A recent study found that only 13 percent of EU regulations have been replaced following Brexit. Brexit continues to cause uncertainty for leading regulatory bodies across the UK and Europe and remains to be a cause for concern as the UK faces large gaps in the law. The deadline for all regulations to be agreed on is April 12, 2019.
In preparation of the exit from the EU, the UK is introducing ‘Statutory Instruments’ which will act as a mechanism to translate EU law into replacement UK law. However, with hundreds of Statutory Instruments being drafted, there are scarcely any final updates on the horizon.
Only after the withdrawal is agreed will the trading and regulatory relationship between the UK and the EU be clear. “Having large gaps in the law throughout the financial sector could see significant growth in financial crime, as bad actors are constantly in search of chinks in the armour to commit fraudulent activities,” says Zac Cohen General Manager at Trulioo, identity verification experts.
Zac continues: “Following Brexit, Fifth Anti-Money Laundering Directive (5AMLD) will change slightly as the EU member states will have to treat the UK as a ‘third country’. Currently, EU regulation requires UK payment providers to supply specific documentation from official sources such as government registers and public registers, in connection with transfers of funds between the UK and EU. However, treating the UK as a ‘third country’ will require moving from a simplified way of verification to enhanced due diligence checks. The implementation of such techniques may take some time and ultimately will give bad actors further opportunity to commit fraudulent activity.”
“Regulation kept in the silos of government policy can have a negative impact on global trade. Instead, compliance and verification should be instant across a shared international system to combat fraudulent activities and encourage global trade.”
“By leveraging innovative technologies to enable a more cooperative approach, there is scope to create a standardized digital structure, which will aid in the dissemination of information that works across borders. By having a shared framework in which the EU and UK both operate, it means that the UK will be included along with other EU member states in the interoperability of systems across Europe. This in turn will allow the global marketplace to flourish.”