Financial regulators around the world spent most of 2025 tightening controls to prevent fraud, while making limited progress on forcing banks and platforms to reimburse victims of financial scams. Despite rising losses from synthetic identity fraud and increasingly sophisticated schemes, authorities largely favored prevention and industry accountability over compensation, according to Ken Palla, a fraud expert and former director at MUFG Bank.
Palla said the global picture shows a clear split. The United Kingdom continues to stand out for pushing mandatory reimbursement rules, while most other jurisdictions have taken a different route.
Regulators in countries such as Canada, Singapore, Hong Kong, Thailand, and the Philippines have focused on stronger controls, earlier detection, and tighter oversight across the financial system. In practice, this approach places more responsibility on institutions to stop scams before money leaves an account, rather than resolving disputes after the damage is done.
According to Palla, this emphasis reflects both regulatory caution and operational reality. Designing reimbursement frameworks that are fair, enforceable, and resistant to abuse remains complex.
Regulators worry that automatic compensation could weaken incentives for customers and institutions to maintain strong security practices. As a result, many authorities see prevention as the faster and more manageable policy response, even as scam losses continue to climb.
Prevention over payouts shapes the regulatory agenda
In Southeast Asia, regulators are expanding their focus beyond banks alone. Palla said authorities increasingly want telecom providers, payment platforms, and online marketplaces to share responsibility for scam controls. This multi-sector approach aims to close gaps that criminals exploit when moving money quickly across systems and borders. However, it also complicates enforcement, as each sector operates under different rules, technologies, and risk models.
Palla noted that combining strict technical controls with reimbursement mandates remains a major challenge. Fraud schemes evolve rapidly, and regulators often struggle to keep rules aligned with real-world threats.
As a result, many governments prefer incremental measures that strengthen controls step by step, rather than sweeping compensation requirements that could carry unintended consequences.
Looking ahead, Palla expects regulators to shift their attention in 2026 toward areas that enable large-scale fraud. These include money mule networks, the growing use of crypto ATMs, and cross-border payment routes that allow stolen funds to disappear quickly.
He believes enforcement will increasingly target the infrastructure that supports scams, not just the scams themselves.
The broader trend suggests that victims may continue to face uneven protection depending on where they live. While prevention-first strategies may reduce future losses, the lack of consistent reimbursement rules leaves many victims bearing the financial burden.
For whistleblowers, compliance teams, and policymakers, the debate highlights a central tension in modern financial regulation: stopping fraud at scale remains the priority, even as questions about accountability and restitution remain unresolved.