Mutual Recognition

Mutual Recognition is a core principle in international regulatory compliance where one jurisdiction agrees to accept the regulatory and supervisory outcomes of another jurisdiction as equivalent to its own, thereby facilitating cross-border trade and service provision without requiring full re-authorization. This mechanism is crucial in financial services, allowing firms to operate across borders, such as within the European Economic Area (EEA) via "passporting," provided they adhere to the home country's regulatory framework, which is deemed sufficient by the host country.