On 9 February 2015, the Central Bank published its annual statement of enforcement priorities. This was followed by the announcement on 26 February 2015 of the Central Bank’s programme of themed inspections for this year.
The programme of themed inspections highlights the areas, identified by the Central Bank, where regulated entities may need to raise compliance standards. These publications, therefore, present an opportunity to regulated entities to review these areas within their own practices with a view to ensuring compliance with the Central Bank’s requirements.
Of note is the statement by the Central Bank that it has specifically allocated resources for enforcement actions in respect of compliance by “low impact firms” irrespective of their nature, scale or complexity. Low impact firms are regulated entities that are considered by the Central Bank to have a low potential adverse impact on the financial stability and the consumer. Investment fund companies and fund management companies typically fall within this category.
Of particular interest to the Funds industry is the inclusion of the following within the lists of targets for enforcement and inspections:
- Provision of complete and accurate information to the Central Bank in a timely manner
- Compliance with anti-money laundering / counter terrorism financing requirements
- Compliance with fitness and probity requirements
The Central Bank identified the following themes for inspections:
- Review of firms regulatory reporting
- Examination of processes for treatment of pricing errors in the calculation of a fund’s net asset value and compensation
- Review of depositary oversight of funds including the depositary’s annual report to investors
- Examination of the ongoing application of risk-management processes employed by UCITS
The enforcement priorities and programme of themed inspections highlight the importance of enforcement within the Central Bank’s risk-based regulatory framework and are in line with the Central Bank’s objective of ensuring the proper and effective regulation of financial service providers and the markets within which they operate.