Banking and Financial Services

Overview

Last updated:  25 June 2018

Bird & Bird's EU Legislation Tracker highlights Regulations and Directives scheduled to take effect or to be implemented by Member States in the period prior to the UK's departure from the EU. It does not provide an exhaustive survey. Instead, we have sought to summarise some of the key legislation, both draft and finalised, which we are tracking in the run up to Brexit and which are likely to be of interest to companies which do business in the UK and/or elsewhere in Europe.

The Tracker includes a short commentary on the substance of each of the measures identified, and a timeline for their known or likely effective dates (for Regulations) or implementation deadlines (for Directives). These are colour coded by reference to the likely date of Brexit.

For the purposes of the Tracker, we have assumed that the UK will exit the EU two years from its service of the Article 50 notice (i.e. on 29th March 2019). However, a transitional period is expected to follow, until the end of 2020, during which the UK will be required to continue to align its laws with those of the EU Single Market and Customs Union. It is currently expected that the EU Withdrawal Bill will be enacted with effect from the exit date and that the resulting Act will retain all EU Regulations (and statutory instruments implementing EU Directives) in UK domestic law. However, the Act is also expected to enable amendments to such Regulations by statutory instruments during a two-years period, and this process will determine the final form, in UK domestic law, of such legislation now summarised in our Tracker.

Key
Implementation status 
  Implementation deadline/effective date likely to be pre-Brexit
  Implementation deadline/effective date likely to be post-Brexit
Timeline   EU legislation

Implementation
deadline
: 18 months after it is published in the Official Journal of the EU

 

Fifth Money Laundering Directive (MLD5) ((EU) 2016/208)

Overview:

  • The European Parliament has adopted the EU Commission's proposal for a Fifth Money Laundering Directive ("MLD5") to amend and expand upon MLD4.
  • Under MLD5, virtual currency exchange platforms and custodian wallet providers are to be brought within the scope of MLD4.
  • MLD5 clarifies the requirements for enhanced CDD by establishing a prescriptive set of measures to be applied by firms, including checks on the customer, the purpose and nature of the business relationship, the source of funds, and monitoring of transactions.
  • The threshold for application of the exemption from CDD in respect of electronic money products is to be reduced from EUR250 to EUR150.
  • The threshold that constitutes beneficial ownership of "passive non-financial entities" (i.e. intermediaries with no economic activity which create distance between beneficial ownership and the assets) is to be reduced, as they are deemed to pose a specific risk of money laundering and tax evasion.

Brexit impact:

  • In an answer (dated 28 November 2017) to a written question on cryptocurrencies, the UK government advised that it expects negotiations on MLD5 to conclude in late 2017 or early 2018.Clearly, the longer it takes to reach agreement on MLD5, the less likely that the implementation date will fall before Brexit. It is uncertain what approach the UK will take to transposing MLD5 if the implementation date is post-Brexit.

Other information:

Full text of legislative proposal for MLD5

EBF position paper on MLD5

AFME/BBA position paper on MLD5

European Central Bank opinion on MLD5


 

Implementation
deadline: 14 September 2019

 

Strong Customer Authentication Regulation (C(2017)7782) (SCA Regulation) to the Second Payment Services Directive (PSD2) ((EU) 2015/2366)

Overview:

  • PSD2 updates the EU's primary piece of legislation on the regulation of the payment services industry.
  • The SCA Regulation specifics the requirements under Article 98 of PSD 2 the exemptions from the application of SCA, the requirements that have to be met to comply with SCA and the requirements for common and secure open standards of communication between account servicing payment service providers, payment initiation service providers, account information service providers, payers, payees and other payment service providers.

Brexit impact:

  • PSD2 was implemented in the UK on 13 January 2018 under the Payment Services Regulations 2017.
  • The SCA RTS applies from 14 September 2019.
  • PSD and PSD 2 allow UK authorised payment institutions to "passport" their services to the rest of the EU. Whether this passporting regime will continue once the UK has exited the EU will be a key element of the Article 50 exit negotiations. The SCA RTS is likely to apply to payment services in the UK

Other information:

Full text of PSD 2

Payment Services Regulations 2017

Strong Customer Authentication Commission Delegated Regulation


           
           
           
                 
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