The Q4 2025 Global Regulatory Pulse highlights key regulatory updates across regions. This issue focuses on updates on senior management accountability, cybersecurity, liquidity and AML/CFT frameworks in Singapore, ESG and sustainability integration in Europe, reforms to the UK’s Senior Managers and Certification Regime (SM&CR), regulatory activity in the U.S., and significant reforms in the UAE and the Abu Dhabi Global Market (ADGM). It also covers emerging trends in digital finance, cross-border regulatory cooperation and crypto oversight.
Regulatory Updates
March 3, 2026
Global Regulatory Pulse – Q1 2026
APAC
Hong Kong
Statutory Obligations During Inspections for LCs
The latest circular of the Securities and Futures Commission (SFC) reinforces its expectations that Licensed Corporations (LCs) demonstrate full cooperation during inspections, with clear emphasis on proactive communication and timely information access. Senior management accountability remains central, particularly for responsible officers (ROs) and managers in charge (MICs) overseeing overall management oversight and compliance.
Key expectations include the following:
- Timely access to records
- Prompt responses to inspection inquiries
- Relevant staff availability
- Active oversight by ROs and MICs to ensure inspection readiness
The circular reiterates that cooperation during inspections is a core statutory obligation for all licensed entities in Hong Kong.
SFC OTCD Regime: Reporting and Licensing Requirements
The SFC continues progress toward full implementation of its enhanced regulatory framework for over‑the‑counter derivative (OTCD) transactions in Hong Kong. Since September 29, 2025, the SFC has required all specified OTCD transactions be reported to the Hong Kong Trade Repository.
Another forthcoming element or the framework is the expanded Type 9 licensing regime, which will apply to asset managers overseeing portfolios containing OTCDs. While the effective date has not been announced, a six‑month transition period is expected.
The final component involves proposed amendments to the Financial Resources Rules. LCs managing portfolios with OTCD products may face variable and potentially volatile capital requirements, reflecting market and counterparty credit risks arising from these transactions.
As the regime moves toward full implementation, LCs should prioritize operational readiness, strengthen compliance processes and prepare for the new reporting, licensing and capital obligations.
Singapore
The MAS Issues Anticipated Consultation Paper on Updates to Liquidity Risk Management Practices for Fund Management Companies
In December 2025, the Monetary Authority of Singapore (MAS) issued Consultation Paper P019 2025, proposing targeted updates to the Guidelines on Liquidity Risk Management (LRM) Practices for Fund Management Companies and related amendments to the Collective Investment Schemes (CIS) Code. The consultation closed on February 28, 2026. The proposals aim to clarify MAS’ expectations and align with IOSCO’s revised recommendations and the FSB’s work on margin and collateral preparedness.
Key proposed updates include the following:
- Scope Clarification: Removal of exchange-traded funds from the LRM guidelines, because of their distinct structural and liquidity characteristics
- Product Design and Ongoing Alignment: Requirement for open ended CIS managers to ensure portfolio liquidity matches redemption terms and to strengthen investor disclosures
- Liquidity Management Toolkit and Governance: Reinforcement of the need for comprehensive liquidity management measures (including anti-dilution tools, or ADTs) and clearer accountability over activation during normal and stressed conditions
- Money Market Funds (MMFs): Enhanced MMF portfolio liquidity standards, including expectations for eligible deposits with financial institutions
MAS Consultation on Proposed Guidelines on AI Risk Management
MAS also consulted on proposed Guidelines on AI Risk Management (issued November 13, 2025) to set supervisory expectations for the responsible use of AI across MAS regulated financial institutions. The consultation closed on January 31, 2026. The guidelines are principle based and intended to be applied proportionately to the AI related risks of each business, with expected focus areas including the following:
- Governance and Oversight: Board and senior management accountability for AI risk management
- Risk Management and Life-Cycle Controls: Controls across development, testing, deployment and ongoing monitoring, calibrated to the materiality of AI use cases
- Capabilities and Capacity: Requirements for adequate resourcing, technical competence and internal capability building to support safe and reliable AI adoption
European Union
ESMA 2026 Work Program
ESMA has published its 2026 work program, outlining planned supervisory activities and outputs for the year. Key investment services related deliverables include the following:
- Q1 2026: Report on the 2024/2025 Common Supervisory Action (CSA) on MiFID II sustainability topics
- Q2 2026: Report on 2025 CSA assessing compliance and internal audit functions of UCITS management companies and AIFMs
- Q2 2026: Report on a holistic review of transactional reporting under MiFIR, EMIR and SFTR
T+1 and CSDR
ESMA published its final report proposing major amendments to the settlement discipline Regulatory Technical Standards (RTS) under the Central Securities Depositories Regulation (CSDR). The changes are designed to improve settlement efficiency across the EU, support the transition to a T+1 settlement cycle by October 2027 and reduce administrative burdens for CSDs and market participants.
A phased implementation will begin in December 2026 and conclude in October 2027, providing a structured transition to the updated regime.
Sustainable Finance Disclosure Regulation Review
The European Commission published a review of SFDR in November 2025. It proposes a simplified framework aimed at providing clearer, more usable sustainability information for investors. The current Article 8 and Article 9 labels would be replaced with three new voluntary product categories:
- Transition Category (Article 7): For products investing in companies or projects on a credible sustainability pathway or contributing to that transition, with at least 70% allocated to transition related assets
- ESG Basics Category (Article 8): For products that integrate sustainability factors beyond basic risk management, but with more limited commitments
- Sustainable Category (Article 9): For products with sustainability objectives and measurable outcomes, requiring at least 70% in sustainable assets
The review also proposes removing PAI reporting requirements and eliminating mandatory taxonomy alignment disclosures, significantly reducing reporting complexity.
Liquidity Management Tools (LMTs)
ESMA has updated its guidelines on LMTs for UCITS and open-ended AIFs to align them with the revised RTS adopted by the European Commission in November 2025. Key updates concern redemption gates and the treatment of transaction costs within ADTs.
The document also provides detailed guidance on quantitative tools (such as suspensions, notice-period extensions and redemptions in kind) and ADTs, including swing pricing, dual pricing, redemption fees and anti-dilution levies.
The new requirements are effective as of April 16, 2026, for new UCITS and AIFs, and existing UCITS and AIFs have until April 16, 2027, to comply with the new requirements.
EU Anti–Money Laundering Authority (AMLA)
The newly established AMLA released its first strategic priorities for 2026–2028, focusing on completing the Single Rulebook, advancing supervisory convergence and strengthening cooperation among financial intelligence units. AMLA is also conducting an EU wide data collection exercise to help identify up to 40 entities for its direct supervision beginning in 2028 and to ensure money laundering risks are assessed consistently across the EU.
Middle East
UAE Issues Updates on the UAE Federal AML/CFT Legislative Framework
The UAE has introduced major updates to its AML/CFT framework under Federal Decree‑Law No. (10) of 2025 and Cabinet Resolution No. (134) of 2025, replacing the 2018–2019 legislation. The decree‑law is already in force, and the cabinet resolution has applied since December 14, 2025. These changes reinforce the UAE’s commitment to stronger financial‑system integrity, alignment with international standards and more effective AML/CFT controls.
Key expectations for relevant persons (financial institutions, VASPs, DNFBPs):
- Review the new legislation and assess its impact on existing AML/CFT and targeted financial sanctions frameworks.
- Update internal policies, procedures, systems, tools and controls accordingly.
Additional VARA requirements for VASPs:
- Conduct a full assessment of current compliance systems against the new 2025 AML decree law.
- Submit an assessment report and a board approved remediation plan within 60 days.
- Address critical gaps immediately and provide updated staff training.
- Complete all remediation within 90–120 days, document progress and retain records for supervisory review.
- Upload all required documents to the firm’s dedicated VASP supervision folder.
ADGM FSRA Showcases Enhancements to Its Funds Regulatory Framework
The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) reported strong momentum in its fund and asset management sector during Abu Dhabi Finance Week, driven by a 48% year on year increase in assets under management and 161 managers overseeing 220 funds as of Q3 2025. To further strengthen ADGM’s position as a global asset management hub, the FSRA introduced several regulatory enhancements in 2025, including a new periodic reporting requirement for funds aligned with international standards.
The FSRA also issued a consultation paper proposing significant reforms, including the following:
- Streamlined rules for smaller fund managers
- A new Institutional Fund Manager category aimed at institutional investors
- Enhanced frameworks for foreign fund managers
- Supportive provisions for employee investment vehicles
These proposals stem from a comprehensive review of the funds regulatory framework, with additional enhancements planned for 2026.
ADGM FSRA Presents Key Enhancements to Its Digital Assets Framework
The FSRA announced major enhancements to its digital asset regulatory framework during Fintech Abu Dhabi, reinforcing ADGM’s position as a leading global jurisdiction for virtual asset oversight. Since establishing one of the world’s earliest comprehensive virtual assets (VA) frameworks in 2018, ADGM now hosts over 20 regulated firms operating in VA and fiat referenced token (FRT) activities.
Key updates include the following:
- Enhanced Criteria for Accepted VAs: Clearer eligibility standards, improved risk assessment methodologies and a more structured review process to ensure the ongoing suitability of listed assets
- Revised Capital and Supervisory Requirements: More granular, risk based capital thresholds and updated supervisory fees aligned with firms’ scale and business model complexity
- Expanded Permissions for Venture Capital Funds: Greater flexibility to invest in tokenized and digital asset native structures
- Proposed Framework for VA Staking: Currently under consultation, addressing operational, custody and disclosure risks for staking service providers
- Amendments Effective January 1, 2026: Expanded regulatory perimeter for FRT related activities and proportionate, risk based requirements aligned with evolving digital asset business models and emerging global standards
DFSA Implements Major Updates to Crypto Token Regulatory Framework
The Dubai Financial Services Authority (DFSA) has implemented an updated crypto token regulatory framework in the DIFC, strengthening the regime and providing greater clarity for market participants. The revised rules reflect feedback from the DFSA’s October 2025 consultation and continued industry engagement since the framework’s original launch in 2022, aligning the regime with the rapidly evolving digital assets landscape.
Key changes include the following:
- Firm Led Suitability Assessments: Firms are now responsible for determining and documenting whether crypto tokens meet DFSA criteria; the DFSA will no longer publish a list of recognized crypto tokens.
- Enhanced Investor Protections: Safeguards have been updated to align with global digital asset market developments.
- Refined Conduct and Operational Requirements: The DFSA has strengthened governance, risk management and operational standards for crypto token activities.
- Proportionate Reporting Obligations: Risk-based reporting requirements have been streamlined and will be calibrated to firm size and activity.
United Kingdom and Channel Islands
United Kingdom
Updates to Sanctions Lists
In October 2025, the UK issued guidance directing firms and stakeholders to use the UK Sanctions List as the sole source of sanctions information. The single list became effective on January 28, 2026, following the closure of OFSI’s Consolidated List of Asset Freeze Targets.
Financial Conduct Authority (FCA) Focus on Corporate Finance Firms
During October the FCA published its findings from two reviews of corporate finance firms.
Client Categorization
The FCA found gaps in corporate finance firms’ assessments and records in relation to client categorization. The regulator highlighted that firms should do the following:
- Consider how they revisit categorization decisions when circumstances change.
- Ensure that financial promotion recipients lists are accurate, that categorization assessments are performed and documented before promotions are sent and that statements/certifications are up to date.
- Have policies and procedures that are tailored to the business and have appropriate compliance regarding and senior management oversight of client categorization.
Financial Crime Controls
Across a review of 300 corporate finance firms, the FCA identified widespread weaknesses in AML controls, including the following issues:
- Lack of business wide risk assessments
- Insufficient customer due diligence documentation
- Gaps in risk assessments for appointed representatives
- Risk Assessments Processes and Controls in Firms
In November, the FCA reported that while most firms perform business wide risk assessments, many are overly generic, lack tailored risk identification and are not clearly linked to required actions. Governance and oversight standards also varied. The FCA provided examples of both good and poor practices to support remediation.
Data Quality Review of Firms’ Prudential Reporting
In the FCA’s findings published on November 26, it reported significant data quality issues among firms subject to a sector of the prudential rules. The regulator identified inconsistent reporting, including misclassified firm types, incorrect units, data entry errors, missing links to required actions, critical fields left blank, repeated data submissions across reporting periods and use of incorrect currencies. Governance and oversight practices also varied substantially.
The UK’s Move to T+1 Securities Settlement
In November, the FCA outlined its expectations for firms ahead of the UK’s transition to a T+1 securities settlement cycle on October 11, 2027, a move intended to enhance market efficiency and competitiveness and reduce settlement risk. Key expectations include the following:
- Industry Led Transition: The transition is supported by the FCA, with the Accelerated Settlement Task Force (AST) having published its implementation plan in February 2025.
- By End of 2025: Firms should familiarize themselves with AST recommendations, establish a project plan, secure funding, conduct internal reviews and engage with settlement agents and other outsourced providers.
- By End of 2026: Firms are expected to implement the required system and process changes.
Crypto Asset Regulatory Regime to Be Introduced in the UK
In December, the Treasury announced a new cryptoasset regulatory regime that will take effect in 2027. Under the regime, cryptoasset firms will be brought into regulation and will require authorization before conducting business activities in the UK. The reforms aim to position the UK as a leading global hub for digital assets, strengthen consumer confidence and enhance transparency and oversight across the sector.
In response, the FCA issued three consultation papers in December, covering the following:
- Regulation of authorized cryptoasset trading platforms
- Retail customer protections and considerations
- A new market abuse regime and corresponding prudential requirements
Other FCA Consultation Papers and Policy Statements
In Q4 the FCA published a number of consultation papers and policy statements covering the following key topics (which is not an exhaustive list):
Consultations
- Changes to the client categorization and conflicts of interest rules
- New transaction reporting regime
- New short selling rules
- Streamlining the UK EMIR (European Market Infrastructure Regulation) Intragroup Regime
- Regulations for ESG ratings providers
- Enhancing liquidity and risk management for UCITs ( undertakings for collective investment in transferable securities) and NURs (non-UCITs retails schemes) funds
- Progression of fund tokenization (digital representation of assets on distributed ledger technology) with the aim of opening up new ways to distribute funds
Finalized Rules or Guidance
- Finalized guidance on tackling non-financial misconduct
- New rules for the UK’s new Consumer Composite Investments regime to replace the current PRIIPs (Packaged Retail and Insurance-based Investment Products) regime and disclosure requirements for UCITs
Channel Islands
Jersey has completed a consultation on whether access to its beneficial ownership register should be permitted on a limited basis, available only to applicants who can demonstrate a legitimate interest. Under the proposed approach, applicants would need to show that their request is directly connected to the prevention, detection or investigation of serious financial crimes, including money laundering, terrorist financing or proliferation financing.
The framework emphasizes necessity and proportionality when assessing access requests, while maintaining strong privacy protections for individuals listed in the register. Jersey’s direction aligns with international trends, particularly across EU member states, which have moved toward restricted access models following the Court of Justice of the European Union ruling that curtailed broad public access.
United States
SEC Update
The SEC continues to reshape its leadership and organizational structure. In January 2026, Commissioner Crenshaw departed, and the SEC appointed Keith Cassidy as director of the Division of Examinations and Paul Tzur and David Morrell as deputy directors of the Division of Enforcement. Senior SEC officials have also increased public engagement, signaling the following focus areas:
- Harmonizing treatment of cryptocurrencies across the SEC and CFTC
- Modernizing rules relating to artificial intelligence, proxy voting and Regulation S‑K disclosure requirements
- Listening: No formal rulemaking has been issued; the SEC has emphasized that it is currently in “listening mode”
At the same time, the Division of Enforcement has not published a fiscal year 2025 enforcement report, departing from past practice, and overall enforcement volumes have declined, with emphasis shifting toward fraud, accounting misconduct and insider trading. The SEC has also taken the unusual step of voluntarily dismissing certain legacy enforcement actions, a notable departure from historical norms.
Despite quieter regulatory activity, registered investment advisors are preparing for Form ADV, Form PF and other Q1 2026 compliance and reporting obligations. The Division of Examinations, meanwhile, remains active.
CFTC Update
On December 22, 2025, Michael Selig was sworn in as the new CFTC chairman, succeeding Acting Chair Caroline Pham, who departed to join MoonPay in a senior role. Chairman Selig has signaled two immediate priorities: advancing legislation for digital asset markets and reducing duplicative reporting requirements for firms registered with both the CFTC and SEC.
Shortly before Selig’s arrival, the CFTC’s Markets Participant Division issued No-Action Letter 25-50, allowing commodity pool operators (CPO) that are also SEC registered investment advisors to forgo CFTC registration for certain funds. The relief closely mirrors the former Regulation 4.13(a)(4) exemption rescinded in 2012.
To qualify for relief under No Action Letter 25 50, a pool must do the following:
- Be exempt from registration under the Securities Act of 1933
- Be privately offered
- Include only participants the CPO reasonably believes are qualified eligible persons (QEPs) at initial investment or as of the letter’s release
The letter is an interim measure while the CFTC evaluates reinstating the former QEP exemption under 4.13(a)(4). Unlike a transition to an active 4.13 exemption, it does not require an additional redemption period. To date, the NFA has not issued supplementary guidance for its members.
Money Laundering Hits Record Highs While U.S. Sanctions Fall Sharply in 2025
Money‑laundering activity surged in 2025, with illicit flows reaching record levels across both crypto and traditional finance. A Reuters report citing Chainalysis estimated at least $82 billion laundered through cryptocurrency, with over $16 billion moved through Chinese‑language networks alone. TRM Labs reported even higher illicit crypto volumes ($158 billion), driven by Russia‑linked sanctions evasion, nation‑state activity and continued exploitation of DeFi vulnerabilities and privacy tools such as mixers and chain‑hopping. Despite increased enforcement attention, crypto platforms remained a primary conduit for large‑scale laundering.
Traditional banking channels saw similar escalation. An analysis from behavioral analytics firm BioCatch reported U.S. financial institutions recorded a 168% increase in confirmed money‑laundering cases in the first half of 2025, largely driven by scam‑related mule accounts used to move illicit funds rapidly.
At the same time, AML‑related fines in the U.S. fell 61%, to $1.7 billion, a decline analysts attribute to a strategic enforcement pullback rather than reduced laundering activity. Regulators issued multiple interagency alerts warning of rising trade‑based laundering, corruption networks and complex cross‑border schemes exploiting both traditional and digital financial systems.
Overall, 2025 marked a critical inflection point, with crypto‑based laundering accelerating sharply and traditional channels remaining heavily abused. The convergence of emerging technologies, cross‑border criminal networks and uneven enforcement underscores the need for stronger vigilance and more coordinated responses across regulators, financial institutions and compliance functions.
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