Page 69 - BIPAR Annual Report 2020_EN
P. 69

Brexit










 EBA Consultation on customer due diligence and ML/TF risk   On 23 June 2016, the UK voted to leave the European Union.   to do so, they must submit applications for UK authorisation
 factors    The UK had been due to leave the EU on 29 March 2019, but   and complete any necessary restructuring.
            the departure date was revised and the UK in fact left the EU
 In  February  2020,  the  European  Banking  Authority  (EBA)  published  a   on 31 January 2020. The UK has entered a transitional period   EIOPA Recommendation and other measures
 consultation on its draft Guidelines on money laundering  and terrorist   which is currently due to end on 31 December 2020.
 financing (ML/TF) risk factors. These Guidelines will amend the 2017 EBA   Further  to  its  December  2017    Opinion  urging  insurance
 risks  factors  Guidelines.  They  set  out  factors  that  financial  institutions,   Once the UK becomes a “third country” under EU legislation,   undertakings to take necessary steps in good time to ensure
 including insurers, insurance and financial intermediaries, should consider   the IDD will no longer apply to UK intermediaries (only the   the continuity of cross-border insurance contracts between
 when assessing the ML/TF risks associated with a business relationship or   UK requirements will continue to apply) and UK intermediar-  the UK and the EEA30 after the withdrawal of the UK, in Feb-
 transaction. Measures for enhanced and simplified customer due diligence   ies will be no longer treated as EU intermediaries.  UK inter-  ruary 2019 EIOPA issued 9 recommendations for the insur-
 are also proposed.  Guidelines  14  and  15  are particularly addressed  to   mediaries will lose the IDD passporting rights they currently   ance sector in light of the UK withdrawing from the EU with-
 life  insurers  and  investment  firms.  The  consultation  is  open  until  6  July   have and similarly, EU intermediaries will lose the IDD pass-  out a withdrawal agreement.
 2020.  BIPAR has launched an internal consultation amongst its member-  porting rights in relation to the UK.
 associations and based  on  the feedback  collected it will  submit  its   The Recommendations provide guidance on the treatment
 contribution to the Commission (post-mortem analysis).  In most EU Member States, EU governments have adopted   of UK insurance undertakings and distributors with regard
            legislative acts on the UK’s withdrawal from the EU provid-  to cross-border services in the EU after the withdrawal of
            ing for contingency measures should there be a ‘hard Brexit’   the UK from the EU without a withdrawal agreement. EIO-
 Other AML initiatives  (i.e., UK withdrawal with limited alignment), ensuring that   PA explains that the objective of its Recommendations is to
            policyholders that hold existing life and non-life insurance   minimise the detriment to policyholders with cross-border
 On 24 July 2019, the Juncker Commission adopted a Communication and   policies with UK insurance undertakings, operating in their   insurance contracts. The Recommendations addressed to
 four reports that aimed at supporting European and national authorities   respective  countries  in  FOE  or  FOS  under  the  Solvency  II   National  Competent  Authorities  are  to  foster  supervisory
 in better addressing ML/TF risks. The reports stress the need for full   single licence, will not be affected by these undertakings los-  convergence and to ensure consistent supervisory practices.
 implementation  of  AML/CTF  rules  while  underlining  that  a number  of   ing their passport rights. Most of these national acts of the
 structural shortcomings in the implementation of the Union’s anti-money   EU Member States provide for a temporary run-off regime   The 9 EIOPA Recommendations range from the authorisa-
 laundering and counter terrorist financing rules still need to be addressed.   which,  subject  to  a  number  of  conditions,  will  enable  UK   tion of third country-branches, the lapse of authorisation,
 Following the request from the Council in December 2018, the European   insurers to continue to fulfil their obligations, contracted to   the cooperation between the national competent authori-
 Commission has analysed in one of the reports ten recent publicly known   their EU customers prior to Brexit, for a transitional period   ties, the communication to policyholders and beneficiaries
 cases of money laundering in EU banks to provide an analysis of some of   after the date of the UK’s withdrawal from the EU. Howev-  to distribution activities.
 the current shortcomings and outline a possible way forward.  er, in many countries, UK insurance intermediaries are not
            included in the relevant local legislations.        With   regard    to   distribution   activities,
 Furthermore, EBA  adopted  in  July  2019  an  Opinion  highlighting  the   Recommendation 9 states the following:
 importance  of  money  laundering  and  terrorist  financing  risks  in  the   BIPAR regrets this situation. It believes that it is important
 prudential  supervision.  Prudential  supervisors are required to take into   to have UK intermediaries included in these national acts.   “Competent authorities should ensure that UK intermediar-
 account AML/CTF information in the context of authorisation, ongoing   Without their UK intermediaries being there to help during   ies and entities which intend to continue or commence dis-
 supervision, supervisory review and in the context taking administrative   this transitional period, EU 27 clients may, for example, have   tribution activities to EU27 policyholders and for EU27 risks
 measures. On the other hand, AML/CFT supervisors will use the information   problems to get claims paid on multiple insurers’ London   after the UK’s withdrawal are established and registered
 from prudential supervisors to inform their approach to the AML/CFT   policies. BIPAR, therefore, suggested to its member associa-  in the EU27 in line with the relevant provisions of the IDD.
 supervision  of institutions.  The management body  of the institutions   tions to contact their respective regulator to ensure that UK   Competent authorities should ensure  that intermediaries,
 should be adequately skilled to identify, assess and manage such risks.  intermediaries are included /referred to in their respective   which are legal persons and are established and registered
            Brexit national act or get the confirmation that their Brexit   in the Union, demonstrate an appropriate level of corporate
            act on the insurance sector covers insurance intermediaries.   substance, proportionate to the nature, scale and complex-
                                                                ity of their business. These intermediaries should not display
            In  the  UK,  European  insurance  intermediaries  currently   the characteristics of an empty shell. Moreover, the profes-
            operating in the UK can continue to carry out insurance   sional and organisational requirements of the IDD must be
            business, including writing new contracts as well as servicing   met on a continuous basis. This is without prejudice to the
            existing contracts, for a temporary period after even a ‘no-  right of the Member States to introduce special provisions in
            deal’ Brexit (i.e., UK withdrawal without agreement). In order   their national law for third country intermediaries, provided



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