Regulatory and Compliance Outlook 2025: Key Trends in Hong Kong and Singapore

Hong Kong is reinforcing AML with a licensing regime for VATPs, digitalised AML systems, and AI/ML-driven risk monitoring. The Hong Kong Monetary Authority (HKMA) is mandating AI/ML adoption, launching the Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Surveillance Capability Enhancement Project, and revising the (AML/CFT) Ordinance to combat mule accounts and malware scams.¹

Singapore is tightening AML efforts by enhancing the scope of predicate crimes, risk indicatorstypologies, monitoring and surveillance, asset recovery, and addressing threats like environmental crimes and cybercrime. Monetary Authority of Singapore (MAS) has introduced revisions to its Money Laundering and Terrorism Financing National Risk Assessment (MLNRA) and a Proliferation Financing National Risk Assessment (PFNRA) strategy,² targeting high-risk sectors such as remittances, cross-border payments, and virtual assets, alongside data sharing platforms such as COSMIC and key initiatives like Project Mindforge to enable the responsible adoption of Gen AI in financial services.

In 2025, regulatory focus will shift to the enhancement of risk-based controls, AI/ML-driven monitoring, and Gen AI adoption to balance customer experience with ensuring the effectiveness of AML programs while simultaneously reducing the cost of compliance over time. Project Mindforge and Hong Kong’s Gen AI sandbox signal a tech-driven approach to streamline compliance, prevent failures, and mitigate emerging risk.

Scams surged in 2024, driving regulators like HKMA and MAS to ramp up fraud prevention efforts. Hong Kong strengthened its oversight through the AML/CFT (Amendment) Ordinance 2024, tightening controls on digital payment platforms and virtual assets. The HKMA also issued enhanced fraud management guidelines, emphasising a risk-based approach to combat cross-border fraud and launching collaborative initiatives with banks to curb digital ecosystem scams.

Meanwhile, Singapore introduced the Shared Responsibility Framework, setting a foundation for banks to share responsibility in safeguarding customers against fraud.

However, 2025 brings an even greater challenge in the form fraud perpetrated with the help of Gen AI, such deep-fake scams. As fraudsters adopt more sophisticated tactics, scams will become increasingly convincing, particularly in the case of authorised payment scams. Unlike account takeover fraud, which can often be detected through user authentication, these scams manipulate victims into willingly authorising transactions, rendering traditional detection methods less effective. The only way forward is to invest in advanced AI and biometric based detection systems, and to enhance data sharing via a consortium. FIs must act swiftly to integrate these technologies and fortify their defenses before these AI driven scams reach an irreversible scale, far outpacing the current defensive measures.

Hong Kong is strengthening focus in the areas of climate risk stress testing, , disclosure framework alignment with international standards such as IFRS S1 & S2 and capacity building programs via the Enhanced Competency Framework on Green and Sustainable Finance.³

Meanwhile, Singapore remains steadfast in its Finance for Net Zero (FiNZ) Action Plan, focusing on transition planning, ESG data and disclosure, and capacity building through initiatives like TRACTION, FAST-P, and the Sustainable Finance Jobs Transformation Map (SF JTM).

With the recent launches of each market’s green taxonomies, banks must stay proactive in understanding the regulatory considerations behind them and use this opportunity to bolster up their transition planning capabilities with clients. Topics such as green washing and disclosure should see steady development as they continue stabilising against international standards. Synpulse expects climate resilience and decarbonisation to remain top priorities and urges FIs to invest in capacity building to stay ahead of regulatory shifts.

Hong Kong is pushing for data-driven conduct risk management, requiring objective, quantifiable metrics in BSCs to determine RM remuneration. New risk management and fair dealing guidelines emphasise customer protection, transparent product assessments, and stronger governance to enhance accountability and internal controls.

Singapore is strengthening its Balanced Scorecard (BSC) framework, linking conduct risk to performance and remuneration. Banks are using AI-driven analytics to monitor risks proactively, replacing traditional audits and whistleblowing. MAS also enforces competency and ethical standards, ensuring strong internal controls to prevent misconduct.

The MAS has also published the "Guidelines on Fair Dealing”⁵ underscoring the importance of fair dealing practices in the financial industry, which are relevant to non-financial risk management as they aim to prevent conduct risk, reputational risk, and legal risk. Publications focuses on (i) Suitability of Products and Services: FIs must conduct robust due diligence to ensure that the products and services they offer are suitable for their customers (ii) Transparent Disclosure and Communication: The guidelines emphasise clear and transparent disclosure of information to customers, including product features, risks, and costs (iii) Competent Representatives: The guidelines highlight the need for FIs to train their representatives properly to provide suitable advice and recommendations to customers and (iv) Effective Complaint Handling: The guidelines stress the need for an effective complaint handling process that is fair, timely, and transparent.

On a similar note, the MAS has also published its second consultation papers to seek feedback on proposed changes to enhance pre and post transaction safeguards for retail clients, with the recent consultation paper closing in Aug 2024.

Synpulse recommends AI-driven conduct risk monitoring, automation and deploying smart smarting methodologies to optimise control frameworks, and refining BSCs approach to align risk metrics with remuneration.

Hong Kong has focused on integrating virtual assets into the traditional financial system with robust oversight. Key measures from regulators include requiring VASPs to obtain licenses under the AML/CFT Ordinance, with around ten licensed VASPs now operational.⁶ The HKMA has also introduced guidelines for banks engaging with virtual asset entities, emphasising risk management, due diligence, and customer protection. To address emerging challenges like liquidity fragmentation and regulatory arbitrage, the SFC launched the A-S-P-I-Re Roadmap, a five-pillar strategy focused on access, safeguards, products, infrastructure, and relationships. This highlighted 12 initiatives include streamlined market access⁷, adaptive compliance and product frameworks, and infrastructure upgrades to bridge TradFi reliability with blockchain efficiency. This embodies a pragmatic approach to solidify Hong Kong’s role as a trusted nexus for virtual asset liquidity.

Singapore continues refining its Payment Services Act (PSA) to regulate digital payment tokens and virtual asset intermediaries. The MAS also introduced stricter AML/CFT requirements for VASPs , including enhanced customer due diligence and transaction monitoring. The authority has also emphasiszed the importance of technology risk management, requiring VASPs to implement robust cybersecurity measures. Additionally, MAS has encouraged innovation through its regulatory sandbox, allowing firms to test new virtual asset solutions in a controlled environment.

Digital asset regulations will evolve further as APAC regulators aim to implement comprehensive regulatory frameworks to govern the activities and focus on innovation while ensuring financial stability and consumer protection. Synpulse can support FIs in navigating these changes, offering regulatory compliance advisory, risk management frameworks, and digital asset strategy development.

Financial institutions are expected to stay ahead of compliance challenges. From AI-driven AML efforts to stricter fraud controls, ESG integration, and advancing digital asset regulations, firms must refine their strategies to navigate this shifting landscape.

Stay tuned for our next article, where we take a deep dive into the HKMA’s 2025 Banking Priorities as outlined by the Hong Kong regulator. To learn how your organisation can adapt and stay compliant, get in touch with our experts today.

^References

^{1. Use of Artificial Intelligence for Monitoring Suspicious Activities (HKMA, 2024)}

^{2. Money Laundering, Terrorism Financing, and Proliferation Financing Risk Assessments (MAS)}

^{3. Enhanced Competency Framework on Green and Sustainable Finance (HKMA, 2024)}

^{4. MAS Launches Finance for Net Zero Action Plan (MAS, 2023)}

^{5. Guidelines on Fair Dealing - Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers (MAS, 2024)}

^{6. Lists of virtual asset trading platforms (SFC)}

^{7. “A-S-P-I-Re” for a brighter future: SFC’s regulatory roadmap for Hong Kong’s virtual asset market (SFC)}

^{8. MAS Expands Scope of Regulated Payment Services; Introduces User Protection Requirements for Digital Payment Token Service Providers (MAS, 2024)}