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Joint Statement: EU-UK Financial Regulatory Forum, May 2024

National Audit Office launches review of FCA's effectiveness
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The second meeting of the Joint EU-UK Financial Regulatory Forum (the Forum) between the European Union (EU) and the United Kingdom of Great Britain and Northern Ireland (UK) took place in Brussels on 22 May 2024.

In light of the shared objectives of preserving financial stability, market integrity, and the protection of investors and consumers, both sides emphasised the benefit and importance of structured regulatory cooperation between the EU and the UK. The discussion focused around 6 main areas, namely: (i) regulatory and market developments and financial stability outlook, (ii) banking and anti-money laundering (AML), (iii) sustainable finance (iv) capital markets (v) asset management, and (vi) digital finance and artificial intelligence (AI).

On AML, both sides emphasised the importance of close cooperation, including within the Financial Action Task Force, to raise the bar globally. The EU updated on the swift progress made on AML reforms. The EU’s AML package introduces, inter alia, detailed and directly applicable rules at Union level, as well as a new EU Anti-Money Laundering Authority (AMLA) which will act as the centre of the Union’s integrated supervisory system involving AMLA and all national authorities and will support and coordinate the work of the Financial Intelligence Units. The UK updated on work to further improve the effectiveness of the UK regime, including on potential options for supervisory reform in the UK and the consultation on improvements to the AML rules set out in the UK Money Laundering Regulations.

The EU and the UK provided views and updates on recent developments in digital innovation in the financial sector. Participants discussed operational resilience and agreed to explore ways to strengthen cooperation between their respective evolving oversight regimes for critical third party (CTP) service providers to the financial sector. Both sides also shared insights from their work on tokenisation and exchanged some reflections from their respective work on the UK’s Digital Securities Sandbox and the EU’s Distributed Ledger Technology (DLT) Pilot Regime. Both sides welcomed continued engagement on Central Bank Digital Currencies (CBDC) and exchanged updates following on from discussion at the first Forum. Both sides took note of data-driven initiatives being pursued in the financial sector, including the Commission’s proposal for a regulation on financial data access (FIDA) and the UK’s introduction of Smart Data legislation through the Data Protection and Digital Information Bill.

In an exploratory exchange of views on the regulatory, supervisory, and financial stability implications of AI, both sides noted the rapid uptake and evolution of AI use in the financial sector and agreed to work together in international fora to further understanding of stability risks. Participants on the EU side noted the recent EU AI Innovation Package and the EU AI Act which aim to foster the development, use and uptake of AI. Similarly, the UK outlined its principles-based approach to regulating AI, as reaffirmed by UK Government’s recent response to the AI White Paper. Both sides acknowledged a shared interest in continuing close engagement on digital innovation, both bilaterally and in multilateral fora.

The EU and the UK agreed to follow up, as appropriate, between now and the next Forum on topics discussed.

 

Source: GOV.UK

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