CBI 2026 Regulatory And Supervisory Outlook: What Irish Fund Managers Need To Know

Introduction

The Central Bank of Ireland (“CBI”) has published its Regulatory & Supervisory Outlook Report 2026 (the “Report”), setting out its strategic priorities and planned supervisory activities for the year ahead.

This note summarises the key issues arising from the Report that are of particular relevance to fund management companies and other firms operating in the Irish investment funds sector.

Overarching Supervisory Priorities for 2026

The CBI has identified five overarching priorities for 2026 that will shape its supervisory engagement with regulated firms, including those in the funds sector:

1. Maintaining and building resilience to geopolitical risks and macro-financial uncertainties, including work on operational resilience, cyber security and financial resilience in the face of a volatile macro-environment.
2. Securing consumer and investor interests, with a particular focus on how firms operate, digitalisation and financial crime.
3. Responding to technology-driven transformations, including the expanding use of artificial intelligence (“AI”), digital money and tokenisation and the implications of these changes for firms and the financial system.
4. Helping to address environmental and societal transitions underway, including sustainable finance and protection gaps.
5. Enhancing how the CBI regulates and supervises, including evolving supervisory approaches, improvements to gatekeeping and delivering on simplification.

Key Supervisory Focus Areas for the Funds Sector

The CBI's supervisory focus for the funds sector in 2026 is organised around seven key areas:

1. Governance and Risk Management –  Deficiencies in governance and risk management practices remain a central concern for the CBI. The Report notes that a key governance risk arises when local boards or executive committees have insufficient substance or inadequate decision-making and management capacity.

   Key planned activities include:

   • Continuation of the sectoral assessment of delegation in fund management companies, with the first industry communication expected in H1 2026.
   • A conclusion of the review of outsourcing by fund administrators and depositaries.
   • A review of governance and board effectiveness in fund administrators and depositaries.
   • A review of compliance functions across fund administrators and depositaries.
2. Operational, Cyber Resilience and AML/CFT –  Operational resilience and cyber risk management remain areas of heightened supervisory focus. Firms must ensure robust due diligence, governance and ongoing oversight to manage concentration, dependency and conduct risks arising from delegation and outsourcing arrangements. Anti-Money Laundering/Countering the Financing of Terrorism (“AML/CFT”) also continues to be a key area of focus for the CBI in 2026.

   Planned supervisory activities include:

   • Continued focus on how firms are implementing and monitoring the Digital Operational Resilience Act requirements, with a survey to be issued in H1 2026.
   • Engagement on the execution by impacted depositaries of their Capital Requirements Directive (CRD6) compliance plans.
   • A thematic review of AML transaction monitoring and suspicious transaction report reporting in the funds sector.
3. Asset Valuation and Market Risks –  The CBI has expressed ongoing concerns about the transparency and reliability of valuations, particularly in private assets. It has also noted that funds that invest in less liquid assets or complex assets are more susceptible to valuation risk due to their reliance on potentially outdated prices, statistical models and expert judgement. The increase in private asset strategies heightens the need for effective, consistent and well-evidenced valuation practices.

   Planned supervisory activities include:

   • A thematic review focusing on hard-to-value assets, reviewing policies, models and controls for level 3 assets and the oversight role of the depositary.
   • Review into industry approaches for monitoring investment restrictions and reporting regulatory breaches.
   • Value at Risk (“VaR”) model review with a focus on UCITS that opt to use the VaR approach and the effectiveness of oversight by depositaries.
4. Liquidity and Leverage Risks –  The CBI expects firms to maintain robust, documented leverage and liquidity risk management frameworks proportionate to their risk profile. Funds with higher leverage or structural liquidity mismatches should be able to demonstrate enhanced controls, clear escalation pathways and operational readiness to deploy liquidity management tools when warranted.

   Planned supervisory activities include:

   • Review of liquidity risk management in bond funds to assess how firms manage the mismatch between investor redemptions and asset liquidity.
   • Review of the progress of relevant AIFMs on leverage reduction and maintenance plans across property funds.
5. Product Costs and Disclosures – The CBI has noted a continued increase in engagement by funds in relation to proposals for investment in complex and innovative investment strategies and alternative assets, including crypto-assets, private debt and novel ETF constructions. The CBI expects funds to adequately consider the risks connected to these new strategies and products and their suitability for their target market. The CBI has also noted that costs and fees charged to investors must be clearly justified and transparent. The CBI plans to focus closely on fund disclosures and cost transparency as part of its gatekeeping role.
6. Data and Artificial Intelligence – The CBI observes in the Report that the risk remains that poor data quality, accuracy and reliability can undermine effective governance and decision-making within firms and the CBI's ability to supervise. It also highlights the risks that can come with the wider deployment of AI across the sector. Where firms are utilising third-party AI service providers, the CBI expects that they will have appropriate governance and controls frameworks in place to mitigate against the relevant risks. The Report notes that engagement will continue to understand firms' approach to and usage of AI in their business models.
7. Climate and ESG-Related Risks –  The CBI continues to focus on driving high standards for environmental, social and governance (“ESG”) funds, addressing greenwashing risk and assessing climate risk as the regulatory landscape and investor demand for ESG products advances.

   Key planned activities include:

   • Sustainability work to assess firms' compliance with Sustainable Finance Disclosure Regulation.
   • Monitoring compliance with the Fund Naming Guidelines.

Conclusion

The Report signals a continued regulatory and supervisory focus on the fundamentals of sound governance, effective risk management and operational resilience. For investment funds firms, the key areas of focus remain governance and delegation, operational and cyber resilience, AML/CFT, asset valuation, liquidity and leverage management and ESG compliance. Firms should proactively review their frameworks in these areas in anticipation of the CBI's planned thematic reviews and supervisory engagements throughout 2026.

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.