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UK shows the shape of post-Brexit EU-derived law

BIScom Subsection: 
Editorial Staff

This is not about money laundering. It's about how the UK is de-EU-ing law and regulation ready for "exit day." The UK's draft statutory instrument called "The Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018" is an object lesson in technical documentation. It has no life of its own and can only be read alongside other UK law and Regulations. It is of extraordinary importance not because of what it does but because of what it demonstrates. This is an indication of the clerical complexity of withdrawing from the EU even when the principles, as they will in relation to the Money Laundering Directives, will remain as now.

The draft says "The regulations come into force on exit day." They amend :

a) The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
b) Oversight (sic) of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017
c) Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015

It has to be noted that the 2017 Regulations have that long name but no one actually uses it: they are called "The Money Laundering Regulations" as all their predecessors since 1993, when the first set was published, been called.

The only material change, from an EU perspective, is the removal of references to "European Supervisory Authorities. This is one of the things that is most upsetting the EU about the UK leaving: the UK, which in common terms is called "the City" will excuse itself from financial sector supervision from the ECB and other EU bodies.

The single sentence "omit the definition of “European Supervisory Authorities” " is the expression that is driving the demands for an EU-wide body to deal with counter-money laundering measures across the EU. The politically driven demand is being pushed on the sidelines of the Brexit negotiations and one suspects that it is enable the EU to claim that the UK is separating, in part, to avoid responsible regulation. Nothing, of course could be further from the truth but truth and politics are rarely found in the same stream.

There are no changes of substance but there are changes in scope and technical changes for example " "UK regulated market” means a recognised investment exchange within the meaning of section 285(1)(a)of The Financial Services and Marketing Act which is not an overseas investment exchange within the meaning of section 313(1) of FSMA."

A recurring theme is "in the definition of "third country" for "an EEA state" substitute “the United Kingdom" "

Sadly, the changes are not something that can fix existing law and regulation by cut-and-pasting the old and the new. Inevitably, then, existing versions of law and regulations, in all relevant fields, will need to be read in the light of what will, inevitably, be many, many amending Regulations. The 1992 "Six pack" and its follow-ons will be a particular nightmare affecting, as they do, many who are not trained in law but must apply it daily.

In relation to the changes to EU legislation, the draft Regulations largely redirect definitions sections from EU law to the equivalent UK law.

It is interesting to note that the Money Laundering Regulations are specifically the implementation of an EU directive and run to some 120 pages. What this six page Draft shows is that while the technical aspects are difficult, the extent of the work to extract the UK from EU law while maintaining its effectiveness, is clerically less complex than feared, at least for an individual Regulation. The sheer numbers of Regulations, however, will make that task one of Herculean proportions.

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