Without a doubt, the regulatory landscape for the year ahead is set to be demanding, with key developments including Swift’s ISO 20022 compliance deadline in November, evolving AI regulation, and the European Union’s (EU) latest updates to payment frameworks through PSD3 and the Instant Payments Regulation. Amid tightening compliance pressures, financial crime also remains a growing concern, adding to the complexity for businesses navigating these shifts.

Apologies to readers for the pun in the headline, but it was there for the taking! After all, the regulatory outlook for the remainder of the year has been much debated as US President Trump returned for his second term, promising trade tariffs and a bonfire of regulations – with many going straight in the bin. 

Interestingly, Bank of England officials in the UK have pushed back implementation of the new Basel 3.1 capital adequacy regime until 2027, as they await clarity on the US approach to capital controls now that Trump is in office. The EU is probably fearful that a regulatory and risk gap may open up between what banks can invest, and in what regions, against their capital bases if a universal adoption of the global regime isn’t followed. 

The down-the-line impact on corporate treasuries if more capital is available for mergers and acquisitions (M&A), loans, corporate bonds and so on – not to mention the inflationary potential of a possible boom on US financial markets in the event of any relaxation – is still to be seen in these early days of the new presidency. 

But one thing is certain: the regulatory outlook will change with Trump in charge. As an example, the green finance and ESG arena have already been hit as he signed an executive order to pull out of the Paris climate mitigation agreement for a second time upon his ascension. DEI also looks to be in trouble. Within days of taking office, Trump moved to scale back DEI initiatives across the federal government and federal contractors, with parts of the private sector following suit.

A regulatory freeze was another executive order signed to stop US Federal agencies from issuing any new rules until Trump has full control of the government, amidst promises of a bonfire of regulations – or at the very least a policy whereby old ones have to go if new ones are enacted. This is an effort to cut down on red tape.      

Capital adequacy confusion

“Personally, I don’t think there is enough water under the bridge since the 2008 crash and the collapse of Silicon Valley Bank (SVB) and Credit Suisse in 2023 to tinker with the global Basel III capital adequacy rules,” said Royston Da Costa, Assistant Treasurer at Ferguson, a multinational value-added plumbing and heating product distributor. 

“The collapses of SVB and Credit Suisse reminded people what a failed bank can look like and of its potentially disastrous impact on corporate payment, investment and supply chains around the world. It was only averted in these cases thanks to government action.”   

“It must be remembered that Trump has made a number of statements in relation to any future trade or policy talks with rival nations. However, we have to wait and see what the actual outcome will be,” added DaCosta. 

“I don’t want to comment about any of Trump’s mooted 25% tariffs against China and others [at the time of interviewing, no such charges on imports to the US had yet been applied]. Ditto with his comments about the US taking over Greenland from Denmark in a geopolitical move designed to stymie any undue Russian or Chinese influence over North Pole trade routes and natural resources.” 

“But I do advise my peers to actually look at the detail, not the rhetoric of Trump to see what actually results,” he continued. “2026 is also generally expected to be a good year for economic growth in the US once the new government settles in, and we get through this year.” The huge investment released by the now defunct Inflation Reduction Act (IRA) will continue to impact the growth potential of the US economy as well – and, by extension, the world. As ever, if the US grows it helps the UK, Europe and the rest of the world to grow.   

Patrick Kunz, Managing Director, Pecunia Treasury & Finance and Founder of the Treasury Masterminds network, is in agreement that President Trump sees the world “very pragmatically” and in a transactional way. 

He is also aware the dollar (USD) needs to remain the world’s reserve currency. “Trump will protect that position,” said Kunz, adding that nevertheless: “US business and consumers need to thrive – and if that means introducing or increasing tariffs for foreign products or companies, then I believe he will do that despite any risk.”  

But, what Trump often forgets is that some regulations are hard to change or implement, at least in a short four-year term of office that goes very quickly. “Some of his envisaged changes might even be illegal, or at least subject to legal challenge, such as ideas around restricting the rights of US-born people to automatic citizenship and changing the US labour market that way. He also seems to have a lot of priorities, so not all of his grand plans will necessarily become reality – purely due to the vast scope of them and his limited time in office.”     

Kunz added, “I guess in the short-term we’ll see more protectionism and a stronger USD. Mid- to long-term the situation will stabilise and normalise, as it always does.” 

Elsewhere, Kunz believes the same principle applies on the non-Trump general global regulatory front as well. “Regulation always settles in eventually and becomes the ‘new norm’. Its driving factors come from several sources, but most noticeably regulations are enacted to deliver: 

• Protection
• Control
• Or enforcement

“The EU Instant Payments Regulation (IPR) promised us a lot for instance. But European banks are too slow or reluctant to implement it (as it costs them money), so they have needed to be forced. The latter enforcement regulatory driver applies here, although the drivers do often overlap somewhat,” he noted.

“The EU’s EMIR, MiFID and MMF reform agenda comes from a protection aspect. Avoiding a crisis in the financial markets is the paramount driver here. This is very difficult though as financial markets nowadays are very global, interconnected and react much faster to movements than was previously the case. For example, we saw Credit Suisse go down in a matter of days only recently.” 

Can more rules and regulations avoid that scenario fully in future? Kunz doubts it. “Usually, new regulations only create extra burdens on investment banking and corporate treasuries. We find ways around them concerning controls, tax or whatever it is – or a new product comes along with new and different risks.” The rise of ETFs after the 2008 crash is an example of this.       

PSD3 and IPR changing EU payments 

As Kunz alluded to, the third iteration of the EU’s Payment Services Directive (PSD3), which incorporates the IPR, is on its way. This requires payment service providers (PSPs) in the euro area to charge the same or lower fees for instant payments as they do for regular transfers is a gamechanger. The same stipulation applies to PSPs outside the euro area by 2027, offering corporates’ faster payments at a cheaper fee. 

As Gareth Lodge, Principal Analyst, Celent, noted, “While many countries in Europe have had forms of instant payments for years, the EU Instant Payment Regulation is designed to deliver the same universal experience as the single euro payments area (SEPA) across the entire continent. Universal acceptance and consistent rules and experience for all users offer clear benefits. 2025 will see which banks pull away from the pack as they embrace the opportunities that instant payments can bring.”  

As a brief aside, Lodge also noted that European initiatives such as EPI and Wero are going mainstream. “The European Payments Initiative (EPI), previously known as the Pan-European Payments System Initiative is a unified digital payment service backed by 16 European banks and PSPs. Its aim is to allow European consumers and merchants to make next-generation payments for all types of person-to-person (P2P) transfers and retail transactions via a digital wallet, called Wero. Wero is based on instant account-to-account (A2A) payments, catered for under SEPA, and will eliminate intermediaries in the payment chain and associated costs.

All of this means a lot of change in the European payments landscape. But hopefully in a beneficial way (once the pain of transition is over), certainly for corporate treasurers at least.

More generally, the over-arching PSD3 will also encourage more access and data sharing by further encouraging the adoption of open application programming interfaces (APIs) as a means of connectivity and easier data exchange. This should open up the payments marketplace to more new entrants, competition, and hopefully, cheaper pricing via the use of open banking and finance techniques – continent-wide aggregated payment processing is one possible end-use. 

The rise of open APIs is a technology trend mirrored in China, the US, and indeed globally with differing regulatory approaches to it. The technology trend forces change in and of itself. Whether regulators want to control it is another matter, but some kind of rules are necessary to ensure resiliency, privacy, anti-fraud and other measures are applied.     

“PSD3 will be good,” commented Kunz, “as it acknowledges the fact that banks are not monopolists for payments anymore in a fintech-enhanced environment. It also acts as a further EU spur to open and speed up information sharing and connectivity in financial services (FS) via the encouragement of more open API usage. This is welcome.”     

“But the EU does need to be mindful of ‘over-regulation’. The EU might be able to regulate harsher than other jurisdictions in payment and other sectors, but that could limit its innovative capacity and harm the growth of certain fintechs. We already see the EU lagging behind in this area.” 

“All the present big fintechs in the payments arena either come from Asia or the US, almost none are from the EU, with only a few exceptions. Getting the balance right between regulating and letting technology rip to evolve markets is always an issue.”    

“Throughout the remainder of 2025, I will be excited to see this battle between innovation and regulation in action,” said Kunz. Certain regulations can ‘force’ innovation (in instant payments or open API access for instance). But other rules may come from a protectionary standpoint and could therefore potentially harm innovation. Getting the balance right in the EU is crucial. Even if the idea comes from a good place innovation may shift to a less regulated market if it isn’t done well.”   

Anti-fraud initiatives  

Despite the potential downsides, the enhanced consumer protection and fraud detection measures in PSD3 via better Strong Customer Authentication (SCA) procedures is welcome – according to Kunz. He pointed to the rising tide of financial crime and fraud levels that we’ve since in recent years as a concern. Sanction compliance has also become a bigger concern for treasurers in an increasingly unstable geopolitical world.  

The Verification of Payee (VoP) service under the IPR is useful in the fight against crime, alongside strengthened SCA under the over-arching PSD3 regulation in Europe. Knowing who beneficiaries are beforehand is very important in the context of instant payments. Trying to prevent rising levels of fraud in the diminishing amount of transaction time available to financial institutions (FIs) in a real-time payment world isn’t easy, so anything that can help is welcome. 

The pan-European Fraud Pattern and Anomaly Detection (FPAD) solution from EBA Clearing is also of great interest in this area, as it seeks to deliver anonymised data, to comply with privacy stipulations, in a federated data solution that is dedicated to stopping fraud and financial crime by identifying suspicious activity faster with AI technology mining the data. After all, criminals share information on the dark web, so why shouldn’t FIs share information in the fight against them? A common anti-fraud taxonomy is being developed by the 50+ FPAD users in Europe and this should ultimately benefit end users such as corporate treasurers.

Swift is seeking to replicate this anti-fraud effort on a global scale. It has also deployed a federated data and AI investigate tool this year. The new Swift AI-powered anomaly detection service will be able to draw on the billions of transactions that flow over the Swift network to better identify and flag suspicious transactions. Banks can then take appropriate action in real time to stop fraud. It’s a case of using shared data and AI’s ability to spot suspicious activity to fight back against criminals, who themselves are increasingly using AI.  

Spotlight on artificial intelligence 

The emerging artificial intelligence area is a case in point when trying to ‘get the balance right’ between innovation and oversight. The EU has its AI Act, for example, which is the first-ever legal framework on AI. It could act as a global template for others to follow if they don’t want to just let the technology rip and aren’t concerned about governance issues. 

The EU AI Act (Regulation 2024/1689) lays down harmonised rules on artificial intelligence, providing AI developers and deployers with clear requirements and obligations regarding specific uses. At the same time, however, the regulation seeks to reduce administrative and financial burdens for businesses, in particular small and medium-sized enterprises (SMEs) to encourage uptake of this useful nascent technology. Getting the balance right, while still ensuring an AI tool doesn’t go off script is the challenge.  

The AI Act is part of a wider EU package of policy measures to support the development of trustworthy AI, which also includes the AI Innovation Package and the Coordinated Plan on AI. Together, these measures seek to guarantee the safety and fundamental rights of people and businesses, while strengthening uptake, investment and innovation in AI across the EU. 

However, there is no doubt China and Asia already have a lead in this AI field and that Trump is targeting it too, so the EU will have to be careful it doesn’t scare AI investors away. The US’ $500 billion Stargate joint venture Initiative recently announced to fund the country’s future infrastructure for AI is a clear statement of intent that it wants to dominate the emerging AI field that will likely come to dominate 21st-century economics. 

China’s launch of the open source-enabled DeepSeek AI in January 2025 shows that it is serious too. The advent of DeepSeek, which so impacted US tech company stock prices and global financial markets in January 2025, could open up a space for Europe to enter the AI race in the future, as the entry stakes just got a lot cheaper. 

Theoretically, others could run their own AI models based on the DeepSeek model – and without the specific Chinese political restrictions applied. As such, the AI field, its regulation vis-à-vis geopolitical tensions, and future end-use just became very interesting. 

“I think the AI Act is diligent and well-meant regulation, but overly protective,” noted Kunz. “It will make the EU much less competitive for AI or tech-related initiatives. Founders will just go to the US or China to build there, as it is much easier. We already see this happening. China is massively ahead of Europe on AI and technology usage already in business and in daily life.”    

“So far AI in treasury has not been revolutionary because it’s often merely an extension of established Machine Learning (ML) techniques, automation, or data analytics end uses,” said Kunz. “However, it is only a matter of time until this changes, and treasury is more directly impacted by AI than it is at present. 

“The technology will bring bigger use cases in future in both information management and cashflow predictions very very soon. Not only will AI be deployed in cash flow forecasting (CFF) but also in heavy information processing procedures involving trade finance or securitisation programmes. AI can additionally help in better debt management. Asking a ChatGPT tool to find relevant clauses for a certain action to take in a 500+ page loan documentation can save loads of time, for example, and enhance efficiency.”   

ISO 20022 messaging 

Returning to the payments arena, but this time from an Asian and global perspective, Yvonne Yiu, Co-Head of Global Payments Solutions, Asia Pacific at HSBC, is focused on the Swift deadline for November 2025 this year, when all banks on its platform must use the more data-rich ISO 20022 messaging standard, which relies on the XML coding language if they want to access its global interbank payment network. 

The Swift ISO 20022 migration will see the end of its old MT messaging series. More character space on ISO 20022 enables more end uses and extra efficient payment processes for everyone in a financial supply chain, including treasurers. Many of the bigger banks have already moved to the standard – and are aiming to bring corporate clients along with them.

Yiu is pleased that HSBC has already enabled its global network of more than 50 markets to receive and forward SWIFT CBPR+ (ISO 20022-enabled) messages. Ditto the newly migrated domestic markets that can exchange ISO messaging. Indeed, HSBC has embarked on a multi-year project and will introduce changes to its online digital channels and further updates to its various payment file formats to not only meet these requirements but ensure fast benefits, justifying its investment. 

But smaller banks and others, including corporate treasuries themselves, must also migrate to ISO 20022 as well in order to get the full industry-wide benefits, without undue reliance on vendor-supplied converter tools.   

“We’ve been encouraging clients across our global network to proactively assess their readiness for ISO 20022,” said Yiu. “This is so that they can fully leverage the enriched and structured payment data to achieve improved transparency and accuracy.” 

“A crucial step on this journey is collaborating with ERP and TMS providers to determine the necessary changes and upgrades,” continued Yiu. “These changes may include accommodating new data requirements, such as debtor addresses and ultimate creditor details, in order to meet changing industry standards.”    

“Adopting ISO 20022 is not just about compliance,” added Yiu. “It’s also a transformative opportunity for the payments industry. By embracing ISO 20022, organisations can unlock significant efficiencies and greatly improve their operational capabilities.  We are committed to partnering with our clients throughout this journey, sharing expertise and providing support to ensure a seamless transition.”  

Celent’s Lodge is in agreement that 2025 is a pivotal year for ISO 20022, with deadlines for the US FedWire service imminent alongside the Swift MT migration, which will finally complete this year after much frustration among treasurers. 

“As with any complex migration, it will always be a challenge for everyone to be 100% ready by the Swift November 2025 deadline,” admitted Lodge. “By then, all payment messages sent or received through the Swift network must be based on ISO 20022 to encourage universal adoption and access to the more charter and data-rich XML-based standard. There have been herculean efforts by many so far, yet arguably the hard work actually starts next year.” 

2026 is when banks need to ensure they double down on their efforts to maximise the benefits that ISO 20022 investment can bring – not just for themselves but for treasury functions, too.

Standing on shifting sands

All this change – within Europe and without – will take shape in 2025 and alter the future of payments, trade, ESG, and beyond.  Potential trade wars are another thing to watch in what could be a volatile year.  

For corporate treasurers, navigating the remainder of the year will require both pragmatism and adaptability. Regulatory shifts, geopolitical uncertainty, and technological advancements are converging to reshape the financial landscape. The balancing act between compliance and innovation will be crucial, not only in Europe but across the globe.

One certainty amid all the uncertainty is that treasurers will need to engage more actively with their regulatory environments. Whether it’s leveraging real-time payments, harnessing AI’s potential, or ensuring seamless ISO 20022 adoption, those who anticipate the impact of regulatory change rather than merely react to it will be the best placed.

Yet, if history is any guide, regulation rarely moves in a straight line. Loopholes emerge, unintended consequences surface, and markets adjust in unexpected ways. Perhaps the real question, then, isn’t whether treasurers will ‘come up trumps’ in 2025, but whether they will be agile enough to play the hand they’re dealt.