Passaportointi

Passaportointi, in the context of European Union financial regulation, refers to the mechanism by which a financial services firm authorized in one EU/EEA member state can provide services or establish operations in other member states without obtaining separate authorization there. It is a fundamental part of the EU’s single market for financial services and applies to sectors such as banking, investment services, insurance, asset management, and payment services.

There are two main forms: freedom to provide services (cross-border service passporting) and freedom of establishment (opening a branch or subsidiary). A firm authorized in its home member state can notify the host country’s authorities and, subject to conditions and ongoing supervision, operate across borders without full local licensing. The host authorities maintain supervision to ensure compliance with local rules, conduct, and consumer protection, and the firm must still meet relevant capital, reporting, and conduct requirements in the host state.

The regulatory basis for passporting comes from EU directives that govern specific sectors, such as MiFID II for investment services, UCITS for collective investment schemes, CRD IV for banks, Solvency II for insurance, and the PSD2 for payment services. The system is administered and supervised through the home-country regulator, with the host regulators coordinating to monitor activities.

Brexit changed the landscape for UK firms, which largely lost EU passporting rights after 2020 and now operate in the EU under alternative arrangements or require local establishment or licensing, depending on the service and country.

In practice, passporting aims to reduce barriers to cross-border financial trade while maintaining regulatory oversight and consumer protection.