Regulatory Updates Newsletter : May 2025

Welcome to the May 2025 edition of our regulatory newsletter, highlighting the most significant developments in financial regulation across the world’s major economies.

This month, we lead with the UK Prudential Regulation Authority’s new banking rules for overseas banks, followed by key updates from the US, EU, and India.

We then turn to important regulatory actions and proposals from other jurisdictions, including the UAE, Australia, Nigeria, and South Africa, ensuring you are informed of the latest in banking, financial crime, AI governance, digital lending, and emerging risk management frameworks.

PRA Tightens Rules for Overseas Banks in the UK

Source: Bank of England News Release

The UK’s Prudential Regulation Authority (PRA) has implemented a significant policy update aimed at strengthening the regulatory framework for international banks operating through UK branches. Effective May 2025, the PRA revised its "open banking" thresholds to account for inflationary trends. Covered deposit thresholds for branches were raised from £100 million to £130 million and from £500 million to £650 million.

A new intermediate threshold of £300 million was also introduced, acting as a pivot beyond which international banks are expected to shift from branch to subsidiary operations.

The PRA also confirmed in Policy Statement PS7/25 that the longstanding SME and infrastructure support factors will be removed from capital requirement calculations. To counterbalance this change and preserve access to SME and infrastructure lending, the regulator introduced tailored Pillar 2A capital requirements. These adjustments are aligned with Basel 3.1 standards and mark an important recalibration of the UK’s prudential regime.

Implications:

• International banks must reassess branch structures and prepare for possible reauthorization as subsidiaries if deposit thresholds are exceeded.

• Removal of SME support factors may raise effective capital requirements and necessitate reassessment of lending strategies.

• Compliance teams must ensure that risk and capital reporting systems are updated to reflect the new methodologies.

SEC, OCC, and EBA Advance Enforcement and AML Rules

UK Financial Taskforce Issues Generative AI Risk Guidance

RBI Releases Digital Lending Framework

PRA Proposes Updated Supervisory Expectations for Banks and Insurers on Climate-Related Risks

Summary of Other Regulatory Updates

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