The Markets Supervision Directorate of the Central Bank published its programme of themed-inspections for 2016. These inspections reflect a number of supervisory priorities for 2016 and anticipate areas of emerging risk. This programme builds on the successful supervisory work undertaken in 2015 in the areas of Cyber Security, Operational Risk and Investment Fund pricing. The planned themed-inspections, which supplement day-to-day supervisory activities, for 2016 are:
- Outsourcing Arrangements - Inspection of service level agreements and operational arrangements with outsourcing providers for Investment Firms, Fund Managers and Fund Service Providers.
- AIFM Programme of Activities - Review of AIFMs adherence to their programme of activity.
- Risk Function - Focus on the risk culture within firms including governance arrangements, risk ownership and responsibility.
- Investment Funds - Analysis of the production costs of investment funds.
- Financial Indices – Review of the use of financial indices as eligible investments for UCITS investment funds.
- Director Time Commitments - Continued focus on various issues with director time commitments.
Client Assets - Focused review of Client Asset Management Plans for Investment Firms.
- Information Technology Risk - Focus on resilience of firms’ IT systems.
Suitability – Review of the suitability assessment of clients.
- Conduct - Examination of the information provided to clients on an on-going basis.
Hedging Arrangements - Review of hedging arrangements at share class level for investment funds.
- Market Integrity - Review of the practices of firms when dealing with insider information and their compliance with Market Abuse Regulations (Reg (EU) No 596/2014).
Director of Markets Supervision, Gareth Murphy said: “Consistent with the Central Bank’s mandate of investor protection, market integrity and financial stability, we are embarking upon a large number of themed-inspections for 2016. Some of these inspections are a continuation of our work in 2015 where follow-up is warranted. An underlying theme for many of these areas is the need to strengthen firms' culture of regulatory compliance. The Central Bank is increasing its inspection activities for entities deemed to be low impact under PRISM and is further developing data analytics to sharpen the focus of supervisory resources. Following these inspections, the Central Bank will communicate its assessment of the issues which have emerged and will use the full range of its powers to ensure that remedial actions are taken where there are unacceptable breaches or where the regulatory risks are unacceptable.”
CRS and FATCA
As detailed in our Front Page article of 13 November, the Common Reporting Standard (CRS) impacts Irish funds from 1 January 2016. Questions have arisen from industry in relation to the application of the requirement for investor self-certification at account opening under the CRS, which is due to take effect from 1 January 2016, and also under the existing FATCA reporting framework as already implemented in Ireland under the Intergovernmental Agreement with the US. The Irish Funds FATCA/CRS Working Group has been engaging on behalf of industry with Irish Revenue on these questions and the clarifications being sought in the context of FAQs issued by the US Internal Revenue Service in respect of FATCA and by the OECD in respect of CRS. The FATCA/CRS Working Group has prepared an Information Note on self-certification at account opening. Furthermore, due to industry demand for a CRS only version of the self-certification forms previously issued, Irish Funds have circulated a CRS only self-certification form for individuals and a CRS only self-certification form for entities. These forms can be used as a CRS only declaration where account holders wish to use Forms W-8/W-9 for FATCA self-certification purposes.