On 1 January 2021, the United Kingdom, including Gibraltar, hereafter the UK, went from being a European Union (EU) member to a non-EEA country (a so-called third country). The UK’s withdrawal from the EU means that the right of financial institutions to conduct cross-border operations in or from the UK that are founded on EU law ceased to exist as of this date. No special agreements were made or transitional provisions decided that would allow such operations to continue with regard to the UK pursuant to EU law. Financial institutions that would like to conduct cross-border operations in and from the UK must therefore now fulfil the requirements that apply to financial institution that would like to conduct cross-border operations in and from non-EEA countries.
In that regard the Financial and Capital Market Commission, hereafter FCMC, clarifies an interim way of operations for UK based financial institutions until they have obtained/concluded respective authorisation in an EU Member State.
The residents of the Republic of Latvia (corporate clients and consumers) who have entered into service contracts with UK authorised financial institution before 31.12.2020 may remain as customers after 31.12.2020, provided these customers are clearly aware and have expressly agreed that the laws of the UK govern their contract and the contract’s operational territory is the UK.
In addition, if the customers from Latvia express their willingness to receive services in the UK from an authorised financial institution, and the latter has not addressed these customers in any way such customers may receive services from those financial institutions, when entering into contracts in the UK. Please see additional information on EBA website: https://www.eba.europa.eu/eba-reminds-financial-institutions-need-readiness-view-brexit-transition-period-ending-31-december.
The financial institutions authorised outside EU cannot address customers from Latvia in any way that might be construed as targeting of Latvia’s residents. In particular, such activities as institution’s homepage in Latvian, target ads on Facebook, other social/online media, or use of local intermediaries, are strictly forbidden.
The FCMC points out that only after obtaining a respective licence in Latvia or in another EU Member State and notifying of the provision of cross-border services in the Republic of Latvia the activities of such financial institution will comply with the EU regulations of financial services; otherwise, its activities in the Republic of Latvia will be considered as unauthorised operation.
The FCMC takes similar approach to the financial institutions that are authorised in other non-EU Member States. Please, see respective financial sector regulation and information on how to obtain necessary authorisation in Latvia here: https://www.fktk.lv/en/licencesana/.