The chief of Financial Conduct Authority has cautioned markets about Hard Brexit financial crime risks, stating that the data sharing agreements between the EU and the UK are crucial.
11 September, AtoZ Markets – The head of the Financial Conduct Authority (FCA), Charles Randall has warned the public about the potential inability of the FCA to deal with the risks of crime in the financial industry in case a no-deal Brexit takes place.
FCA Warns About Hard Brexit Financial Crime Risks
During his speech, Mr. Randall has referred to the data sharing agreements between the UK and the European Union (EU). He noted that these agreements play a crucial role in combating a financial crime.
During the regular yearly financial meeting of the regulator, Mr. Randall has stated that the UK has directed around 3.1 billion transaction reports to other EU officials by the start of this summer. They were sent via the European transaction reporting mechanisms. During the meeting, Mr. Randall has stated:
“Whatever shape Brexit eventually takes, maintaining and deepening our partnerships with international regulators and law enforcement agencies will remain vital. It is important to stress that we cannot manage the risks of financial crime successfully unless we can share data in this way. Data sharing provides both the UK and EU countries with a vital foundation to tackle cross-border market abuse, including insider dealing and cross-market manipulation.”
In the meantime, the Brexit negotiations are taking place in Brussels. The negotiators from the UK side are struggling to win the preferential treatment over other non-EU bodies once Britain leaves the economic bloc. To be more specific, they claim that an interruption in data sharing agreements could potentially pose significant risks to both sides.
As of the moment, Brexit talks’ result is still unclear. In fact, a transition deal has been agreed upon, but it is not legally binding as of the moment. Due to this fact, the regulator has put aside around $39 million to its EU withdrawal budget.
Mr. Randall has added:
“Our business plan for the next year explains that we will continue to devote a considerable part of our resources to Brexit. I think it is important to say that meeting this funding requirement has required us to take difficult decisions elsewhere.”
One of the FCA’s key roles is to protect UK investors against financial frauds and scams. One of the ways the regulator does this is by publishing numerous warnings on its website regarding unauthorized firms and other fraudulent entities.
BaFin Brexit Warning
Another EU regulatory body, Germany’s Federal Financial Supervisory Authority (BaFin) has stated that financial regulators could adopt some emergency measures in case of the Hard Brexit.
According to some of the online reports, Felix Hufeld has spoken during the banking conference in Frankfurt, where he has stated that it might be the case that the UK leaves the European Union (EU) without an exit deal that clarifies a number of outstanding legal matters. In this case, BaFin could bring some temporary measures in place.
He has been quoted as saying:
“These would be just temporary fixes to avoid chaos.”
It is known that Mr. Hufeld did not get any more specific. However, he reportedly also stated that Germany is now in the process of working on more than 25 banking licenses with the Brexit deadline approaching.
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