Banking Regulations Update

📣 It’s that time of year again 2025 was the year regulators stopped asking “do you have a policy?” and started asking “can you prove this actually works?” Across AML, fraud, sanctions, digital assets and AI, supervision has shifted decisively toward evidence, outcomes, and real-world effectiveness. Controls are no longer assessed on design alone, they’re being tested on performance, speed, and resilience. That’s why we’ve published Plenitude’s RegIntel: 2025 Recap & 2026 Outlook: an analysis of how financial crime regulation evolved across 2025, and what firms must now prepare for in 2026. The report brings together developments across the UK, EU, US, Singapore and global bodies, and shows how: • AML, fraud, sanctions, crypto and AI risk are rapidly converging • Supervisors are moving from policy review to deep operational testing • AI, instant payments and digital assets are reshaping both risk and regulatory expectations • Accountability is shifting decisively to demonstrable, board-level ownership Most importantly, the paper translates regulation into action. Each section distils change into: ✔ what actually matters ✔ Key Actions firms can take now ✔ a forward-looking 2026 outlook to support real planning, not box-ticking As we move into 2026, the message from regulators is consistent and unmistakable: ▶️Show me the evidence. ▶️Show me it works. 👏 This paper is never a small effort and I want to particularly call out the massive efforts of Thomas Hudson, Ciarán McMullan, & Daniel Keay As always, each year we aim to improve upon the previous year. Have suggestions? We'd love to hear them

Understanding the Imperative: Basel III and Post-Crisis Reforms The financial crisis of 2008 was a stark reminder of the interconnectedness and vulnerabilities within the international financial system. The crisis exposed significant weaknesses in the global regulatory framework, particularly under Basel II, necessitating a more robust and resilient banking system. Understanding why Basel III and other post-crisis reforms were introduced is crucial for banking professionals who are navigating these regulatory environments. Although Basel II was a significant advancement over its predecessor, it became apparent during the financial crisis that it did not go far enough in preventing the build-up of systemic risk. Basel II was heavily reliant on internal risk assessments by banks, which proved to be overly optimistic and insufficient in the face of financial distress. The framework also lacked stringent requirements for liquidity and leverage, allowing banks to operate with high leverage while maintaining insufficient liquid assets. Basel III was developed to address these shortcomings and to significantly strengthen the global capital framework. Key enhancements introduced by Basel III include: 1. Higher Capital Requirements: stricter capital requirements, increasing both the quantity and quality of capital banks must hold. This includes a higher ratio of equity to risk-weighted assets, ensuring that banks have enough capital to absorb losses during periods of financial stress. 2. Countercyclical Buffers: To prevent excessive credit growth that can lead to asset bubbles, Basel III introduced countercyclical capital buffers, requiring banks to hold additional capital during periods of high credit growth, which can be reduced when conditions worsen. 3. Leverage Ratio: Unlike Basel II, Basel III introduced a non-risk-based leverage ratio to serve as a safeguard against excessive leverage on banks' balance sheets. This measure helps ensure that banks' expansion is matched by solid capital support. 4. Liquidity Requirements: Basel III established two key liquidity ratios - the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). These ensure that financial institutions maintain sufficient high-quality liquid assets to withstand a 30-day stressed funding scenario and promote more stable funding structures. The implementation of Basel III and its ongoing updates reflect an ongoing commitment to fortifying the global banking system against future crises. These reforms have led to a more conservative banking environment where institutions must operate with higher levels of capital and stronger risk management practices. Understanding the rationale and requirements of Basel III is not just about regulation, but about appreciating the role of these reforms in fostering a more stable banking system. As the landscape continues to evolve, the insights gained from these reforms will be essential in guiding future regulatory changes.

Crypto regulation is no longer a wild frontier. It’s becoming global, structured — and strategic. The newly released PwC Global Crypto Regulation Report 2025 marks a regulatory turning point for digital assets. Here are some key takeaways worth your attention: 1) US Pivot: A clear shift away from “regulation by enforcement” toward well-defined frameworks. Spot Bitcoin & Ethereum ETFs are just the beginning — Staked ETFs are coming next. 2) MiCAR in Full Effect: The EU now has a single market for crypto. Authorization, whitepapers, and AML rules are now standard. 3) Stablecoins in Focus: Regulators worldwide are setting strict, but innovation-friendly rules. Europe treats them as payment tools, while the US signals support for bank-issued stablecoins. 4) DeFi Under the Microscope: Expect more scrutiny. Global regulators are applying “same risk, same rule” logic to lending, DEXs, and even mixing services. 5) Tokenization Rising: From pilot programs in the EU to SEC-CFTC coordination in the US, real-world asset tokenization is becoming a regulated frontier for capital markets. Regulatory clarity is no longer optional. Time to adapt, align, and build responsibly. #CryptoRegulation #MiCAR #Stablecoins #Tokenization #DeFi #DigitalAssets #Web3Policy #PwC #FutureOfFinance

GFTN Global Digital Assets Report This inaugural GFTN Global Digital Assets Report provides a comprehensive cross-jurisdictional analysis of the evolving digital asset ecosystem, focusing on market developments, regulatory trends, and forward-looking policy implications. The report is designed to serve as a practical reference for policymakers, central banks, industry participants, and international standard-setting bodies navigating the rapid transformation of digital money, tokenization, and decentralized finance. Thank You Arthur D. Little | Arjun Vir Singh 🞕 Trends and Key Highlights ➟ At least nine of 12 jurisdictions studied have implemented or are drafting digital-asset frameworks, signalling growing recognition of responsible innovation in the space. ➟ 47% of survey respondents highlighted that digital assets could enhance efficiencies in cross-border payments, while 36% projected new financial services driven by programmability and smart contracts. ➟ A majority of respondents surveyed see capital market efficiencies via tokenisation (56%) as key growth opportunities for digital assets, with nearly half (46%) also highlighting programmable money as an emerging frontier. ➟ Asia leads in cross-border payments and tokenisation pilots, driven by public-private collaboration and live projects such as Project Nexus. ➟ Europe continues to advance regulatory clarity through MiCA and digital-euro trials. ➟ The Middle East is emerging as a fast-growing innovation hub, leveraging digital-asset sandboxes and sovereign-wealth investment. ➟ The Americas are moving toward institutional adoption, supported by the U.S. GENIUS Act and listings of digital-asset exchange-traded funds. 🞕 Real-World Impact ➟ Small and medium enterprises (SMEs) gain faster, cheaper access to cross-border payments and financing through tokenised assets and programmable money. ➟ Migrant workers benefit from instant, low-cost remittances powered by stablecoins and interoperable payment systems. ➟ Investors can access fractionalised portfolios of previously illiquid assets such as infrastructure and real estate. ➟ Governments and regulators leverage blockchain-based transparency to improve supervision and public-sector efficiency. ➟ Financial institutions deploy blockchain and AI-enabled compliance tools to reduce settlement times and strengthen risk management. Excellent Report By combining first-hand inputs from global decision-makers with structured analysis of market activity and regulatory frameworks, the methodology provides a comprehensive and forward-looking assessment of the industry.

Fintech Evolution: From Hustlers to License Holders 💡 The global fintech industry is maturing, and its next phase of growth is being powered not just by tech innovation, but by regulatory ambition. But getting licensed is more than just ticking a regulatory checkbox; it’s a calculated move that often reveals the strategic DNA of the fintech itself. Licenses are not only legal tools - they're leverage. Whether it’s controlling infrastructure, going global, or unlocking new product categories, fintechs are increasingly viewing licenses as strategic assets. 1️⃣ Operational Ownership (Vertical Integration): Aiming for Control For fintechs like Stripe, Airwallex, Tamara, and Pluggy, licensing unlocks ownership of the rails. By cutting out intermediaries, these companies gain direct control over the customer experience, improve their margins, and enhance compliance. These companies are focused on building their capabilities internally to streamline operations and boost profitability. 👉 Outcome: Greater control over operations, faster product launches, improved unit economics. 2️⃣ Borderless Scale: Going Global Robinhood, for instance, plans to use its Brokerage License in Lithuania as a launchpad for trading services across the European Union. Similarly, Revolut’s Prepaid Payment Instruments License in India is a crucial step towards scaling its global banking services, while Nuvei targets Latin American markets with its Payment Institution License in Brazil. This group demonstrates how licensing can open new international revenue streams while ensuring compliance with local regulations. 👉 Outcome: Market expansion, regulatory resilience, cross-border product growth 3️⃣ Product Deepening: Expanding the Value Proposition For fintechs like Aspire, Neon, Cash App, and Offa, the focus is on product diversification. These companies use licenses to deepen their offerings by adding new financial products - such as lending, investing, or payment initiation. This category highlights how fintechs are leveraging licenses not just for operational scale, but for broadening their customer-facing product portfolios. 👉 Outcome: Full-suite product offerings, increased lifetime value, and ecosystem moat. Fintechs have flipped the script - regulation is now part of the blueprint, not the barrier. A blueprint of trust, control, scale, and product innovation. Whether it's Stripe insourcing banking licenses, Robinhood setting up shop in Europe via Lithuania, or Neon doubling down on payments infrastructure in Brazil, one thing is clear: Licenses look like compliance. They act like weapons. Source: WhiteSight - https://shorturl.at/7fEAh #Innovation #Fintech #Banking #FinancialServices #Payments #Lending #BNPL #License #Compliance #Strategy

Navigating India's Digital #Banking Future: Reserve Bank of India (RBI) 's New Authorization Directions. The Reserve Bank of India (RBI) has just unveiled its comprehensive "Reserve Bank of India (Digital Banking Channels Authorisation) Directions, 2025". This significant draft, effective from its final issuance date, aims to streamline and strengthen the regulatory framework for digital banking services across India. This isn't just an update; it's a foundational shift for all commercial and cooperative banks operating in India! Let's dive into what these directions mean for the banking landscape: 1. Defining the Digital Frontier: The RBI clearly distinguishes between various digital banking channels: • Digital Banking Channels themselves encompass services offered via websites (internet banking), mobile phones (mobile banking), or other digital channels, involving significant process automation and cross-institutional capabilities. • Internet Banking allows customers to manage accounts and access services online. • Mobile Banking facilitates banking through mobile applications, USSD, and SMS. Crucially, the directions differentiate between two levels of digital service based on functionality: • View Only Banking Facility: This is for non-transactional services that do not alter a customer's assets or liabilities. Think balance inquiries, statement downloads, or viewing. While loans and fund transfers cannot be directly provided, banks can offer downloadable forms for such facilities. • Transactional Banking Facility: This is the full suite, allowing all fund-based or non-fund-based banking services. This distinction is key to understanding the varying compliance requirements. 2. Dual Pathways for Authorization – A Tailored Approach: The RBI has established two distinct eligibility criteria, reflecting the risk profiles of the services offered: • For "View Only" Banking Facility:     ◦ Banks must have fully implemented Core Banking Solution (CBS).     ◦ Their public-facing IT infrastructure must be enabled to handle Internet Protocol Version 6 (IPv6) traffic.     ◦ Upon launching, banks must inform the concerned RBI regional office within thirty days and submit a ‘Gap Assessment and Internal Controls Adequacy’ (GAICA) report. This demonstrates a lighter, but still structured, oversight for lower-risk services. • For "Transactional" Banking Facility:     ◦ This requires prior approval from the Reserve Bank.     ◦ Applications must be submitted via the PRAVAAH portal with a board resolution and supporting documents.     ◦ The criteria are significantly more stringent, emphasizing robust financial health and technological readiness:         ▪ Full CBS and IPv6 enablement of IT infrastructure.         ▪ Compliance with minimum regulatory Capital to Risk-Weighted Assets Ratio (CRAR).         ▪ Net worth of at least the minimum regulatory requirement or ₹50 crore, whichever is higher, as of March 31st of the preceding financial year.

Excited to share the THIRD EDITION of our flagship research: "Advancing Regulation": A Compilation of Latest Research and Policy Papers by Standard-Setting Bodies. The global crypto landscape has been rapidly evolving, with Standard-Setting Bodies (SSBs) across the world actively setting new policy standards and closely observing market developments. From the IMF's cross-border payment frameworks to IOSCO's investor protection guidelines, regulatory clarity is emerging at an unprecedented pace. Our policy team recognized the need to consolidate these critical developments into one comprehensive resource. This September 2025 report, our third edition, brings together cutting-edge insights from global standard-setting bodies including the IMF, FSB, BIS, IOSCO, and more. Key highlights from this edition: 🔹 Cross-border crypto flows and their policy implications 🔹 G20 crypto asset implementation roadmap progress 🔹 Tokenization's impact on financial market efficiency 🔹 Central Bank Digital Currencies (CBDCs) development trends 🔹 Stablecoin regulations across emerging markets 🔹 Enhanced investor protection frameworks Let’s drive meaningful policy conversations together! You can read the full report here:

How do we safeguard Europe’s investment capacity – at a time of geopolitical tensions and immense transformation needs? Europe wants to invest: in transformation, in infrastructure, in security, in competitiveness. A key lever for this is a strong and diverse banking system. Regionally anchored, low-risk institutions finance #SMEs, municipalities and households every single day. This structure is not a relic – it is a European competitive advantage. To preserve it, we now need regulatory reform: simpler, more coherent, more proportional. Not less stability. But rules that enable diversity instead of unintentionally levelling it. Concretely, this means: 💡Consolidating capital buffers and removing gold-plating elements such as the Systemic Risk Buffer. 💡Establishing a genuine #EU regime for regional banks – with substantial relief in SREP, reporting, disclosure and governance requirements. 💡Making the CRR3 transitional arrangements permanent and avoiding competitive disadvantages compared to other jurisdictions. 💡Introducing a moratorium on new reporting requirements and consistently reducing redundant reporting obligations. 💡Ensuring coherence in sustainable finance rules – simplifications must be systematically reflected in CRR/CRD and SFDR, aligned with actual data availability. 💡Aligning the ECB’s €30 billion threshold with systemic relevance rather than a static balance sheet size. 💡And particularly important: advancing a dedicated Financial Services Omnibus. The proposal by Lars Klingbeil and Roland Lescure is the right approach. Such a simplification package could enable tangible regulatory improvements in the short term – even before lengthy legislative procedures are concluded. Europe needs speed. A comprehensive review of the financial regulatory framework with a clear focus on competitiveness would send a strong signal. Diversity in the European banking system is not a problem to be solved. It is a competitive advantage we should preserve.

It takes years to build credibility with a regulator. It takes one reporting failure to damage it. The European Central Bank’s €12.18 million sanction on J.P. Morgan SE is not about the size of the fine. It is about what failed underneath. For multiple years, Risk Weighted Assets were understated due to misclassification of exposures and omissions in Credit Valuation Adjustment calculations. That means capital ratios were overstated. On paper, the bank looked stronger than it actually was. This is the real issue. Regulators rely on RWA to understand risk. Boards rely on capital ratios to make decisions. If the inputs are wrong, every decision built on top of them is distorted. What stands out is not just the error, but the duration. Fifteen to twenty one quarters. That points to a deeper problem in controls, governance, and independent validation. RWA is often treated as a reporting output. It should not be. It is a core risk metric that should be embedded in decision making, pricing, and capital allocation. If it only appears at the end of the month, issues will be detected too late. Accurate RWA reporting is not a compliance exercise. It is a reflection of how well a bank understands its own balance sheet. When that breaks, credibility becomes the real capital at risk. For banks, the lesson is clear. Strong models are not enough. You need strong controls, continuous validation, and clear ownership of data and classification logic. How confident are you in the integrity of your RWA numbers today? #BaselIII #RWA #RiskManagement #Banking #Regulation

Deploying LLMs in Banking? Don’t Let the Machine Just Vibe! In regulated industries like banking, a customer saying “I’m sure there’s a good reason…” may sound polite—but it could be hiding a real complaint. Miss it, and you're not just risking poor service—you’re risking regulatory trouble. That’s the problem I tackle in this paper: “Knowledge Graph as Guardrails: Achieving Conceptually Sound LLM Complaint Classification Without Fine-Tuning” https://lnkd.in/ez8RWhcS Instead of relying on zero-shot LLMs to make judgment calls, we use knowledge graphs as external decision frameworks to ensure: - Structured, component-level analysis of customer statements - Regulatory logic applied through explicit, auditable rules - Transparent, explainable decisions—not black-box outputs - Built-in triggers for human review when confidence is low This makes the use of LLMs conceptually sound—exactly what SR 11-7 demands in high-risk applications. If you're building or validating GenAI in banking, this framework bridges the gap between raw model power and regulatory-grade accountability.