More than 700 new European laws have been introduced into UK statute since the EU Referendum vote in June 2016, with a further 1,260 expected to be absorbed by the time of UK’s departure in March 2019.
There are approximately 19,000 EU laws in UK statute, to which the new laws will be added, according to a recent report by Thomson Reuters Legal, highlighting the legislative burden on the government.
The process of implementing the new legislation arose after the decision on 29 March by Prime Minister Theresa May to trigger Article 50, signalling Britain’s divorce from the EU.
May has pledged that the European Communities Act 1972 Act, which enshrined UK membership of the EU in UK law, will be repealed once the UK formally leaves the EU.
The Queen’s Speech (19 June), which laid out the statutory framework for the UK for the next two years, states that the Act will be replaced by a Repeal Bill, which will provide for EU-based statutory instruments to continue in UK law where practicable and convert necessary EU statute into UK law.
According to the EU, there are at present nearly 20,000 EU legislative acts in force. Of these, around 5,000 EU regulations are directly applicable in all EU Member States. Directly applicable EU law does not need further domestic transposition to apply in the member states, but applies as soon as it enters into force.
Areas of UK law in which EU laws have been implemented include trade, agriculture, financial services and the environment, as well as employment and immigration, according to the report.
Looking back, a total 52,741 laws have been introduced in the UK as a result of EU legislation since 1990. On average, 60 EU regulations and directives have been added to the statute book monthly since the EU Referendum, according to Thomson Reuters statistics published in March.
If continued at the same rate, it is expected that by the end of March 2019, the anticipated time of Britain’s exit from the EU, a further 1,260 more laws will become applicable to the UK.
The number of laws introduced illustrate the scale of the challenge lying ahead for the UK government.
Some prominent EU laws applying to financial institutions introduced into UK statute this year include the Criminal Finances Act and The Money Laundering Regulations.
The Draft Money Laundering Regulations 2017 were published in March, and the regulations are due to commence today (26 June). These will transfer the EU’s Fourth Money Laundering Directive into UK statute and bring with it significant changes for firms undertaking work in the regulated sector.
The changes include carrying out thorough risk assessments and provide these to the Solicitors Regulation Authority (SRA) on request, better record keeping and monitoring processes, establish and maintain group controls and procedures for data protection and enhanced due diligence. While these are still being finalised and may be subject to change, the Law Society have made representations to HM Treasury recommending amendments.
The Criminal Finances Bill received Royal Assent in April, making provisions for a number of changes to the law governing money laundering including a new corporate offence of failure to prevent the facilitation of tax evasion.
Sherman & Sterling global co-head of financial institutions Barney Reynolds told Legal Business that ‘some of the 700 laws may be tiny and less relevant to the UK so it may be easy to deal with them at the point of Brexit.’
‘Markets in Financial Instruments Directive 2 (MIFID 2) is by far the biggest EU directive. This will be implemented by January 2018, it’s the biggest for financial markets, and already involves a lot of work around it’, Reynolds said.
‘Overall, the process appears to be being dealt with logically, thoughtfully and in a sophisticated way. After Brexit the UK can decide what to do with these laws,’ he added.
Bob Penn, Cleary Gottlieb Steen & Hamilton financial regulatory partner, said however that ‘it is an elaborate process. European legislation comes out in quite a piecemeal fashion.’
‘Someone will have to decide which of the thousands of pages of guidance we have from the EU should continue in effect and which ones will be replaced. It requires firm policy decisions to be made, probably in advance of Brexit,’ Penn added.