Our Perspectives

    View Authors February 2019

    The Our Perspectives Newsletter provides insights on legal, regulatory, economic and public policy issues affecting the global financial services industry. This edition summarizes some of the most recent developments that might be of interest.

    Family Office Insights – Digitalisation of Tax: Effect on Family Offices
    By Jeremy Cape
    New technology has changed and will continue to change the way businesses, including family offices, structure and conduct their operations. The speed, breadth and depth of change facilitated by digitalization has been described – rightly, given the sheer breadth and depth of transformation – as the Fourth Industrial Revolution. Individual countries are coming up with their own responses to the tax challenges presented by digitalization and changes are set to impact both revenue raising (e.g., introducing new taxes for digitalized businesses) and tax procedures (e.g., reformulating the way authorities are able to assess and collect taxes through digitalization).

    KNF-Polish Financial Supervision Authority Announces No Transition Period for UK Entities in the Case of a No-deal Brexit
    By Peter SwiecickiMalgorzata Olech and Pawel Hoc

    In the announcement of January 29, 2019, KNF-Polish Financial Supervision Authority confirmed that, in the case of a no-deal Brexit, UK entities operating on the Polish financial market will be treated as third-country entities. In the wake of the recent British Parliament vote rejecting the UK’s EU withdrawal agreement, the eventuality of a no-deal Brexit has become more likely than merely a month ago. This has been corroborated by the reactions of certain European politicians who – in response to the January 29, 2019, House of Commons vote indicating support for the Brexit deal would hinge upon amending certain provisions – now rule out the likelihood of any deal renegotiation. Therefore, EU member states have been increasingly interested in weighing up the legal and business ramifications of a possible Brexit with no contractual provisions whatsoever.

    Artificial Intelligence Services for Financial Institutions: Regulatory and Contractual Concerns
    By Huu Nguyen

    Artificial intelligence (AI) is being used in fintech at an increasing rate and is poised to have a major impact in the industry. AI applies and refines, or “trains,” a series of algorithms on a large data set in order to identify patterns and make predictions for new data. The US Department of the Treasury, in its recent report, states: “PricewaterhouseCoopers estimated that by 2030, AI technologies could increase North American gross domestic product (GDP) by US$3.7 trillion and global GDP in US$15.7 trillion. Within the financial services sector, large banks report that AI could help cut costs and boost returns.” This article addresses certain regulatory concerns about AI currently expressed by financial regulators.

    2018 Farm Bill Legalizes Hemp: What’s Next?
    By Tom Reems and Austin Harrison

    In 2018, Congress passed H.R. 2, most commonly referred to as the “Farm Bill,” to reauthorize federal farm, nutrition assistance, rural development and other agricultural programs through fiscal year 2023. One notable aspect of the legislation, section 12619, removes hemp as a Schedule 1 drug under the Controlled Substances Act, subsequently legalizing its growth. This alert explores what hemp’s legalization means for US investors, consumers and manufacturers.

    By Bill Longbrake, guest author and Executive-in-Residence at the University of Maryland Robert H. Smith School of Business

    Longbrake Letter – 2019 Outlook – February Assessment
    As was the case in 2018, above potential economic growth continues to be a global theme. However, reflecting growth deceleration in the second half of 2018, over the course of 2019, global growth is expected to slow gradually and converge to its long-run potential level by the end of the year. What economists refer to as “tail risk,” which is large deviations from generally anticipated outcomes, is unusually high as 2019 commences. While the consensus does not expect recession to commence during 2019, “tail risk” is significant and the probability of recession occurring in the US, and some other countries, is rising.