How evolving regulations are transforming cross-border treasury operations

Ankur Kanwar Head of Transaction Banking & Cash Management, Singapore & ASEAN, Global Head of Cash Structured Solutions Development

9 Mar 2024

The shifting regulatory environment is impacting cash management and payments functions, presenting treasury teams with new avenues for liquidity optimisation, more effective capital deployment across different markets, and more agile operations.

The global payments and liquidity management space has undergone immense change in recent years, driven by technological advancement and evolving business models. As digital disruption transforms processes at an unprecedented pace, regulatory frameworks are being revised to keep up.

Against this backdrop, authorities worldwide face growing demands to update rules and clarify how innovation can be safely adopted while maintaining financial stability. With a growing number of differing rules across jurisdictions to grapple with, staying ahead of the curve is becoming increasingly challenging for the treasury function.

“Several macro-level trends are fuelling regulatory change across the landscape, and it can be tough for corporate treasury departments focused on day-to-day operations to maintain comprehensive visibility of these developments,” says Ankur Kanwar, Global Head of Structured Solutions Development and Head of Cash Products, Singapore and ASEAN, at Standard Chartered. “On the surface, such policy updates may seem removed from treasury concerns. Yet closer examination often reveals implications and keeping informed of changes is crucial for strategic planning and compliance.”

Emerging technologies like real-time payments, distributed ledger, and digital currencies are prompting action from policymakers. Meanwhile, geopolitical shifts and trade disruptions are adding impetus for countries to streamline cross-border capital flows and demonstrate openness and competitiveness through regulatory easing.

As these high-level forces persist, regulatory evolution will remain constant, reshaping the compliance environment across markets – as well as unlocking new opportunities to create value and generate efficiencies.

Payments regulations on the move

To encourage digital adoption and address new risks in the increasingly cashless economy, a growing number of countries are overhauling payments regulations. Singapore’s Payments Services Act has emerged as a model, clearly defining licensing requirements and controls for different payment activities, and specifying guidelines that must be adhered to when facilitating overseas funds transfers related to e-commerce sales or marketplace operations. 

“Within the Asia-Pacific region, Singapore and Hong Kong are the pioneers when it comes to payment service guidelines. Licensing requirements for each activity, controls to be maintained, and other guidelines are clearly defined, which eliminates ambiguity. Other markets in Asia are coming fast up the curve. Therefore, this is an area where we expect to see increased regulatory activity in the near term,” says Kanwar. He adds that since it is likely regulators will base their rules on the Singapore and Hong Kong models, corporates can prepare by adopting best practices to remain compliant when operating in these spaces.

Another major development in the payments area – while not a regulation per se – is the transition to the ISO 20022 standard for financial messaging. Many markets, among them the Philippines, have accelerated their commitment to adoption, upgrading domestic formats to the new standard ahead of SWIFT’s Cross-Border Payments and Reporting Plus (CBPR+) milestone of November 2025.

“Numerous countries in our footprint markets across Asia, Africa and the Middle East have already changed to the new format, which obviously has implications for our clients. But instead of just focusing on becoming compliant, there’s a real opportunity for corporates to speak to their banking partners to understand how they can leverage the enhanced payment data to enable more automated reconciliation and real-time decisioning. This is an enormous benefit that can’t be overlooked,” says Kanwar.

Cash pooling rules thaw out

Regulations have long posed challenges for multinationals seeking to optimise liquidity through cross-border cash pooling structures. However, rules are gradually relaxing in some markets. Thailand made waves in 2021 by permitting onshore FX conversion, allowing corporates to include onshore converted USD balances in pools located elsewhere and unlocking pooling for sizeable sums that would otherwise have been stranded locally.

Similar moves are unfolding in markets like Indonesia and the Philippines for USD balances – it is now feasible to move USD balances offshore, while China’s stance on cash pooling continues to evolve through various pilot programs. Meanwhile, Vietnam is also reviewing the feasibility of intercompany loans, which are currently not permitted.

By shaping strategies around both emerging capabilities and enduring compliance needs, forward-thinking treasury teams can ensure regulatory developments enhance rather than impede liquidity optimisation.

“These moves come as regulators seek to demonstrate that they’re open for business and that they want to give corporates the flexibility to come and set up these structures. We’re already seeing large multinationals with existing cash pools in Singapore or Hong Kong revalidating the new regulatory changes,” says Kanwar, who adds that financial institutions are also moving to facilitate cash pooling across markets.

“One of the biggest issues in cash pooling is how cumbersome it can be for multi-banked corporates. Signing bilateral agreements with every bank and setting up daily sweep creates friction,” he explains. “We are now seeing innovation in how banks work together to do cash pooling. In some countries, such as Singapore and Malaysia, instead of the traditional MT 101 and 103 we have now started to use the direct debit network, which is real-time and mandatory, so no bank can refuse it.”

Technological advances such as Partior, an open industry platform that harnesses the power of blockchain to enable real-time programmable value transfer, promise to streamline cash pooling even further.

“Standard Chartered’s investment in the Partior initiative enables frictionless fund movements between partner banks, across currencies and across countries, effectively pooling liquidity as if under one roof,” says Kanwar.

Taking action in 2024 and beyond

With new developments in the payments space gaining pace, keeping up to speed presents an ongoing challenge. However, treasury professionals have options to incorporate emerging opportunities even as rules change. Maintaining close partnerships with banks that dedicate significant resources to deep regulatory surveillance will be paramount.

“With regulatory complexity likely the new normal, we are supporting clients to navigate what’s ahead and empowering them to confidently grow their global operations,” says Kanwar.

He points to the bank’s biannual regulatory updates, which distil complex shifts into clear, actionable insights on an individual country basis, as well as a recent collaboration with global law firm Allen & Overy to produce the Guide to Payment Regulations: Asia, to help businesses operating in the new economy to establish their cross-border operations compliantly.

“In some countries, it’s difficult for corporates to get clear guidance from the regulators because the guidelines are still evolving, so we have taken the proactive step of publishing this document together with a law firm, which is a fabulous testimony to how we are supporting our clients,” says Kanwar.

But beyond simply gaining information on upcoming developments, corporates can leverage their banking partners’ expertise both to capture new opportunities as well as remain compliant across markets.

As an example, recently introduced rules in export-oriented economies like Indonesia require companies to retain part of their export earnings onshore for at least three months before releasing them, which can be difficult to manage and monitor across large volumes of incoming payments. In response, Standard Chartered is launching a PaaS (Payment-as-a-Service) solution for clients to automate this process, as well as provide export retention quota accounts that enable them to hold a portion of their export proceeds in foreign currency.

Ensuring rules enable business

While regulatory changes can introduce complexities, forward-thinking corporates are partnering with banks to advocate positions supporting innovation and growth, ensuring compliance does not impede competitiveness or the ability to optimise operations across borders.

“As one of the prominent banks in the markets where we operate, often we have the opportunity to provide commentary to regulators as part of their consultation process for new guidelines,” says Kanwar. “Guidance crafted with business enablement in mind ultimately benefits all players in shaping a more efficient global landscape.”

With regulatory shifts inevitable, sustained effort will be needed to stay up to date. But with the right banking partner, treasury teams can continue thriving regardless of how quickly the operating environment evolves.