On 23 December 2019, a resolution of 11 September 2018 of the European Parliament (the Parliament) on relationships between the EU and third countries concerning financial services regulation and supervision was published in the Official Journal of the EU.
The key takeaways of this resolution, which has been forwarded to the European Council (the Council) and the European Commission (the Commission), are the following:
- While noting that since the financial crisis the EU has developed its financial regulation and increased regulatory and supervisory cooperation with third countries, thus contributing to enhanced global consistency in financial regulation and resilience to financial shocks, the Parliament is nonetheless concerned that international cooperation is increasingly difficult to achieve owing to diverging national interests and the inherent incentive to shift risks to other jurisdictions.
- The Parliament notes that EU equivalence procedures are not harmonised but stem from several EU legislative acts. It is of the view that a unilateral equivalence decision taken by the EU should be, at least, dependent on satisfactory third-country rules on fighting tax evasion, tax fraud, tax avoidance and money laundering.
The Parliament further stresses that, unlike the EU passport, equivalence decisions do not grant financial institutions established in third countries the right to provide financial services throughout the EU and may in some cases give third-country institutions limited access to the single market for certain products or services. Conversely, the Parliament takes the view that the EU should also encourage other jurisdictions to grant access to their financial markets to EU market participants.
In this context, the Parliament considers that the process for granting, withdrawing or suspending equivalence is not transparent enough and not defined with sufficient granularity and therefore calls on the Commission to define clear and appropriate processes. In particular, it is of the view that the equivalence process in the area of financial services should be subject to appropriate scrutiny by the Parliament and the Council and that decisions in that respect should be taken by means of delegated acts (where necessary facilitated by an early non-objection procedure) and that, afterwards, annual reports (with necessary explanations) should be provided to the Parliament on an annual basis for monitoring purposes. Furthermore, a consistent framework for ongoing supervision of an equivalent third-country regime, involving the European Supervisory Authorities, should be developed.
- Ultimately, the Parliament calls for the active involvement of both the EU and its Member States in global standard-setting for financial regulation.
It will be interesting to follow up on any measures that may be taken in the future at EU level based on such a resolution.
The full text of the resolution is available via the following link.