Irish and Domestic

SEAR and individual accountability: General Scheme published

The Department of Finance announced details on the long-awaited Individual Accountability Framework (the IAF) including the Senior Executive Accountability Regime (SEAR). SEAR will be introduced on a phased basis but will apply, in the first instance, to:

  • credit institutions (excluding credit unions)
  • insurance undertakings (excluding reinsurance undertakings, captive (re)insurance undertakings and Insurance Special Purpose Vehicles)
  • investment firms which underwrite on a firm commitment basis and/or deal on own account and/or are authorised to hold client monies/assets

Third country branches of the above categories of firms will also fall within the first phase of SEAR.

SEAR will be one of the most impactful regulatory changes of recent years, requiring firms to map regulatory responsibilities to a senior individual within the organisation who is accountable for regulatory contraventions that may occur in their remit. In addition to enhancing the regulator's ability to hold individuals to account for regulatory contraventions, the reforms will impose 'conduct standards' on many individuals working in financial services in Ireland, not just senior executives. You can read more here

AIFMs and UCITS ManCos with MiFID II top ups

AIFMs and UCITS ManCos with MiFID II top ups should continue to comply with their current prudential regime pending further engagement with the Central Bank of Ireland (CBI) on the prudential regime applying (in the context of the Investment Firms Directive and Investment Firms Regulation). You can read the CBI's statement here. You can read more about the Investment Firms Directive and Investment Firms Regulation here

CBI review of compliance with the Market Abuse Regulation and arrangements to prevent market abuse

The CBI published a series of findings and expectations from its industry-wide review of compliance with the Market Abuse Regulation (MAR). This review examined how regulated firms, issuers, and advisors who act on behalf of issuers are meeting their obligations to ensure organisational arrangements are effective in mitigating the risk of market abuse and ensuring market transparency. The review observed some good practices but identified a need for significant improvements. You can read more about this topic here.

Beneficial Ownership developments

The European Union (Modifications of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership of Certain Financial Vehicles) (Amendment) Regulations 2021 SI 321 of 2021, effective 1 July 2021:

  • oblige CFVs (i.e. ICAVs and unit trusts) to submit the PPSNs of their beneficial owners to the CBI (so as to validate the data on a beneficial owner on the CBI central register)
  • six month deadline for existing CFVs and new CFVs. Existing ICAVs and Unit Trusts must file PPSNs by 31 December 2021
  • PPSNs will be safely stored by CBI, rather than being hashed (as is done on the CRO's RBO)
  • CBI Beneficial Ownership Register FAQ has not yet been updated to reflect the requirements

The Investment Limited Partnerships (Amendment) Act 2020 (s.64) provided for PPSNs to be used for this purpose by the amendment of Schedule 5 to the Social Welfare Consolidation Act 2005 to include the following:

  • Registrar of Beneficial Ownership of Investment Limited Partnerships
  • Registrar of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts
  • Registrar of Beneficial Ownership of Common Contractual Funds

A CBI levy on ICAVs and unit trusts to fund the CBI's Register of Beneficial Ownership of Certain Financial Vehicles has been set at €118 per CFV for 2020.

The Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021 (S.I. 335 of 2021) came into operation on 8 July 2021. The regulations prescribe levies to fund the expenses of the CBI in the implementation and operation of the Register of Beneficial Ownership of CFV. These regulations impact ICAVs and unit trusts which held authorisation in the financial year 2020.

A standard levy notice dated 21 July 2021 is available on the CBI's Beneficial Ownership Register FAQ.

• the levy amount for the period 2020 is €118 per entity

• levy invoices will be issued by email/post in August 2021

• payment must be made no later than 28 calendar days from date of issue.

ILPs and CCFs are not subject to this 2020 levy as they were not obliged to file on the CBI's central register of beneficial ownership of CFVs in 2020

Revenue host the Central Register of Beneficial Ownership of Trusts (CRBOT) under the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021. Revenue have issued a useful FAQ

  • unit trusts are not in scope – only certain express trusts are in scope
  • trustees must submit details of relevant trusts and their beneficial owners to Revenue, who will manage the CRBOT
  • trustees (or their agents, advisors or employees) can register such details from 26 July 2021 onwards
  • for trusts that were established on or before 23 April 2021, the registration deadline is 23 October 2021, trusts created after 23 April 2021 must file within six months of their creation

You can read more about this topic here.