Welcome to the latest edition of our Global Regulatory Pulse. In this report, we provide a comprehensive overview of recent regulatory developments from key jurisdictions, including the U.S., UK, EU, APAC region and Middle East. From policy changes to enforcement actions, stay informed of and prepared for the evolving regulatory landscape. Read on to stay ahead of the curve.
APAC
Regulators across the APAC region, including the Monetary Authority of Singapore (MAS) and the Securities and Futures Commission (SFC) in Hong Kong, continue to strongly emphasize in their respective jurisdictions the principles of investor protection, market conduct and fair dealing, accountability of key personnel, and anti-money laundering/countering the financing of terrorism (AML/CFT).
Investor Protection and Market Conduct
Several recent enforcement cases and other regulatory and judicial actions continue demonstrating that regulators in the region exercise a zero-tolerance approach in cases involving mistreating or misleading customers and, therefore, are cracking down on misconduct by financial institutions and key individuals associated with these firms.
The MAS has also issued enforcement actions and pursued criminal charges against firms that allegedly conducted false trading and other acts intended to defraud investors. Across the APAC region, multiple high-profile cases have caused a significant stir and taken over headlines, with hefty fines having been issued at both entity and individual levels.
ESG Initiatives
Environmental, social and governance (ESG) matters remain a prevalent global regulatory concern, and the financial services industry is not immune to this sentiment. Multiple initiatives and incentive programs have been announced across the APAC region, centered on encouraging sustainable investing and better management of environmental risks. Financial institutions are expected to adopt more robust, transparent reporting practices for disclosing ESG risks—specifically, climate-related risks—to investors.
Regulatory Reporting and Operational Resilience
A financial institution’s required disclosures and notifications, whether to customers, investors or the regulators themselves, continue to represent a significant proportion of the institution’s regulatory obligations. The MAS has brought several enforcement actions against firms, citing the failure to submit required information to the MAS, including financial returns, auditors’ reports, changes to shareholding structure and resignation of directors. Furthermore, the SFC issued a circular outlining deficiencies in complying with the Hong Kong Securities and Futures Rules, highlighting the following common pitfalls: inadequate or ineffective controls over ongoing liquid capital monitoring, failure to make proper accruals or accounting provisions, and incorrect treatments of certain assets or liabilities for liquid capital computation.
AML/CFT Focus in Singapore
In Singapore, AML/CFT continues to be a key regulatory focus. The Singapore Government published its updated Money Laundering (ML) National Risk Assessment (NRA) on June 20, 2024. Since the last ML NRA was published in 2014, the MAS has updated its NRA to consider key ML risks related to cyber-enabled fraud orchestrated by criminal syndicates typically located overseas, organized crime, corruption, tax crimes, trade-based ML and environmental crime ML. The updated ML NRA also includes two new sectors—digital payment token service providers and precious stones and precious metal dealers—signaling an expansion in the regulator’s perspective since its 2014 ML NRA. The MAS has also issued enforcement actions that highlight key deficiencies related to inadequate AML/CFT practices. Common themes noted, among others, are deficiencies related to enterprise-wide risk assessments (under MAS regulation, these are focused primarily on assessing money laundering or terrorism financing [ML/TF] risk at the enterprise level); failure of firms to identify customers as exhibiting higher ML/TF risk even though those customers presented red flags; and failure to submit suspicious transaction reports when there is sufficient basis to do so.
Accountability of Key Personnel
Regulators want to see that the board and senior management possess sufficient understanding of the risks they are exposed to and ensure that adequate policies, procedures and internal controls are in place to address and mitigate these risks. This theme is easy to spot across various regulations and regulatory initiatives and is most obvious in the Individual Accountability and Conduct regime in Singapore and the Manager-In-Charge regime in Hong Kong. The Manager-In-Charge regime has recently come more in focus for the SFC, which wants to ensure the people who hold these positions hold the appropriate levels of seniority, experience and accountability; again, this has been reflected in more recent enforcement cases the SFC has brought.
