Does this mean that DAC6 will no longer apply in the UK?
The short answer is no.
The long answer is that the Fair Trade Agreement emphasises that the UK “shall not weaken or reduce the level of protection provided for in its legislation at the end of the transition period below the level provided for by the standards and rules which have been agreed in the OECD at the end of the transition period”. This is a reference to the OECD’s model Mandatory Disclosure Rules (MDR) and includes some elements of DAC6.
How the Brexit deal impacts legal and financial services and data protection
At the last minute, the UK and EU agreed to a Trade and Cooperation Agreement (TCA) governing the new relationship between Great Britain and the EU bloc, Great Britain being the correct term since Northern Ireland remains inside the customs union.
In general, the TCA establishes a trading relationship without tariffs and quotas. But non-tariff barriers such as customs checks, paperwork and regulatory processes will become the norm as they did not exist inside the single market. The services sector, in particular professional services, will be quite significantly affected by the new deal.
What does the Brexit deal mean for legal and professional services?
The TCA does not allow for the mutual recognition of professional qualifications. This means accountants, lawyers and others with recognised professional qualifications may need to seek recognition with the appropriate UK, EU or member state-level body.
On 31 January 2020, the UK’s membership in the EU ended, and Britain entered a transitional period that will last until 31 December 2020. To prepare for the change, there was a flurry of Brexit-related legislation passed. One central piece of legislation with a wide-ranging impact that changed is GDPR, which has been replaced in UK law with the Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019. The impact of Brexit on each business will depend on its type and the locations in which they collect and process data, but there is sure to be some level of impact for everyone.
A number of our courses required minor amendments following the UK’s departure from the EU on 31 January 2020. Mainly, these changes affected our suite of data protection training, which now includes an opening paragraph making it clear that mentions of GDPR in the course refer to both the EU GDPR rules as well as UK GDPR rules, unless otherwise stated.
From Friday 31 January 2020, European rules and regulations stopped having effect in the UK by virtue of the fact that the UK’s membership in the EU will end. Britain has now entered a transitional period which will last until 31 December 2020.
To prepare for this change, the government passed a flurry of Brexit-related legislation in recent years. The one relating to data protection is the Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019.
How much of an impact will Brexit have on business?
While there is sure to be some level of impact for everyone, the impact of Brexit on each business will depend on the type of business and, most importantly, in which jurisdiction they collect and process data. Due to the Brexit transition period, the impact is unlikely to be immediate.
To help businesses keep track of updates in UK legislation and policies, VinciWorks regularly publishes a short regulatory update. Since our last update in July, the Prime Minister was unable to fulfill his pledge to take the UK out of the EU by the end of October 2019. As a result, a general election was called for 12 December 2019.
This regulatory agenda is designed to provide an overview of regulatory changes or new regulations recently passed, proposed, or on the agenda which are relevant to key compliance areas of VinciWorks’ clients in the UK. In this election special, the regulatory agenda will focus on the compliance-related manifesto commitments of the main parties.
Parliament was dissolved on 6 November 2019, so there is currently no legislation in progress. However, government consultations remain in progress, as do EU level developments.
This special edition of the Regulatory agenda will cover the following:
Manifesto commitments from key parties
Current open consultations
You can download this special edition of the regulatory agenda here.
In a recent article published by QBE insurance group on the risks that law firms should look out for in 2019, our Director for Legal Services Pip Johnson shared her insights together with other compliance experts.
Pip flagged the Fifth Money Laundering Directive, which must be implemented into national regulations by this time next year. While the Fifth Directive is not as extensive as the Fourth Directive that came into force in 2017, there are still some changes to take on by the beginning of 2020. These changes include the regulation of cryptocurrencies such as Bitcoin, with some firms already having been asked to accept cryptocurrency payments. The Fifth Directive will also see enhanced due diligence requirements. Of course, Pip also discussed the effect Brexit could have on UK lawyers, with the UK due to implement its own Sanctions regime.
Other key takeaways from the interview:
EU Council Directive 2018/822, (DAC 6), that came into force last June requiring intermediaries involved in cross border tax transactions to retain details of potentially tax advantageous matters
An expected increase of comlaints to the Information Commissioner’s Office (ICO) for GDPR breaches
The upcoming reformed SRA Handbook and the new Accounts Rules
How Brexit could effect the UK’s laws and regulations and how they apply to UK law firms
The result of the 2017 general election has resulted in a hung parliament
What business needs to prepare for in a hung parliament
As the clock struck ten on election night, it was all over. Theresa May’s gamble had failed to pay out. The majority was lost. An unexpected swing to Labour across key and unexpected constituencies took place, offset by a strong swing against the SNP. A surge in young voters turning out and a complete collapse of the UKIP vote meant that the 42% won by the Conservatives and the 40% won by Labour no longer resulted in a landslide, but a hung parliament.
Before the election, VinciWorks published an outline of what to expect after the election from a Conservative or Labour government. Neither of those results has come to pass, so here’s what business could expect, and should prepare for, in this new reality.
A hard Brexit won’t happen
There simply isn’t a majority in Parliament for the hard Brexit that Mrs May was proposing. Cutting off British access to the customs union and single market as the Conservative party wanted looks likely to be set adrift. The Tory’s partners in Parliament, the Northern Irish Democratic Unionist Party, while themselves cheerleaders of Brexit, want a softer version and a frictionless border with the Republic of Ireland, and thus the EU. Continue reading →
What business needs to prepare for no matter who walks into Number 10
Theresa May called a general election expecting, we all assume, that she would have an easy ride back into 10 Downing Street. While she still enjoys a commanding lead over the Labour party, this has narrowed in recent weeks. The Tories are still odds-on favourite to win, although elections can often throw up surprises.
Now the manifestos of all the major parties have been published, we can glean some idea of what will be changing in the compliance landscape no matter who the Prime Minister will be after the election. Of course, should the election result in a hung parliament, manifesto pledges can be traded and bartered away, and promises made before an election can often be forgotten in the glow of victory.
Nevertheless, it’s always a good idea to consider the potential risks of an election outcome, and start to prepare accordingly. Continue reading →
Regardless of what the UK does with GDPR after Brexit, the biggest threat to data protection is from an exit from the EU without any deal. This is the so-called hard Brexit and fallback to World Trade Organisation rules until a further agreement is reached, or not. It’s the kind of Brexit Theresa May and many inside the Conservative party and Leave camp have called for. As we have seen, the crucial component for the UK after Brexit is to be judged as offering an adequate level of protection by the European Commission.
A hard Brexit with no deal means no assessment of adequacy. Furthermore, the UK cannot apply to the European Commission for an assessment of adequacy, that determination can only be given by the Commission itself. If the negotiations turned sour and both parties decided to walk away with no deal, perhaps due to the estimated €60bn leaving bill, there might not be much goodwill left to speed up a UK adequacy determination for GDPR. Continue reading →
In the immediate wake of Brexit, there was considerable confusion surrounding the details and ramifications of the UK leaving the European Union. That confusion is unlikely to dissipate any time soon. Regulatory uncertainty will be a reality until the ink has dried on a separation agreement.
Money laundering laws under Brexit are particularly flummoxing. The EU’s Fourth Anti-Money Laundering Directive came into force in June 2015. It requires European member states to update their respective money laundering laws and “transpose” the new requirements into local law by 26 June 2017.
This timetable for transposition, aligning UK and EU law, clashes head on with the timetable for Brexit. Continue reading →