As we enter 2025, the European financial sector faces a pivotal year marked by major regulatory developments aimed at encouraging stability, resilience, and compliance.

AGPLAW brings you four key updates, including Basel III, that businesses and financial institutions must monitor closely.

DORA: Strengthening Digital Resilience

The Digital Operational Resilience Act (DORA) entered into force on January 16 2023 and became applicable on January 17, 2025, requiring financial entities across the EU to enhance their ICT (Information and Communication Technology) risk management frameworks. DORA mandates robust measures for cybersecurity, incident reporting, and oversight of third-party ICT service providers to safeguard the financial system from cyber threats.

To learn more about DORA click here.  

AMLA: The EU’s Unified Front Against Money Laundering

Launching in summer of 2025, the new Anti-Money Laundering Authority (AMLA) will aim to transform the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision and enhance cooperation among financial intelligence units (FIUs). The new authority will centralize the supervision of high-risk entities across the EU and harmonize anti-money laundering (AML) standards. AMLA is expected to enhance cooperation between member states and address cross-border financial crime more effectively.

To learn more about AMLA click here.  

Basel III: A Cornerstone of Banking Stability

The Basel III regulatory framework introduces internationally agreed measures to ensure banks maintain robust capital and liquidity levels. While many aspects are already in effect, the EU is set to implement final reforms, including the Fundamental Review of the Trading Book (FRTB), by January 1, 2026.

These rules aim to, among others to:

• Increase the quality and quantity of bank capital.
• Enforce minimum liquidity standards through ratios like the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).
• Strengthen oversight of systemically important banks to reduce systemic risk.

With these changes, banking institutions will increasingly rely on RegTech solutions to automate and streamline compliance with Basel III’s complex requirements. #Legaltech plays a critical role in enabling banks to efficiently track, report, and manage their capital and liquidity data, ensuring adherence to regulatory standards.

The recent decision by the Bank of England to delay Basel III implementation until 2027 has sparked discussions within the EU about potential adjustments to maintain competitiveness. As banking institutions look to future-proof their operations, integrating advanced legal and regulatory technologies will be essential to navigating these ongoing regulatory changes.

To learn more about Basel III click here.  

Instant Payments Regulation: The Era of Real-Time Transactions

Effective January 9, 2025, the Instant Payments Regulation (IPR) mandates that all Eurozone banks must process credit transfers in real time, enabling 24/7/365 payments to be settled almost immediately. This regulation is designed to accelerate the transition to a fully digital, frictionless payment landscape across Europe.

The application of the IPR dictates that by 9 of January 2025 all banks should ensure that they receive instant payments, by 9 October 2025 they send instant payments and by 9 April 2027 all payment and electronic money institutions are to send and receive instant payments.

The IPR not only applies to established banks but also impacts startups, particularly those in the fintech, e-commerce, and digital wallet sectors. These emerging businesses will need to ensure their payment solutions are capable of processing instant payments in compliance with IPR requirements. For startups, this regulation presents both challenges and opportunities:

• Challenges: Startups may need to upgrade their existing infrastructure to meet the standards for real-time transactions. This could involve significant investments in new technologies and compliance systems to ensure seamless integration with the Instant Payments System (IPS).
• Opportunities: Startups that embrace instant payments can gain a competitive advantage by offering faster and more efficient payment options to customers. This could enhance user experience, foster trust, and differentiate them in the highly competitive digital finance space.

Additionally, the regulation will have a ripple effect across the entire payments’ ecosystem, pushing innovation and digital transformation within both established financial institutions and emerging players in the market.

To learn more about IPR click here.   

So what’s Next?

2025 is a year of transformation for the financial sector. With DORA enforcing operational resilience, AMLA unifying anti-money laundering efforts, Basel III shaping banking stability, and IPR revolutionizing payments, institutions must stay informed and adapt. By understanding these changes and their implications, businesses can navigate the challenges and seize opportunities in the evolving European financial ecosystem.

Are you ready to align your operations with these regulatory shifts?

Contact AGPLAW’s expert team at agp@agplaw.com 

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