public of scams or unregistered entities without singling out regulated firms prematurely. The FCA’s decision also reflects responsiveness to industry concerns; it “aimed to build a broad consensus” on its approach and pivoted when concerns persisted.
EU Proposes Unified Anti-Money Laundering Rules and New EU Authority
European regulators took a major step toward overhauling the bloc’s anti-money laundering regime. The European Banking Authority (EBA) opened a public consultation on four draft Regulatory Technical Standards (RTS) that will underpin the EU’s new Anti-Money Laundering and Countering Financing of Terrorism package. These standards are part of preparations for the forthcoming EU Anti-Money Laundering Authority (AMLA). Key elements include:
Scope of AMLA’s Direct Supervision: Criteria for which institutions AMLA will supervise directly. The EBA proposes that AMLA first identify firms with significant cross-border activities, then apply a risk-based methodology to pinpoint those with the highest money laundering risk for direct oversight. This two-step process ensures the new Authority focuses on the riskiest, most complex institutions.
Harmonized Risk Assessment: A standardized approach for national supervisors to assess banks’ inherent ML/TF risk, the effectiveness of their controls, and residual risk. This common methodology will make supervisory risk ratings comparable across Member States and reduce duplicate efforts for cross-border banks, who often face varied national risk assessment criteria.
Customer Due Diligence (CDD) Requirements: Revised CDD rules clarifying what information banks must gather and how they can apply a risk-based approach. The draft allows firms some flexibility in how they meet CDD obligations (e.g. listing types of documents to verify identity, rather than prescribing one form), so long as minimum standards in the new AML Regulation are met. The goal is to ensure effective checks without imposing one-size-fits-all burdens, thereby limiting compliance costs while maintaining rigor.
Uniform Penalty Setting: Common indicators and criteria for determining fines and penalties for AML breaches. This includes developing a methodology to calibrate penalties based on factors like the severity of the violation and a firm’s size, ensuring that enforcement actions are “proportionate, dissuasive and effective” across the EU. In practice, a bank in any EU country would face similar treatment for similar AML failings, preventing regulatory arbitrage.
Implications
These draft standards are foundational to the EU’s ambitious AML reforms.
For banks and financial institutions, the writing is on the wall:
expect more consistent and centralized AML supervision in the next few years.
Once the AMLA is established and these standards are in force, large cross-border banks may find themselves directly supervised by the EU Authority for AML compliance, rather than by just their national regulators. This could raise the bar for compliance, as AMLA will likely zero in on high-risk firms with intense scrutiny. On the positive side, a single harmonized rulebook means greater clarity and uniformity – firms will navigate one set of expectations EU-wide, simplifying compliance for international operations. The emphasis on risk-based approaches and proportional penalties is also reassuring, as it suggests regulators want to direct resources where risks are highest and avoid overly punitive measures for minor infractions. In sum, the EU is moving toward a “single AML rulebook” model, aiming to close loopholes in the fight money laundering. Stakeholders should engage with the consultation (open until June 6, 2025) to shape rules that are tough on financial crime yet practical in implementation.
India Fast-Tracks Rights Issues with New SEBI Framework
India’s capital markets regulator SEBI has overhauled the rights issue process (a way for companies to raise capital from existing shareholders) to make it faster and more flexible. The SEBI (Issue of Capital and Disclosure Requirements) Amendment Regulations, 2025, took effect in March and introduced several important changes:
Speedier Timeline: Rights issues must now be completed within 23 working days from the board’s approval of the offer, a drastic reduction from the earlier timeline (which often stretched 55–60 days). This ensures companies can raise funds more quickly. Additionally, the subscription period for shareholders has been set between 7 to 30 days, and stock exchanges will implement an automated system for processing rights issue applications, further accelerating the process.
No SEBI Vetting Required: In a bid to streamline issuance, SEBI has removed the mandatory review of offer documents. Companies no longer need to file a draft letter of offer with SEBI and wait for comments. Instead, issuers can directly file the offer letter with stock exchanges and proceed, cutting down regulatory red tape. The requirement to appoint merchant bankers as lead managers for rights issues was also eliminated, shifting responsibility for due diligence onto the issuer’s board. This change places more onus on companies to ensure compliance, but saves time and cost associated with an extra layer of oversight.
Flexible Allotment to Strategic Investors: A major innovation is the ability for promoters (controlling shareholders) to renounce their rights entitlements in favor of specific investors. In other words, a promoter who is entitled to subscribe to new shares can instead offer that entitlement to a named investor (for example, a strategic partner or institutional investor). This allows companies to bring in new investors or have certain investors increase their stake as part of the rights issue, which was previously not straightforward. The regulations require detailed disclosure of any such intended allotment to specific investors (including their names and how many rights shares they’ll take up) to ensure transparency. Furthermore, issuers can also arrange for any unsubscribed shares to be allotted to those specific investors, subject to conditions.
Simplified Disclosure Requirements: SEBI has rationalized the disclosure requirements in rights issue offer documents. Companies no longer need to provide voluminous information already available elsewhere (like full business descriptions or lengthy MD&A sections). Instead, the focus is on key facts: the object of the issue, the issue price, record date, entitlement ratio, and other material information. This makes the offering document more concise and investor-friendly, and reduces compliance burden.
Implications
These reforms are a boon for both issuers and investors in India. Companies in need of capital (especially during tight credit conditions) can now tap into shareholder funds much more quickly and with less procedural hassle. The ability to involve specific investors can make rights issues more attractive as a fundraising avenue – for instance, a company can ensure a big investor is ready to buy any leftover shares, which increases the issue’s success certainty. From the investor perspective, existing shareholders still have the opportunity to retain their proportional ownership (as they can subscribe to their rights), but they benefit from a more efficient process and potentially stronger company finances due to faster capital infusion. The streamlined timeline also means shareholders’ money is deployed sooner for the company’s growth, potentially improving returns. However, with SEBI stepping back from pre-vetting documents, there’s greater responsibility on issuers and their boards to uphold disclosure standards and due diligence – any misstep could lead to post-facto regulatory action or investor litigation. Overall, SEBI’s move is seen as promoting a market-driven approach to capital raising, aligning with its broader strategy of easing compliance for legitimate business activities while protecting investors through targeted, material disclosures. Companies considering rights issues should familiarize themselves with the new rules and possibly consult experts to fully leverage the flexibilities (such as structuring deals with specific investors) offered by this regime.
Singapore’s MAS Urges Stronger Commodity Finance Risk Controls
The MAS has published an information paper detailing findings from its 2024 thematic inspections of banks engaged in commodity financing, with a focus on the oil and gas trading sector. The review comes in the wake of several high-profile commodity trade defaults in the region in recent years, and it highlights where banks should tighten risk management.
Key areas of guidance include:
Governance and Oversight: Boards and senior management of banks are expected to actively oversee commodity finance portfolios. MAS observed that banks need clearer risk appetite limits for commodity trading exposure and more robust strategic planning for this sector. The paper emphasizes that senior management should regularly review commodity financing strategies and risk reports, ensuring they align with the bank’s overall risk tolerance. Organizational structures may need adjustments so that commodity finance units are adequately monitored by risk committees.
Customer Due Diligence and Credit Risk Assessment: Banks must conduct deeper due diligence on commodity trading counterparties. The inspections found variability in how banks evaluated traders’ creditworthiness and trade authenticity. MAS expects rigorous customer-level controls, such as: scrutinizing borrowers’ ownership structures (to detect hidden related parties), understanding the underlying trade (e.g. verifying commodity volumes and prices), and assessing borrowers’ risk management practices. Before extending credit, banks should evaluate alternate scenarios (like a sharp drop in commodity prices) on the borrower’s ability to repay. Enhanced credit approval processes for higher-risk traders and periodic credit reviews are advised to promptly identify any deterioration in clients’ financial health.
Transactional Controls and Collateral Management: The paper highlighted the need for tighter transactional oversight – essentially, once a loan is granted, how the bank monitors the use of funds and the performance of the trade. MAS expects banks to track lending conditions and covenants in real time, ensure the commodities financed are sufficiently insured, and frequently value the collateral (which in commodity lending is often the commodity cargo itself)
Any deviations or waiver of terms (for example, if a shipment is delayed or collateral falls in value) should be approved through a formal process and promptly reported to management.
Banks should also use tools like inventory tracking and independent spot checks on warehouses to verify that financed commodities exist and are not pledged elsewhere – a common fraud risk.
The MAS information paper essentially creates a benchmarking tool: it asks banks to compare their practices against those observed and improve where gaps exist. It does not introduce new regulations per se, but clarifies supervisory expectations.
Implications
Commodity trade finance is a significant business in Singapore’s banking sector, but it comes with unique risks (price volatility, potential fraud in documents, and dependency on the global commodity cycle). MAS’s latest guidance serves as a warning and an opportunity for banks.
In the short term, banks active in this space should conduct internal audits or reviews of their commodity financing units, using the MAS paper as a checklist. We may see banks increasing their credit requirements – for instance, demanding more collateral or guarantees from smaller commodity traders – and improving staff expertise in trade finance operations.
In the medium term, the industry might consolidate, with only the more robustly managed banks remaining prominent in commodity finance, as weaker practices get weeded out. MAS’s focus on governance also signals that bank boards will be held accountable if large losses occur due to oversight lapses. The broader implication is a strengthening of Singapore’s resilience to commodity market shocks. By pushing banks to adopt global best practices (and indeed MAS cited relevant industry guidelines in its paper), the regulator aims to prevent a repeat of past incidents where the collapse of a commodity trader led to significant bank losses. Financial institutions beyond Singapore might also take note – as global trade finance is interconnected – making this information paper influential across the region’s trade finance community.
Middle East: Saudi Arabia Proposes Easier Rules for Special Purpose Entities
Saudi Arabia’s Capital Market Authority (CMA) is seeking to boost corporate fundraising by overhauling the regulations for Special Purpose Entities (SPEs). SPEs are vehicles that can be established to issue debt (such as sukuk or bonds) or investment units, allowing companies to raise capital without putting the debt on their own balance sheet. On March 26, the CMA issued a draft for public consultation aimed at enhancing the governance of SPEs and streamlining their use
Key proposed changes include:
Broader Access and Use-Cases: The draft rules would broaden the range of eligible issuers that can utilize SPEs. Currently, SPEs might be limited to certain types of companies or transactions. The new framework seeks to allow more businesses (potentially including smaller firms or new asset classes) to create SPEs, provided they comply with the relevant regulations. It also explicitly permits SPEs to conduct securitization transactions – meaning companies can package financial assets (like loans or receivables) into an SPE and issue securities backed by those assets. Additionally, SPEs would be allowed to issue debt instruments through exempt (private) offerings in addition to public offerings, giving sponsors flexibility to place bonds privately with institutional investors without full public prospectus requirements.
Simplified Procedures and Management: The CMA plans to simplify the operational procedures for SPEs and clarify roles of those involved. For instance, the draft suggests standardizing and speeding up approvals for establishing an SPE and making amendments to its bylaws easier. It also outlines responsibilities for directors and fund managers when an investment fund is structured as an SPE, so that governance is clear in such structures. This should make SPEs more user-friendly and reduce administrative burden.
Strengthened Governance and Investor Protection: To ensure SPEs remain robust, the CMA is proposing some governance safeguards. These include requiring that the trustee of an SPE (who holds assets for investors) be a legal entity (as opposed to an individual) for greater accountability, and that procedures for removing a trustee are improved. There is an emphasis on the independence of SPE board members – they should not be tied to the sponsor or originator of the assets, reducing conflicts of interest. The draft also refines how an SPE can be dissolved once its purpose is fulfilled, to protect investor rights during wind-down. Essentially, while making SPEs easier to use, the CMA wants to ensure they operate transparently and with proper oversight so investor interests aren’t compromised.
Implications
These changes, once finalized, could significantly boost Saudi Arabia’s debt capital markets. By making SPEs more accessible and flexible, the CMA is encouraging more companies to issue sukuk/bonds – for example, a mid-sized company could securitize its receivables via an SPE and raise funds from investors, which it might not have attempted under a more restrictive regime. This supports the Saudi government’s broader strategic objectives to deepen capital markets and diversify financing options for its growing economy. We may see a rise in structured finance deals and a diversification of issuers (beyond just large banks or government-related entities) tapping the debt market.
For investors, especially institutional ones, a more vibrant SPE framework means more investment opportunities, potentially with different risk/reward profiles (from infrastructure project bonds to consumer loan securitizations, etc.).
However, with greater activity, regulators will also be keenly monitoring that risks are contained – the improved governance rules are meant to preempt issues like mismanagement or abuse of SPE structures (which, in other jurisdictions, have sometimes been associated with off-balance-sheet risks). Market participants in the GCC region should prepare for new compliance requirements if they plan to set up SPEs – e.g. ensuring independent directors and qualified trustees – and might want to participate in the CMA’s consultation to shape practical rules.
The consultation is open until April 29, 2025
Summary of Additional Regulatory Updates (March 2025)
Regulator | Update | Source |
FINRA (USA) | Published its 2025 Regulatory Oversight Report, highlighting emerging risks in firms’ compliance programs – including third-party vendor risks, cybersecurity, and the use of artificial intelligence in brokerage operations. | |
UK ICO | Announced plans to consult on updated AI and data protection guidance in spring 2025, to ensure clarity on how GDPR principles (like fairness, transparency, and accountability) apply to AI systems and automated decision-making. | |
RBI (India) | The Reserve Bank of India’s Governor advocated for leveraging AI in banking supervision and customer service. In a speech, he noted that AI can greatly improve the speed and fairness of resolving customer complaints, while cautioning banks to implement AI with proper oversight to avoid bias or privacy issues. | |
DFSA (Dubai) | Launched a Tokenisation Regulatory Sandbox initiative, inviting firms (Mar–Apr 2025) to test innovative tokenized financial products (like digital bonds and securities) in a controlled environment. This sandbox will let fintechs experiment under lighter-touch rules before obtaining full authorization, supporting Dubai’s push to be a digital assets hub. |
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
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