UK Secondary Legislation Published to Align Ring-Fencing With Financial Sanctions Legislation

The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) (Amendment) Order 2018 has been made and will come into force on October 31, 2018.

The Amendment Order amends the definition of a "core deposit" (set out in The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014) for the purposes of the U.K. framework for the ring-fencing of retail from wholesale/investment banking. Under the U.K. framework, if a deposit is not a "core deposit," then carrying on the regulated activity of accepting deposits in relation to that non-core deposit can take place in the non-ring-fenced bank.

The effect of the Amendment Order is to exclude from the definition of "core deposit" any deposit where one or more of the account holders is, or at any point within the previous six months has been, subject to financial sanctions. This aligns the requirements between the U.K.'s ring-fencing legislation and the financial sanctions regimes that would otherwise conflict and will ensure that banking groups can maintain accounts held by sanctioned account holders in their existing locations whilst still complying with ring-fencing legislation.

View the Amendment Order (S.I. 2018/897).

View the explanatory memorandum.

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