Introduction
On the 9th of February 2015, the Central Bank of Ireland (the "Central Bank") published its statement of enforcement priorities for 2015 (the "Statement"). The publication of the Statement by the Central Bank provides an opportunity for regulated entities to assess and raise compliance standards, where necessary, in key risk areas. In addition, the Statement also provides regulated entities with a list of the Central Bank's planned priorities for enforcement activity for 2015.
During 2014, the Central Bank entered into 11 enforcement settlements with regulated financial services providers resulting in the imposition of overall fines in excess of €5 million.
2015 Enforcement Priorities
The Central Bank publishes Enforcement Priorities annually in order to help promote compliance in areas that are of greatest importance to the Central Bank.
The Enforcement Priorities for 2015 are:
All Sectors
- Prudential Requirements
- Systems and Controls
- Provision of timely, complete and accurate information to the Central Bank
- Appropriate governance and oversight of outsourced activities
- Anti- Money Laundering/ Counter Terrorism Financing Compliance
MiFID Firms
- MiFID Conduct of Business Rules
- Client Asset Requirements
Credit Unions
- Governance
Consumer Protection
- Code of Conduct on Mortgage Arrears
- Suitability of Sales
- Fair Treatment of Customers.
Low Impact Firms
In the context of low impact firms the Central Bank has specifically stated that it has allocated resources for enforcement actions against firms with a low impact PRISM rating on the Central Bank's risk assessment framework. The Central Bank will utilise its enforcement powers in order to remind all firms irrespective of their nature, scale or complexity that all regulatory requirements must be complied with and that non-compliance is regarded as a serious issue.
Enforcement Priorities – All Sectors
Prudential Requirements
The Central Bank will continue to focus on adherence to prudential requirements across all sectors focusing particularly on prudential requirements for credit unions and retail intermediaries and large exposure rules for credit institutions and markets.
Systems and Controls
The Central Bank considers the existence and proper functioning of a firm's systems and controls as a fundamental element in ensuring its compliance with its regulatory requirements. Strong systems of control are essential safeguards to ensure compliance with a firm's regulatory requirements as well as preventing harm to consumers.
Provision of timely, complete and accurate information to the Central Bank
In the Statement the Central Bank refers to enforcement cases in 2014 which concerned the provision of incomplete/inaccurate regulatory information by firms to the Central Bank. The Central Bank considers this a very serious issue and accordingly timely and accurate information to the Central Bank will remain a cross sector focus area for 2015.
Appropriate governance and oversight of outsourced activities
In the Statement the Central Bank refers to enforcement cases in 2014 which concerned failures by firms with respect to the outsourcing requirements. The Central Bank reminds firms that outsourcing in order to reduce costs and focus on key areas of a business is no defence to regulatory failings and that the Central Bank expects full compliance with all regulatory requirements and that there should be appropriate oversight and supervision when a firm engages an outsource service provider.
Anti- Money Laundering/ Counter Terrorism Financing Compliance
The Central Bank has stated that it expects compliance by firms that are credit and financial institutions with regards to the regulatory requirements which are in place to counter threats of money laundering and terrorist financing.
Conclusion
The publication of the Statement demonstrates the need for firms to review their business practices and to ensure that all regulated firms can at any time demonstrate the highest standards of compliance. It is also necessary to state that enforcement activity will not be confined solely to the above pre-defined areas set out in the Statement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
