Risk Radar: APAC Financial Crime and Regulatory Update - October 2026

Quick Summary

The October 2026 APAC Risk Radar examines the latest anti-money laundering (AML), financial crime, and regulatory developments across Asia-Pacific. Key updates include Singapore's risk-based source of wealth guidance, Australia's Tranche 2 AML/CTF reforms, evolving stablecoin regulations in Singapore and Hong Kong, and emerging AI governance requirements. Discover what these changes mean for financial institutions and how compliance teams can adapt to evolving regulatory expectations, strengthen financial crime prevention, and maintain effective risk-based controls.

Singapore

Circular on Risk-Proportionate Source of Wealth Establishment

On May 25,2026, the Monetary Authority of Singapore (MAS) issued a Circular on Risk-Proportionate Source of Wealth Establishment to guide financial institutions in streamlining Source of Wealth (SoW) checks. This followed a tightening of standards and expectations after the 2023 Fujian gang money laundering scandal, which involved the laundering of over S$3 billion in illicit proceeds linked to overseas online gambling, unlicensed money lending, and cyber-enabled fraud. Many banks and clients had complained that the rules had become overly burdensome, and had led to a loss in competitive standing for Singapore in comparison to competing jurisdictions.

Key Objectives and Context

• Reducing Unnecessary Friction: The circular addresses the industry tendency to apply a blanket, "one-size-fits-all" approach, encouraging FIs to cut out excessive or disproportionate process steps that burden legitimate investors and businesses. In essence, it is reengineering the risk-based approach.
• Alongside the circular, the Private Banking Industry Group committed to improving onboarding practices and cutting account-opening times for private wealth clients by the end of 2026. Ambition is for (median) sub one month account opening.
• Core Risk Principles (building on prior MAS guidance like Circular AMLD 08/2024):
  
  • Materiality: Verification efforts to focus on the most significant and higher-risk components of a customer's overall wealth rather than minor or peripheral assets.
  • Prudence: Use reliable, high-integrity corroboration (such as audited accounts or independent third-party documentation) where material risks demand it.
  • Relevance: Ensure information and public sources utilized are fit-for-purpose and directly relevant to the client's actual risk profile.
  • Governance and Oversight: Senior management remains responsible for deciding whether to accept high-risk relationships, applying risk-mitigating measures, and maintaining close ongoing monitoring.

‍MAS Proposed Amendments to the Payment Services Act 2019 for Stablecoin Regulation

On 1 September, 2026, the MAS published its consultation paper on Stablecoin regulation, which closed on 16 October 2026.

• The proposed regulation covers single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a G10 currency.
• It proposes a new license class covering “stablecoin issuance” which would be created under the Payment Services Act 2019. Only licensed issuers could describe their coins as “MAS-regulated.” Key features include:
  
  • Separate from e-money: Fiat-pegged stablecoins would not be treated as e-money. Stablecoins that are not MAS-regulated stay under the existing digital payment token (DPT) regime.
  • Reserves: Issuers must hold reserves at least equal to the value of coins in circulation. MAS is consulting on whether a minimum share must be held as cash or bank deposits.
  • Redemption: Holders must be able to redeem in the pegged currency within set timeframes. MAS is also consulting on banning interest or other benefits paid to holders.
  • Customer protection: Customer money must be safeguarded, and issuers exiting the framework must wind down in an orderly way.
• Systemic stablecoins: MAS proposes powers to designate systemically important stablecoins, which would face stricter rules wherever they are issued.
• Foreign stablecoins: A limited number of foreign-regulated stablecoins could be recognized case by case.
• Risk and financial crime controls: Issuers would need regular stress testing, and recovery and wind-down plans approved by their boards. MAS is seeking views on requiring issuers to trace, freeze or burn coins, verify holder identities, and restrict unhosted wallets (wallets not held with a regulated provider).
• Banks: The paper also clarifies how banks, merchant banks and wholesale banks may issue stablecoins.

Scams (Countermeasures) and Other Matters Act 2026

On September 9, 2026, Singapore enacted the Scams (Countermeasures) and Other Matters Act 2026 to strengthen powers against scams, online account mules, and non-compliant platforms.

Key Measures and Penalties

• Online Account Mules: It is an offense to supply, receive, possess, or provide personal details to create online accounts (such as on Carousell, TikTok, Telegram, and Meta platforms) for criminal activity. Convicted offenders face up to 3 years in jail, a fine of up to $10,000, and up to 12 strokes of the cane.
• Police Powers: The Singapore Police Force is empowered to issue Account Disabling Orders (ADOs), Disclosure Orders (DOs), and Service Limitation Orders (SLOs) to intervene before or during a scam.
• Platform Penalties: Maximum administrative penalties for online service providers failing to comply with codes of practice or implementation directives have increased from $1 million to $10 million (with daily fines rising up to $300,000).
• Information Exchange: The law establishes a legal framework for sharing scam-related intelligence between the police and banks, telcos, and online platforms.
• Deterrence Push: Following a September 2026 High Court appeal ruling on youth offenders, the government announced further legislative steps to ensure strict, deterrent sentencing (such as jail or reformative training) applies to all scam facilitators regardless of age.

MAS Issues AI Risk Management Guidelines for Financial Institutions

The guidelines set supervisory expectations for AI governance, third-party tools and risk-proportionate controls, with phased implementation from October 2027.

Singapore Passes Bill to Regulate Cloud and Data Centres

The Digital Infrastructure Bill, passed in Parliament on October 7, introduces strict licensing, cybersecurity, and sustainability requirements for major data centres and cloud service providers.

Hong Kong

Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA) Stablecoin and Digital Asset Regulation

On August 1, 2025, the Hong Kong Stablecoins Ordinance took effect. This is a coordinated regulatory framework jointly operated by the SFC and the HKMA for stablecoins and virtual asset-related activities. The framework introduces a licensing regime for stablecoin issuers and custodial service providers, with transition periods for existing market participants.

• Core requirements for issuers:
  
  • Local incorporation and a minimum paid-up share capital of HK$25 million (plus liquid capital requirements).
  • Reserve assets must always match or exceed the par value of circulating coins and be held in segregated trust arrangements.
  • One-day redemption rules without unreasonable fees or burdensome conditions.
• Licensed Issuers: The HKMA has granted two stablecoin issuer licenses to Anchorpoint Financial Limited (Standard Chartered Bank [Hong Kong]) and HSBC.
• Retail Availability: Only stablecoins issued by HKMA-licensed entities can be offered to retail investors.

Australia

Australia’s Tranche 2 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms

The reforms took effect on July 1, 2026, marking the biggest expansion of the country's financial crime laws since 2006.

The AUSTRAC Tranche 2 reforms extend regulatory oversight to approximately 70,000 to 100,000 previously unregulated professional services (Designated Non-Financial Businesses and Professions, or DNFBPs). Australia was long criticized by the Financial Action Task Force (FATF) for leaving real estate, legal, and accounting sectors outside the AML regime, making it a target for illicit cashflows and property-based money laundering. The shift aligns Australia with international financial transparency standards.

• Included Sectors:
  
  • Lawyers and conveyancers handling real estate, trust accounts, company formation, and asset transfers.
  • Accountants and bookkeepers managing client funds or business structures.
  • Real estate professionals (estate agents, property managers, conveyancers) involved in property sales and transfers.
  • Trust and company service providers (TCSPs).
  • Dealers in precious metals and stones (for transactions of A$10,000 or more).
  • Virtual Asset Service Providers (VASPs): Expanded scope to include crypto-to-crypto swaps, custodial wallets, and asset transfers (effective March 31, 2026).

Key Obligations

• Enrolment: Mandatory registration with AUSTRAC (with a deadline of July 29, 2026).
• Compliance Programs: Written risk-based AML/CTF programs and the appointment of a dedicated compliance officer.
• Customer Due Diligence (CDD): Know Your Customer (KYC) checks, beneficial ownership identification, and enhanced due diligence (EDD) for high-risk clients.
• Reporting & Records: Filing suspicious matter reports (SMRs) and threshold transaction reports, backed by a 7-year record retention requirement.

Australian Banks Urge Government to Limit AI-Specific Regulations

The ABA has called on lawmakers to promote AI adoption and rely on existing regulatory frameworks before introducing new technology-specific rules.

Malaysia

Malaysia Banks to Pilot Industry-Wide Fraud Alert System

The initiative will warn banks and customers of potential payment risks before transactions are completed, targeting authorized push payment scams.

Malaysia Proposes Data Protection Rules for AI Systems

On October 5, 2026, Malaysia's Personal Data Protection Department (PDPD) published a consultation paper on a proposed Artificial Intelligence and Personal Data Protection Framework. The draft sets out requirements for AI development, vendor oversight, cross-border data transfers, algorithmic fairness and data subject rights.

Regional Stable Coin and Tokenised Deposits

Japan FSA Approves Stablecoin Pilot for Trade Settlements

On September 29, 2026, Japan's Financial Services Agency (FSA) announced support for a pilot project to test the use of stablecoins for settling funds in trade transactions.

Citi Expands Tokenised Deposit Network to Japan and UAE

On September 28, 2026, Citi expanded its blockchain-based liquidity network to Japan and the UAE, offering institutional clients round-the-clock cross-border transfers.

Korea Proposes Tokenised Securities Rules Ahead of 2027 Launch

South Korea’s Financial Services Commission (FSC) has published draft rules to legalize the issuance and trading of tokenised stocks, bonds, funds, and fractional securities starting February 4, 2027.

Indonesia Targets Stablecoin Regulations by Early 2027

New rules for stablecoins being drafted will govern reserves, consumer protection, and mandatory industry licensing.

Other News

Revolut Eyes Philippine Digital Banking Licenses in Asia Expansion

Revolut is evaluating regulatory pathways to secure digital banking and electronic money issuer licenses in the Philippines.

Shanghai Regulator Issues AI Guidelines for Banks and Insurers

The Shanghai Financial Regulatory Bureau has introduced 16 measures to guide the safe, compliant, and strategic application of AI across the financial sector.

A changing compliance landscape across APAC

The developments highlighted this month point to a broader shift in Asia-Pacific's regulatory landscape.

Authorities are moving beyond simply expanding compliance obligations toward frameworks that demand greater precision, and adaptability. At the same time, emerging technologies, digital assets, and increasingly sophisticated financial crime threats are introducing new considerations for financial institutions.

For compliance leaders, staying ahead requires an approach to financial crime risk management that can accommodate different jurisdictional requirements, adapt to emerging threats, and support innovation without compromising oversight. As such financial institutions that prioritize flexibility, strong governance, and risk-based controls will be best positioned to navigate the region's regulatory changes.

Related resources

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