On 22 November 2018, there was published the draft Political Declaration setting out the framework for the future relationship between the EU and the UK. Amongst other things, the Political Declaration considers the future of cooperation in the financial services sector:
- the UK and the EU are committed to preserving financial stability, market integrity, investor and consumer protection and fair competition, while respecting each other’s regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest. They also agree to engage in close cooperation on regulatory / supervisory matters in international bodies;
- as both the UK and the EU have equivalence decision-making processes in place, both the UK and the EU should begin assessing equivalence with respect to each other as soon as possible following Exit day – to conclude the assessments before June 2020;
- both the UK and the EU recognise that close regulatory and supervisory cooperation is in their mutual interest. Cooperation should be grounded in the economic partnership and will be based on the principles of regulatory autonomy, transparency and stability. Cooperation should include: adequate procedures concerning equivalence decisions; information exchange; and consultations on regulatory initiatives and similar issues of mutual interest; and
- both the UK and the EU will support the Financial Action Task Force and the ongoing fight against money laundering and terrorist financing. Both parties will end the anonymity associated with the use of virtual currencies, including through obliging virtual currency exchanges and custodian wallet providers to apply customer due diligence checks.
The first three points expand on those raised in the draft political declaration of 14 November 2018, whilst the latter point is a new introduction – focusing on the combating of money laundering, particularly in the crypto markets.
While it is not legally binding, the declaration of political principles is significant in indicating the framework for negotiations. The press release issued by the UK Government notes that the Political Declaration has been agreed at negotiators level and in principle at a political level, subject to endorsement by Leaders.