[Newsflash n. 67]
After complex negotiations, the EU and the UK agreed on a withdrawal agreement (European Union Withdrawal Agreement Act). The agreement, ratified by both parties, came into force on 31 January 2020 and, as a result, from 1 February 2020 the UK is no longer a member of European Union.
The agreement establishes a transitional period (ending on 31 December 2020) during which the European Treaties and EU legislation will continue to apply to the United Kingdom as if it were a Member State.
The possible extension of the transitional period is conditional to the agreement of EU and the UK to be made by next 30 June 2020.
In the meantime, European Authorities are publishing some clarifications on issues relating to their governance on UK entities and the reporting obligations for UK entities from 1 February. In particular:
- ESMA will continue monitoring the application of EU law to/in the UK – such as reporting and notification obligations and supervision on registered Credit Rating Agencies, Trade Repositories and Securitisation Repositories established in the UK;
- ECB – after processing around 25 licensing procedures for banks relocating to the euro area and assessing 42 Brexit plans of euro area banks that will maintain their UK branches after the Brexit – has taken steps to ensure continued good cooperation in the area of banking supervision, also after the transition period ends with the adoption of a memorandum of understanding that will allow supervisors to continue exchanging information and to coordinate the supervision of cross-border banking groups.
Pursuant to such guidelines, on 31 January 2020 the Italian Ministry of Finance made clear that the rules contained in the Law Decree n. 22 of 25 March 2019 (transitional regulation in case of no-deal Brexit) will not apply.
Based on the provisions of the withdrawal agreement, the Ministry has expressly stated that during the transitional period:
- the current regime of mutual recognition of authorizations and the surveillance system (passport regime) is extended to banking, financial and insurance services;
- the relationships between financial market infrastructures (trading and post-trading), intermediaries and customers to and from UK, the protection of depositors and investors and business continuity in general are ensured.
After the transitional period, unless otherwise agreed between EU and UK:
- the UK entities that operate within the EU and, therefore, also in Italy, will be subject to the relevant third country regimes;
- the EU entities that operate in the UK will fall under the regulations governing non-EU operations.
Please do not hesitate to contact us should you need any further clarification on the above and related topics.