Freshfields FS Insights
Welcome to the May 2026 edition of the Freshfields FS Insights newsletter, which contains a selection of thought leadership related to the financial services industry published over the past month by Freshfields lawyers from around the world, as well as upcoming dates for your diary. If you would like more information regarding any of these developments, please get in touch with your usual Freshfields contact.
This month’s edition includes the following topics:
Financial crime
Sanctions
Prediction markets
Cryptoassets
Prudential regulation
Outbound investment
Targeted support
Bank recovery and resolution
Open finance
Asset management
Consumer credit
Insurance
Dates for your diary
Financial crime
Treasury and federal banking agencies propose sweeping changes to the AML/CFT compliance framework
The first week of April 2026 produced a series of proposed federal rules that, if finalized, would meaningfully reshape the US anti-money laundering and countering the financing of terrorism (AML/CFT) framework. Should the new proposals be adopted following the conclusion of the 60-day comment period in June 2026, financial institutions, financial service providers, and particularly stablecoin issuers will be required to evaluate and, where necessary, adapt their existing AML/CFT programs to ensure alignment with evolving regulatory expectations during the subsequent 12-month implementation phase. In our client alert, we discuss and summarise key takeaways from the proposals as well as what they may mean for the US illicit finance legal and regulatory framework
Sanctions
Sanctions on finance arrangements: UK Supreme Court confirms broad scope
A recent Supreme Court decision has provided important clarity on the reach of UK financial sanctions. The court held that the Russia (Sanctions) (EU Exit) Regulations 2019 prohibited UniCredit Bank from making payments under letters of credit that secured aircraft leases to Russian airlines until licences to do so were obtained, with the consequence that no statutory interest accrued during the period of prohibition. The decision confirms the broad scope of the UK sanctions regime and clarifies the protection available to financial institutions that withhold performance in a reasonable belief that an act or omission complies with sanctions. In this article, which first appeared in the May 2026 issue of PLC Magazine, Emma Probyn, Lucy Clark and Laura Feldman of Freshfields analyse the Supreme Court decision and its wider implications.
Prediction markets
Regulating insider trading on prediction markets
Global prediction markets trading surged more than 400% last year to nearly $64 billion and could hit one trillion dollars annually by 2030. Users trade event contracts—bets on the occurrence of a future event. Prediction markets also raise insider trading concerns, and regulators have taken notice. Federal agencies and state gaming authorities are competing to lead enforcement, the contours of which are taking shape in real time. DOJ is also actively considering how to use its criminal enforcement authorities under various fraud theories to curb abuse. The implications will be far-reaching—for prediction markets and any company whose personnel could create regulatory or criminal exposure through their trading activity on prediction markets. For more information, see our blog post.
Preparing for Congressional scrutiny of online gambling and prediction market platforms
Online gambling and prediction market platforms face an increasingly volatile regulatory and political environment. State authorities are trying to crack down with lawsuits, while federal regulators are adopting an aggressive deregulatory stance by asserting exclusive jurisdiction. Most companies in this space are likely tracking, or even litigating, these issues already. But a new front is on the horizon: Congress is poised to enter the fray, with lawmakers signalling investigations into these services from several angles. Companies in this industry should brace for heightened oversight in 2027 and begin preparing now for robust congressional inquiries. For more information, see our blog post.
SDNY and CFTC charge US soldier with using classified information to profit on prediction market
On 23 April 2026, the US Attorney’s Office for the Southern District of New York (SDNY) and the Commodity Futures Trading Commission (CFTC) announced charges against a US soldier related to insider trading on a prediction market. The indictment alleges that the soldier profited from his access to classified non-public information regarding US operations to capture former Venezuelan President Nicolás Maduro and his wife. The case significantly marks the first parallel charges with DOJ and CFTC related to insider trading activity on a prediction market and notably relies on a theory that the prediction markets contracts were commodities for the purposes of Commodities Exchange Act (CEA) violations. For more information, see our blog post.
Prediction markets and investment advisers: from regulatory curiosity to business critical risk
The earlier discussion of prediction markets focused on their structure, regulatory classification, and the unsettled perimeter between commodities, gaming, and financial regulation. Recent developments—particularly the rise of copy‑trading tools and the scrutiny they have attracted—make clear that for investment advisers, prediction markets are no longer merely an interesting edge case. They increasingly implicate core features of the advisory business itself: how advisers generate insight, how they discharge fiduciary duties, how they supervise personnel and vendors, and how they defend their processes in an enforcement environment that is increasingly skeptical of “novelty” arguments. Prediction markets sit at a crossroads between information and trading. For advisers, that intersection has always been the most heavily regulated terrain. For more information, see our blog post.
Cryptoassets
FDIC and Treasury unveil proposed stablecoin rules to advance the GENIUS Act framework
With the statutory deadline for implementing regulations approaching on 18 July 2026, federal agencies seem to be moving in rapid succession to help bring the payment stablecoin framework Congress enacted last summer into fruition. In the span of just one week, the Department of the Treasury and Federal Deposit Insurance Corporation (FDIC) proposed three rules to implement key components of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), bringing the number of additional required rulemakings closer to zero, with one particularly important proposal still to come: from the Board of Governors of the Federal Reserve System (FRB). In our blog post, we summarize and highlight key takeaways from the Treasury and FDIC proposals.
Prudential regulation
More proportionality for smaller institutions and de-scoping of significant institutions – BaFin’s 9th revision of the MaRisk
The German financial services supervisory authority BaFin is consulting on the ninth revision of its Minimum Requirements for Risk Management (MaRisk) as of 1 April 2026. While the date of the consultation suggests otherwise, BaFin seems to be serious about its calls for simplification and deregulation, especially for smaller institutions. In this blog post, we provide an overview of the key changes proposed by BaFin, including clarity on the scope of application and a move towards more proportionate regulation.
Targeted support
Navigating targeted support: FCA guidance on designing consumer segment
On 23 March 2026, the Financial Conduct Authority (FCA) published new information and good and poor practice examples on how firms should design consumer segments for the purpose of delivering targeted support. Building on the FCA’s policy statement (PS25/22) outlining the final rules for targeted support, the new publication offers practical examples to illustrate how firms can provide ready made suggestions to groups of consumers with common characteristics without tipping over into comprehensive, individualised advice. This blog post summarises the key takeaways for firms seeking to deliver targeted support in a robust and compliant manner.
Outbound investment
New outbound investment legislation and FAQs: good for financial services providers; largely status quo for investor
There have been two significant developments in US outbound investment policy in recent weeks: (1) The Comprehensive Outbound Investment National Security Act of 2025 (the COINS Act) became law, largely codifying the August 2023 Outbound Investment Security Program (OISP) Executive Order but with some tweaks, and (2) the Department of the Treasury issued new Frequently Asked Questions adding clarity on some points and potentially compounding ambiguity on others. The OISP seeks to restrict US investment support for certain sensitive technologies in countries of concern. For a detailed analysis of the changes, and some practical near-term steps investors can take to prepare, see our briefing.
Bank recovery and resolution
New resolution rules for EU banks: the CMDI package at a glance
On 20 April 2026, the final legislative texts implementing the Crisis Management and Deposit Insurance (CMDI) reform were published, consisting of amendments to the Single Resolution Mechanism (SRM) Regulation, the Bank Recovery and Resolution Directive and the Deposit Guarantee Scheme Directive. The reform package represents a fundamental re-balancing of the EU’s resolution framework for credit institutions and investment firms by addressing a central shortcoming: that the current resolution framework was "seldom resorted to" and that failures of smaller and medium-sized institutions were "typically addressed through unharmonised national measures" relying on taxpayers' money rather than industry-funded safety nets. For a summary of the key changes across the reform package's main pillars, see our blog post.
Open finance
Open finance: the FCA maps out a smart data future
On 14 April 2026, the FCA published Open finance: Our vision for a smart data future, its roadmap for facilitating the expansion of open finance in the UK between now and 2030. The approach outlined in the roadmap aims to extend secure, consent-based data sharing to a wider range of financial products. While open banking is limited to payments data, open finance would extend the same principles to products such as mortgages, SME lending, investments, pensions, insurance, savings, credit and debt management. In this blog post, we explore how the FCA aims to achieve its objective of building a smart data economy that works for everyone.
Asset management
Recent DOL rule proposal could expand retirement account access to alternative investments
On 30 March 2026, the US Department of Labor (DOL) released an eagerly-awaited proposed rule concerning alternative investments by retirement savers in defined contribution plans (i.e., 401(k) accounts). The proposed rule, which would provide guidance and potential safe harbor for ERISA fiduciaries that include alternative assets as investment options in the plans they sponsor, is a significant development in the ongoing retailization of private capital that is shaping the asset management industry. If the rule is adopted, it can facilitate greater access for individuals contributing to their 401(k) accounts to invest in alternative assets such as private market investments, real estate interests, commodities, interests in projects financing infrastructure development, holdings in actively managed investment vehicles that are investing in digital assets, and lifetime income investment strategies including longevity risk-sharing pools. The proposed DOL rule has the potential to benefit private capital managers, by affirming a process-based, asset-neutral prudence standard and establishing a safe harbor for ERISA fiduciaries that appropriately consider investment strategies. Our blog post provides an overview of the proposals, as well as next steps for asset managers and plan sponsors.
Consumer credit
Germany finalises its CCD 2023 implementation: the new regime for consumer credit at a glance
After a period of legislative debate, clarity has finally arrived for the future of German (non mortgage) consumer credit. The draft act implementing the EU’s revised Consumer Credit Directive (CCD 2023) – including a number of adjustments and deviations from the initial government draft agreed during the parliamentary deliberations – passed the German Bundestag on 17 April. While the new rules are only expected to be formally adopted by mid May – around half a year after the actual transposition deadline – the original application date of 20 November 2026 remains unchanged. This briefing unpacks the essential changes to support your preparation and further refinements in the run up to that date.
Insurance
The infrastructure powering modern insurance
For much of the past decade, insurtech was synonymous with digital challengers aiming to disrupt traditional insurers. Venture backed start ups promised to reinvent underwriting, distribution and customer engagement. While some have succeeded, the most significant technological change now appears to be coming from another direction. A growing proportion of insurtech activity is focused on B2B infrastructure: technology providers that enable insurers, brokers and MGAs to operate more efficiently, launch new propositions and connect with partners without taking on underwriting risk themselves. As described in our blog post, this shift brings new opportunities but also important regulatory, operational and strategic implications for insurers.
Click, buy, covered: how embedded insurance is rewriting distribution
Innovation in insurance is increasingly being driven by the growth of embedded products. Rather than competing directly with established carriers, many technology businesses are building the “digital rails” that allow insurance to be woven into non‑insurance customer journeys. For insurers seeking new distribution models, access to richer data, and ways to modernise legacy systems without full‑scale transformation programmes, embedded insurance is becoming difficult to ignore. At the same time, these models raise regulatory, governance and strategic questions that need to be addressed at the outset, as explained in our blog post.
Dates for your diary
Freshfields’ Mexico City Forum
On 27 May 2026, Freshfields’ Mexico City Forum will bring together Freshfields partners and local experts for a series of insightful discussions on the issues shaping today’s business and legal landscape in Latin America. Our panellists include former high-ranking US government officials from the US Department of Justice, Federal Trade Commission and Securities and Exchange Commission, as well as veteran litigators and transactions attorneys with deep experience in the region. In addition to the panel sessions, the forum will feature opportunities for networking with industry peers, Freshfields partners and other thought leaders.