Some approaching compliance deadlines
- 28 February 2019. Fitness & Probity - management companies, AIFMs, self-managed/internally-managed UCITS/AIFs and other regulated financial service providers (RFSPs), where they have not already done so, will need to obtain their annual certification from persons performing PCFs (e.g. directors) and CFs (e.g. money laundering reporting officer and company secretary) that they are aware of the Fitness and Probity Standards, agree to continue to abide by those Standards and will notify the board if they no longer comply. This forms part of ongoing performance monitoring set out in Section 22 of the Guidance on Fitness and Probity Standards.
- The submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for UCITS Management Companies and for AIF Management Companies is 31 January 2019 or 28 February 2019. The submission due date for the Annual PCF Confirmation Return (for the year ending 31/12/18) for Investment Funds is 28 February 2019. The deadline for each entity will be detailed on the ONR system.
- The Annual PCF Confirmation Return (which is made via the ONR system) involves a mandatory declaration to confirm that the CEO or equivalent, has confirmed in writing that:
- the RFSP has brought the Standards to the attention of all PCFs
- the RFSP is satisfied on reasonable grounds that all PCFs comply with the Standards
- the written agreement of all PCFs to abide by the Standards has been obtained
- all necessary due diligence has occurred
- the RFSP will investigate any fitness and probity concerns, take appropriate action and notify the Central Bank of any action taken without delay.
- 21 March 2019. MMFs- MMFs are required to notify CBI that they have ceased using the reverse distribution mechanism by 21 March 2019.
- 28 March 2019. UK FCA TPR Notifications - The UK FCA has advised that TPR notifications must be made by 28 March 2019.
The above list does not cover tax, FATCA or CRS filings, ad hoc filings (such as regulatory reports) or filings of annual accounts (and related documents which include any annual FDI Return) and semi-annual accounts or other similar returns which deadlines will vary to reflect the particular entity's year end.
Central Bank intentions for the location requirement for directors and designated persons of Irish Fund ManCos in the event of a no deal Brexit The Central Bank of Ireland (Central Bank) issued a Notice of Intention in relation to the location requirement for directors and designated persons of Irish Fund Management Companies. The notice reminds readers that the Central Bank introduced an Effective Supervision Requirement (ESR) for Fund Management Companies as part of a review of the organisation and effectiveness of Irish Fund Management Companies. The requirements are set in the Annex to the Notice. Existing Fund Management Companies were required to be in compliance with the ESR from 1 January 2019. Fund management companies which sought Central Bank authorisation after 1 July 2017 were obliged to be organised in such a way as to comply with the ESR upon authorisation.
The Central Bank notes that, on 30 March 2019, the UK will become a third country. In the event of a no-deal Brexit, the Central Bank will consider whether the UK is a country which meets the ESR. While this is under consideration, the Central Bank does not propose adopting a default position which would treat the UK as not satisfying the ESR. After consideration, the Central Bank will make a determination and will publish a notice on its website. Such determination may be changed, including if circumstances change.
Central Bank clarifies that a QIAIF will be permitted to designate a UK AIFM as its AIFM The Central Bank published the Thirty-First Edition of its Central Bank AIFMD Q&A which includes a new Q&A concerning Irish Qualifying Investor AIFs (QIAIFs) with UK AIFMs. The Q&A clarifies that a QIAIF will be permitted to designate a UK AIFM as its AIFM. QIAIFs migrating to such an arrangement need to assess the impacts arising from the loss of the marketing passport under AIFMD including notification to investors, amendments to documentation, filings with the Central Bank or other supervisory authorities and any other operational issues.
ESMA and EU Securities Regulators (including the Central Bank) agree no-deal Brexit MoUs
On 1 February 2019 ESMA confirmed the agreement of no-deal Brexit MoUs with the FCA. One memorandum of understanding (MoU) is a multilateral MoU between national EU/EEA regulators and the Financial Conduct Authority (FCA) of the United Kingdom (UK). The multilateral MoU will allow arrangements for fund manager delegation of portfolio/investment management to the UK to continue in the event of a no-deal Brexit. These MoUs will only be required and come into force in the event of a no-deal Brexit.
ESMA issued a press release and has a Brexit section on its website. The EU Commission webpage which includes a notice setting out the consequences that the UK withdrawal from the EU will have on Asset management rules is also useful.
The Central Bank issued a Markets Update on 4 February noting the MoUs as part of authorities’ preparations for a no-deal Brexit scenario and noting that the MoUs are similar to those already concluded on the exchange of information with many third country supervisory authorities. This is further discussed in our February Brexit Update.
Guidance on Personal Data Transfers in Event of 'No Deal' Brexit
The DPC published guidance on transfers of personal data from Ireland to the UK in the event of a 'No-Deal' Brexit'. The guidance includes information on the extra measures that can be put in place to legally transfer personal data to the UK in the event the UK becomes a 'third country.'
Central Bank statement on EMIR
The Central Bank issued a statement to address EMIR Refit implementation issues. The Central Bank welcomed the recent ESMA statement on EMIR Refit implementation regarding the clearing and trading obligations for small financial counterparties and the backloading requirement with respect to the reporting obligation. The Central Bank has confirmed that, in accordance with the recommendation from ESMA and pending the entry into force of EMIR Refit, the Central Bank will apply its risk-based supervisory powers in the day-to-day enforcement of applicable legislation (i.e. EMIR’s reporting obligation, clearing obligation and MiFIR’s trading obligation) in a proportionate manner.
These clarifications are most welcome at a time when clients are busy assessing the business and compliance challenges of Brexit which include marketing permissions, delegation, portfolio impact, investor disclosures, contractual changes and GDPR
European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019
The European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 (the Regulations) came into force on 29 January 2019. The Regulations require trustees of certain Irish trusts to establish and maintain registers of beneficial ownership. The Regulations transpose into Irish law the obligations imposed on EU member states by the Fourth Anti-Money Laundering Directive as amended by the Fifth Anti-Money Laundering Directive, in relation to determining the beneficial ownership of certain types of trust. Read more here
Central Bank Speeches
Central Bank Director of Consumer Protection, Gráinne McEvoy, spoke on Culture & Ethics in Financial Services. Ms McEvoy spoke about the role of the Central Bank, its supervisory toolkit and the value of culture, gave examples of effective culture and Central Bank expectations and detailed Central Bank recommendations for accountability.
Central Bank Governor, Philip R. Lane, delivered a speech on The Brexit Discontinuity noting that Brexit constitutes a disruptive event across many dimensions, including the operation of the single market. The Governor focussed on some of the implications of Brexit for the Irish economy and the Irish financial system.
Central Bank Director General, Derville Rowland, spoke on Why culture matters: Insights from the Central Bank of Ireland Review of Behaviour and Culture in the Irish Banking Sector. Ms Rowland noted that:
- The findings and recommendations have application across the financial services sector as a whole.
- The thematic review of UCITS performance fees identified some non-compliance with Central Bank guidance and other poor practice. The central Bank has begun supervisory engagement with firms where instances of supervisory concern were identified.
- Culture should be driven by institutional standards such as fairness, respect, integrity and honesty, which are promoted from the top down, echoed from the bottom up and visible throughout the organisation. Every member of an organisation should be clear on what is expected of them, and the consequences of deviating from such standards.
- Firms should ensure the standards to which they aspire are understood and reflected in every business area, from corporate governance structures to individual accountability; from strategy setting to product development; from risk management to people management; and from internal challenge to how whistleblowers are treated.
- There should be a dedicated focus at board and management level to ensure a truly diverse and inclusive organisation, from the top down, to mitigate risks such as group-think, over-confidence and lack of internal challenge, and to improve the quality of decision-making.
Central Bank Regulatory Service Standards Report H2 2018
The Central Bank published its Regulatory Service Standards Performance Report for the second half of 2018. This report sets out the Central Bank’s performance against standards and deadlines it has committed to for the authorisation of financial service providers and fitness and probity applications.
Central Bank Deputy Governor, Ed Sibley, said: “Since the Brexit referendum the Central Bank has seen an increase in the number of applications for authorisation from all sectors. These include applications for new authorisations and material changes to existing business in Ireland.
“In H2 2018, there was an increase in the number of applications from almost every sector. …Firms who submit applications that demonstrate compliance with the requirements, and fully engage with the authorisation process are now being authorised.”
Central Bank of Ireland