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Artificial intelligence (AI) regulation is accelerating across Asia-Pacific, as supervisors respond to rapid uptake of machine-learning models in credit, fraud detection and customer engagement.
Singapore and Malaysia are leading the way in regulating how the technology is used and implemented by financial institutions (FIs).
Bank Negara Malaysia’s (BNM) October 2025 discussion paper on AI sought feedback to inform its regulatory and developmental approach to AI in the financial sector. The paper signals BNM’s interest in model governance, explainability, data stewardship and safeguards against consumer harm.
The Monetary Authority of Singapore (MAS) released a consultation on its proposed guidelines for AI risk management in November 2025. The guidelines aim to establish expectations for FIs commensurate with their size, use of AI and risk profile.
The timing of the consultations reflects regulators’ efforts to keep pace with rapidly rising adoption of AI systems. It also aligns with recent Singapore–US and Malaysia–US trade agreements that include cooperation on digital and AI capabilities, implicitly raising expectations on regulatory safeguards.
Different stages, but a common theme
Singapore and Malaysia’s approaches share a focus on proportionality, although this principle is applied differently in each jurisdiction.
In Singapore, the MAS expects FIs to implement any guidelines that it issues in a manner appropriate to their size and use of AI. Proportionality will influence documentation depth, model validation frequency and monitoring expectations.
In Malaysia, BNM’s approach emphasises parity, proportionality and neutrality. Although BNM has not yet proposed detailed guidelines, it encourages experimentation via its regulatory sandbox, prioritising “win-win-win” use cases that benefit customers, enhance institutional outcomes and align with policy goals such as financial stability and inclusion.
Regulatory leaders and followers
Along with the Hong Kong Monetary Authority (HKMA), the MAS and BNM are widely seen as bellwethers for regulatory trends – any regulatory initiative undertaken by one of these regulators is often followed by others.
Hong Kong is already laying groundwork for AI-focused supervision: the Privacy Commissioner’s 2024 guidance on automated decision-making sets expectations on transparency, accountability and data protection that could evolve into sector-specific AI governance requirements.
FIs operating in Singapore and Malaysia should prepare for imminent AI regulation, as both jurisdictions’ consultations are likely to trigger binding measures in 2026.
Singapore is expected to finalise and implement its guidelines before the 2026 Singapore FinTech Festival. Malaysia is likely to announce a clearer regulatory timeline once it completes consultation feedback analysis.
Firms should inventory all AI and machine learning (ML) use cases, map them against the proposed guidelines, and conduct a gap analysis covering model documentation, validation, monitoring, auditability and data lineage.
For Malaysian FIs, next steps remain less prescriptive. Firms considering deployment of AI solutions may wish to leverage BNM’s sandbox, ensuring proposals demonstrate clear customer benefits, transparent model governance and credible risk mitigation.
At the regional level, FIs in Thailand, the Philippines and other emerging AI markets should remain alert. Once Singapore, Malaysia and Hong Kong act, historical patterns suggest rapid regulatory spill-over across Asia-Pacific.
