Risk & Compliance: What Developments Await in the Coming Months?
Risk & Compliance: What Developments Await in the Coming Months?
Article by Paperjam from 18/11/2025
CRR III, CRD VI, AIFMD II, AMLA…Over the coming months, a wave of new regulations will reshape the risk landscape and the framework for Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) for both banks and fund managers. A transformation that must be anticipated and approached methodically, according to BDO Luxembourg.The months ahead promise to be intense for both the “risk” and “compliance” functions of financial institutions. Several regulatory developments will indeed require a series of structural adjustments, as explained by Benoît Wtterwulghe, Partner Consulting, and Luca Samuel, Senior Manager Risk Advisory at BDO Luxembourg. These texts are part of an initiative toward harmonization and strengthened supervision, aimed at consolidating the resilience of the European financial system.
Risk Management: A Wave of Clarifications
In the area of risk management, significant developments are expected in the coming months, with a strengthened supervision and new technical requirements. These will affect banks, European branches of third-country banks, as well as alternative investment funds.“For banks, the European Banking Authority is continuing the drafting of the technical standards required under Regulation CRR III (2024/1623). Around thirty standards and forty reporting templates are expected to define, by 2027, the new calculation and relief methods. As of today, only one third of the final texts have been published.” - Luca Samuel, Senior Manager, BDO Consulting
In light of these changes, anticipation is essential. “Institutions must now identify the relevant RTS (Regulatory Technical Standards), review their credit granting processes, and prepare their reporting systems,” he continues.
Third-Country Bank Branches Now Under Supervision
For their part, European branches of third-country banks will see their activities, starting in 2027, subject to a harmonized supervisory framework (CRD VI, 2024/1619). “Until now, they were governed by disparate national regimes, which were sometimes more flexible. This change aims to restore fair competition,” explains Luca Samuel. The EBA notably plans to strengthen reporting on operations carried out outside the Union but involving European clients, and also requires the establishment of an escrow account in Europe to secure deposits. “Branches must therefore immediately inventory their intra-EU transactions, adapt their accounting tools, and work closely with their parent entities to structure the transmission of information to supervisors.”
Harmonizing Liquidity Management for AIFs
Finally, open-ended alternative investment fund managers (AIFMs) will have to comply with the AIFMD II Directive (2024/927) as of April 2026. They will be required to integrate at least two harmonized liquidity management tools, such as redemption gates, redemption fees, swing pricing, or anti-dilution levies. “These mechanisms aim to better manage capital outflows and protect investors, particularly in the context of open or semi-open funds,” adds Luca Samuel. “The CSSF will soon adapt Circular 18/698 to clarify the practical arrangements, particularly regarding liquidity risks and ESG aspects.”
A Strengthened Framework for Restrictive Measures
Regarding the fight against money laundering and financing of terrorism, two developments — one of them major — should be noted. “In the short term, there is first the implementation of CSSF Circular 25/896, effective December 30, explains Benoît Wtterwulghe. This circular adopts the European Banking Authority (EBA) guidelines on the implementation of restrictive measures. In this respect, a draft law is expected to be adopted in Luxembourg, introducing criminal liability in cases of gross negligence for the failure to comply with certain restrictive measures, including the possibility of imprisonment. All of this should make stakeholders even more attentive to this issue.”
Anti-Money Laundering: Toward European Harmonization
However, the most significant project is yet to come. It concerns the new European regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AMLR), which will be directly applicable.“This new regulation aims to harmonize the level of requirements across the European Union. In this context, a new supervisory agency— the Anti-Money Laundering Authority (AMLA) — has been created and is expected to expand its teams in the lead-up to the regulation’s entry into force on July 10, 2027.” - Benoît Wtterwulghe, Head of Advisory, BDO
This transformation represents a major turning point for the stakeholders concerned, who must begin preparing now. In this regard, the first four regulatory technical standards (RTS) were submitted for consultation in the second quarter of this year and are expected to be further detailed in the coming months.
“Significant changes are anticipated in terms of reporting — with more than 260 data points envisaged, compared with only a few dozen today — as well as in customer due diligence obligations,” adds the BDO Luxembourg partner.
Potentially Major Overhauls
Although Luxembourg is generally at the forefront within the European Union, several approaches currently coexist, and it is not certain that the one advocated by the Grand Duchy will ultimately be adopted. “Small adjustments can lead to major projects in terms of information systems, organization, and data collection,” adds Benoît Wtterwulghe. “To prepare for this, stakeholders would be well advised to closely monitor the publication of European normative acts — RTS, ITS, and guidelines — expected in the coming months, with a first key deadline set for July 10, 2026.”
Anticipating the Challenges to Prepare Effectively
In front of these successive waves of regulations, the main risk remains underestimating the complexity and interdependence of the texts. “Banks could find themselves in non-compliance during inspections if they fail to anticipate properly,” warns Benoît Wtterwulghe. Harmonization will also bring simplification in AML/CFT management for European entities and foster a common approach within groups. Branches, when it comes to risk management, will have to deal with potential conflicts between European transparency requirements and certain home-country laws relating to banking confidentiality or data protection. “Beyond compliance, these developments also represent an opportunity to rethink risk governance, to improve data and process quality,” adds the BDO Luxembourg partner.To support these transformations, BDO Luxembourg intends to keep the relevant stakeholders informed through its free newsletters. These will enable them to better assess the impacts progressively, thanks to the clarifications, and to address the related challenges more effectively. “Institutions that approach these changes as a lever for optimization rather than an additional constraint will be able to sustainably strengthen the efficiency and overall coherence of their processes and systems,” concludes Luca Samuel.