From Singapore’s new AI governance framework to Australia’s AML overhaul to Basel reforms taking shape in the US, UK and EU, the global regulatory agenda for financial services is unusually dense right now. Tata Consultancy Services’ Ajay Katara maps what’s happening jurisdiction by jurisdiction and when institutions need to be ready.
The financial services industry is undergoing significant transformation, shaped by rapid technological advancements, shifting risk landscapes and increasing regulatory scrutiny. Across jurisdictions, regulators are rolling out new and updated frameworks aimed at reinforcing governance structures, improving operational resilience and safeguarding the stability of the financial system. As institutions embrace AI, expand their digital operations and contend with volatile macroeconomic conditions, regulatory bodies are intensifying their focus on managing emerging risks and ensuring systemic robustness.
Singapore
The Monetary Authority of Singapore (MAS) has released a comprehensive consultation paper proposing guidelines for AI risk management for all financial institutions operating in Singapore. With AI, and particularly generative AI, becoming integral to product design, customer engagement, compliance and risk management, MAS is prioritizing the establishment of formal AI governance frameworks.
The guidelines emphasize the FEAT principles — fairness, ethics, accountability and transparency — and assign explicit responsibility to boards and senior management. Financial institutions will be required to implement proportional controls throughout the AI lifecycle, covering model development, validation, monitoring and eventual decommissioning. With the consultation period having closed at the end of January, institutions will have a 12-month transition period to achieve full compliance. This initiative signals a move toward more structured and auditable AI oversight, underscoring the agency’s commitment to responsible AI adoption in the sector.
In response to lessons learned from the 2023 global banking crisis, MAS has also proposed updates to its 2013 liquidity risk guidelines. The enhanced framework introduces more rigorous stress-testing methodologies, greater operational readiness and an “operational reflex” approach to liquidity risk, ensuring that contingency funding plans (CFPs) are not just documented but can be executed in practice. These enhanced requirements are designed to reduce the risk of liquidity shortfalls during periods of stress and to foster a higher level of preparedness across the industry.
Canada
The Office of the Superintendent of Financial Institutions (OSFI) in Canada has introduced Guideline E-21, which sets mandatory expectations for managing operational risk and building operational resilience. The guideline applies to banks, insurers, trust and loan companies as well as cooperative credit associations.
Guideline E-21 encourages a shift from traditional business continuity planning to a more proactive, outcomes-based resilience framework. Institutions are required to:
- Identify critical operations.
- Define maximum tolerances for disruption.
- Conduct comprehensive scenario testing.
This approach involves preparing for a variety of severe but plausible disruptions, including cyberattacks, technology failures and third-party service outages. The phased implementation timeline extends to September 2027, giving institutions time to strengthen their governance, data management, technology and cross-functional coordination capabilities.
Complementing the focus on operational resilience, OSFI’s Guideline E-23 establishes a comprehensive model risk management framework for banks, including foreign branches, as well as life insurers and property and casualty companies.
Institutions are required to adopt a rigorous, enterprise-wide approach to managing risks throughout the entire model lifecycle, including those based on AI and machine learning. The guideline mandates robust governance, validation, monitoring, documentation and accountability mechanisms to prevent financial and reputational losses stemming from model failures or misuse. Full implementation is scheduled for May 1, 2027, reflecting Canada’s ongoing commitment to addressing risks associated with advanced analytics and automation.
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Australia’s AUSTRAC has introduced new AML/CTF rules, which apply to banks and financial service providers. These updated rules represent a major overhaul of the region’s financial crime compliance framework, with key areas of focus including:
- Stronger governance and board-level accountability.
- Comprehensive, enterprise-wide risk assessments.
- Enhanced customer due diligence (CDD).
- Regulatory expansion to include virtual asset service providers (VASPs).
- Increased oversight of professions vulnerable to money laundering.
The new, technology-driven framework is designed to address emerging threats such as crypto-enabled crimes, cross-border illicit flows and complex fraud networks. The rules took effect March 31.
United Kingdom
The Prudential Regulation Authority (PRA) in the United Kingdom has postponed the implementation of Basel 3.1 for most financial institutions to Jan. 1, 2027, with a phased rollout extending through 2030. This delay provides banks with more time to adapt to the comprehensive operational, data and system upgrades necessary for compliance.
Basel 3.1 aims to bring greater clarity and risk sensitivity to capital calculations, leading to a moderate increase in capital requirements for major banks. These reforms are expected to shape lending strategies in sectors like infrastructure, real estate and small and medium-sized enterprises (SMEs), influencing both credit availability and pricing. The phased approach seeks to balance regulatory goals with the PRA’s objective of maintaining the UK’s competitiveness as a global financial center.
United States
In the US, regulatory agencies, including the Federal Reserve, the Office of the Comptroller of Currency (OCC) and FDIC, are moving ahead with the finalization of Basel III endgame reforms. These rules apply to banks with assets exceeding $100 billion and are slated to take effect Jan. 1, 2027.
Key components of the reforms include:
- Higher capital buffers.
- Stricter limits on internal risk models.
- More rigorous assessments of credit, market and operational risks.
These changes are intended to bolster the stability of the US financial system, improve comparability across institutions and reduce dependence on opaque or overly optimistic internal modeling practices.
Global market risk reforms
The fundamental review of the trading book (FRTB), led by regulators in the US, UK and EU, represents a substantial overhaul of market risk capital requirements for large, internationally active banks. The FRTB framework introduces:
- More granular risk measurement.
- Stricter trading desk-level capital attribution.
- Heightened requirements for data and model accuracy.
FRTB is scheduled for implementation in the UK and EU by January 2027 and in the US by January 2028. These reforms will require significant investments in technology, data infrastructure and risk analytics to meet the new and more demanding standards.
The regulatory environment for financial institutions is becoming more complex, interconnected and driven by technological change. Whether through advancements in AI governance, improvements in liquidity resilience or reforms in capital adequacy, global regulators share the objective of reinforcing the safety and stability of the financial ecosystem.
Ajay Katara is a Domain Consultant with the Banking Industry Advisory Group at Tata Consultancy Services (TCS). He currently heads the Solution and Strategy for Enterprise Risk and Compliance Regulations. Ajay has extensive experience of more than 15 years in the Consulting & Solution design space cutting across CCAR Consulting, AML, Basel II implementation and credit risk, and he has worked with several financial enterprises across geographies. He has significantly contributed to the conceptualization of strategic offerings in the risk management space and has been instrumental in successfully driving various consulting engagements. He has also authored many editorials, details of which can be found on his 
