12 Feb 2021
Michel Barnier has accused British financial services firms of using letterbox companies to gain access to the EU’s Single Market.
The EU’s chief Brexit negotiator said that some firms were looking to circumvent post-Brexit rules by setting up shell companies to satisfy EU headquartering requirements.
“As far as financial services are concerned, we know there are attempts to circumvent the new rules through what we call letterbox structures,” Mr Barnier said.
“Needless to say national authorities of the EU in each and every country and the EU authorities themselves will be very, very vigilant. In the next few weeks and months, I recommend everyone to be careful.”
Some European regulators have been probing whether such letterbox companies are fully operational and staffed. Some supervisors expect banks to move staff if almost all their EU business is still conducted in London.
British firms lost their EU “passport” to the Single Market on January 1 when the Brexit transition period ended.
UK financial services firms’ access to the EU market is governed by equivalence, which is a system of regulatory approval.
Bank of England Governor Andrew Bailey said the EU’s approach to equivalence was aimed at forcing the City to be a “rule-taker” on Wednesday.
Mr Barnier said that Brussels would not grant access to firms in 28 financial sectors until the British government gave details of any plans it had to diverge from EU rules.
“In this process, the main concern of the commission is to defend the union interest once again, and financial sovereignty, the integrity of our financial markets and financial stability,” he said at the European Business Summit in Brussels.
MEPs in the European Parliament’s Economic and Monetary Affairs Committee yesterday called on the commission to withhold equivalence unti it has scrutinised all UK money laundering and tax legislation.
By James Crisp, The Telegraph, 11 February 2021
Read more at The Telegraph
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