New Regulatory Requirements for Financial Institutions in 2026

Introduction

As 2026 approaches, regulatory pressure on financial institutions is becoming harder to ignore. Expectations around operational resilience, cyber security, governance, and financial crime controls are increasing across both Australian and international frameworks. For banks, insurers, superannuation funds, payment providers, and fintech organisations, compliance is no longer about meeting the minimum threshold. Regulators are now asking a more direct question about whether controls are actually working in practice and embedded into day-to-day operations.

In this environment, ISO/IEC certifications for financial institutions are taking on greater relevance. When applied properly, they offer a structured way to demonstrate regulatory alignment using recognised international frameworks, rather than relying on fragmented or reactive controls.

The 2026 Regulatory Landscape for Financial Institutions

Operational resilience and accountability

In a nutshell, expectations about operational risk have materially shifted. Under the Prudential Standard CPS 230 Operational Risk Management, which becomes effective in July 2025, clear obligations are placed on institutions to identify critical operations, understand disruption impacts, and actively manage third-party dependencies. These requirements are not theoretical; they will be examined closely throughout 2026.

CPS 230 also reinforces existing expectations under CPS 234 Information Security. The boards and senior executives are to ensure a continuous visibility of cyber risks, security incidents, and the effectiveness of controls. In fact, the regulatory focus has shifted from the policy libraries to the evidence of accountability and outcomes.

Financial crime and AML obligations

Anti-money laundering and counter-terrorism financing reforms coming in 2026 will continue to increase both the breadth and depth of financial crime requirements. Risk assessments, transaction monitoring, and reporting requirements are becoming increasingly burdensome. AUSTRAC has been consistent in its messaging: for regulated entities to have mature, risk-based financial crime controls underpinned by governance and evidence. Relying on manual workarounds or having compliance in name only is no longer acceptable.

System-wide regulatory coordination

Australian regulators are also working more closely together. Through the Council of Financial Regulators, expectations across prudential supervision, market integrity, and financial stability are becoming increasingly aligned.

For financial institutions, this coordination increases the need for structured frameworks that can support multiple regulatory objectives at the same time, without creating duplicated or inconsistent controls.

Why ISO/IEC Certifications Matter in a Regulatory Context

Regulators do not mandate ISO certification. That has not changed.
What has changed is the standard of proof regulators expect.

The institutions should be able to give evidence that risks are identified, treated, monitored, and reviewed in a structured and repeatable manner. In practice, there may be ad hoc controls and undocumented judgment calls, but these are increasingly difficult to defend when regulators challenge them.

ISO/IEC certifications within financial institutions provide internationally recognised frameworks that align closely with regulatory expectations. They support governance, accountability, and assurance while allowing organisations to scale controls according to their risk profile rather than a fixed model.

When mapped effectively to regulatory obligations, ISO/IEC standards provide evidence that controls are in place to manage real and measurable risks rather than simply to satisfy documentation or audit checklists.

Key ISO/IEC Certifications for Financial Institutions in 2026

ISO/IEC 27001 Information Security Management Systems

Cybersecurity remains one of the most heavily scrutinised areas for regulators. ISO/IEC 27001 establishes a risk-based information security management system that aligns strongly with CPS 234 expectations. It requires organisations to identify threats, select controls based on risk, and continually assess their effectiveness.

For financial institutions, ISO/IEC 27001 provides independent assurance that information security risks are governed at a strategic level, with defined accountability and oversight.

ISO/IEC 22301 Business Continuity Management

Operational resilience will continue to be a defining regulatory theme through 2026. ISO/IEC 22301 supports the development of a formal business continuity management system that identifies critical services, assesses disruption scenarios, and tests response and recovery capabilities.

This standard aligns closely with CPS 230 requirements relating to critical operations, disruption tolerance, and recovery planning. It provides evidence that continuity arrangements are structured, tested, and actively maintained.

ISO/IEC 27701 Privacy Information Management

Financial institutions handle large volumes of sensitive personal information. As AML obligations and regulatory reporting requirements expand, privacy governance becomes more complex, not less.

ISO/IEC 27701 extends ISO/IEC 27001 by introducing privacy-specific controls. It helps organisations manage personal data risks systematically, particularly where regulatory obligations intersect across cyber security, privacy, and financial crime controls.

ISO/IEC 27017 and ISO/IEC 27018 Cloud and Third-Party Controls

Third-party and cloud risk management remains a core focus under CPS 230. ISO/IEC 27017 and ISO/IEC 27018 provide additional guidance for managing cloud environments and protecting personal data in outsourced arrangements.

For financial institutions that rely on external service providers, these standards support stronger supplier governance and clearer assurance over outsourced operations.

Linking Regulatory Risk to ISO/IEC Certifications

A common weakness in compliance programs is the absence of a clear link between regulatory risks and the standards selected to manage them. Effective alignment requires prioritisation.

This approach ensures certification decisions are driven by risk exposure rather than industry trends or customer pressure alone.

Using Certification as Regulatory Evidence

ISO/IEC certifications for financial institutions should be treated as part of a broader assurance framework. Certification outcomes can support regulatory engagement, internal audit programs, and board reporting when they are properly integrated into governance processes.

Institutions should ensure certifications are supported by regular internal audits, management reviews, and continuous improvement activities. Certification without operational ownership or oversight will not meet regulatory expectations.

Final Thoughts

Regulatory requirements for financial institutions in 2026 are more demanding, more interconnected, and more outcomes-focused than ever before. Meeting these expectations requires structured, risk-based frameworks that extend beyond minimum compliance.

ISO/IEC certifications for financial institutions provide a credible, internationally recognised way to demonstrate governance, resilience, and accountability in an increasingly complex regulatory environment. When aligned with regulatory priorities, they strengthen assurance, support supervisory engagement, and build long-term trust.

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