Enforcement Actions – Ireland
The Central Bank issued warning notices against three unauthorised investment firms during the second quarter of 2014. These warnings can be very damaging to the reputation of a firm and they have a knockon impact when applying for regulatory licences in other jurisdictions or when applying to be an approved
For further information please see: http://www.centralbank.ie/regulation/unauthorised-firms/pages/listsearch-unath.aspx
There were three enforcement sanctions issued against Irish regulated entities during the second quarter
of 2014 with the Central Bank reprimanding the three firms and imposing total fines of €1,240,000.
For further information please see: http://www.centralbank.ie/publications/Pages/settlementagreements.aspx
The Central Bank's on-going investigation of Custom House Capital Ltd (in liquidation) and persons
concerned with its management is listed for mention in the Examiner's Court on Monday 7 July 2014 and
two full days hearing on 24 and 25 July 2014, following adjournments of the previously scheduled
For further information please see: http://www.centralbank.ie/press-area/pressreleases/Pages/UpdateonCustomHouseCapital.aspx
Enforcement Actions – International
During quarter two the UK FCA issued warning notices against 106 firms for acting without the necessary
regulatory licences. Also in the UK, five entities were fined in the aggregate amount of £49million, three
people were banned from acting in significant influence roles and one person was charged with insider
For further details please see: http://www.fca.org.uk/news/list?ttypes=&yyear=2014&ssearch3
In international news, the US Securities and Exchange Commission ("SEC") issued a monetary sanction
to a firm of c. $108million for breaches of the Foreign Corrupt Practices Act as well as a fine of c.
$20million to a separate firm for misleading investors. The SEC has also charged a further 15 firms and
74 individuals for various regulatory offences (including 30 persons for insider dealing).
Legislative/Regulatory Enforcement Developments – Ireland
Data Protection Annual Report 2013
The Data Protection Commissioner ("DPC") recently published the 2013 Data Protection Report which
notes that the overall number of complaints to the DPC have decreased from 1,349 in 2012 to 910 in
The report also notes that 517 of these complaints were made in relation to data access requests.
Further, the DPC recorded 1,507 data breach notifications in 2013.
For further details please see:
Whistleblowing on Fitness and Probity
What action can a regulated financial service provider ("RFSP") take against an employee who has
disclosed to the Central Bank ("CBI") suspicions that a colleague who performs a controlled function
("relevant person") is in breach of the fitness and probity standards (the "Standards") under the Central
Bank Reform Act, 2010? In other words, can a RFSP sanction a whistleblower employee?
Before legislation was introduced recently to protect whistleblowers, employers could treat whistleblowers
as having breached their employment contract either in terms of the obligation of confidentiality or the
implied duty of loyalty insofar as the employer’s business was damaged or disrupted.
Currently, under Part V of the Central Bank (Supervision and Enforcement) Act, 2013 (the "Act"), a RFSP
cannot penalise any of its employees who make, in good faith, a disclosure to the CBI, if the relevant
employee has reasonable grounds for believing that an offence under any provision of financial services 4
legislation may have been committed. Importantly, however the Act does not apply to disclosures made
The government has introduced new legislation, this 15 July 2014, to allow employees in any area of
industry blow the whistle on perceived wrongdoings without fear of being penalised. The Protected
Disclosures Act, 2014 (the "PDA"), permits disclosures to be made anonymously and without an express
requirement for good faith.
Interestingly, the Act would not apply to disclosures which qualify as protected disclosures under the
PDA, except in the case of the whistleblower being a person appointed to perform a pre-approval
controlled function. This would therefore reduce the ambit of the criminal sanctions set out in the Act
against employers who penalise or threaten penalisation against an employee who makes a protected
disclosure under the Act.
It is strongly recommended that RFSPs, if they have not already done so, introduce a company
whistleblowing policy and, importantly, train employees on the required procedure for raising alarms
about actual or potential wrongdoings by co-workers, including breach of the Standards. A RFSP’s best
interest will be served by controlling the manner in which any one of its employees seeks to raise the
alarm on a perceived breach of the Standards and, importantly, keeping such disclosures in-house so far
As regards legislation, Ireland has to date adopted a sector-by-sector approach to whistleblower
protection. The Act firstly protects employees who make disclosures, in good faith, to the CBI with
reasonable grounds for believing that the disclosure will show one or more of the following:
(a) that an offence under any provision of financial services legislation may have been or may be
(b) that a prescribed contravention may have been or may be being committed;
(c) that any other provision of financial services legislation may have been or may be being
(d) that evidence of any matter which comes within paragraph (a), (b) or (c) has been, is being or is
likely to be deliberately concealed or destroyed.5
Secondly, there is an obligation on individuals performing a pre-approval controlled function to "as soon
as it is practicable" disclose to the CBI information relating to (a), (b), (c) and (d) above which he believes
will be of material assistance to the CBI. Such a disclosure to the CBI would also constitute a protected
disclosure under the Act ("S. 38 (2) protected disclosure").
A disclosure made anonymously will not be a protected disclosure under the Act.
An employee who makes a protected disclosure under the Act is protected in that they cannot be
penalised, for example dismissed from employment, suspended or transferred from duties. An employer
who penalises or threatens penalisation against such an employee, or causes or permits any other
person to penalise or threaten penalisation, commits an offence and is liable "on indictment to a fine not
exceeding €250,000 or imprisonment for a term not exceeding 2 years, or both."
If the penalisation constitutes a dismissal from employment then the employee would be liable to a
maximum compensation award of 2 years' remuneration under the Unfair Dismissals Acts 1977 to 2007,
or to recover damages at common law for wrongful dismissal. Furthermore, an employee is protected
from civil liability regarding a protected disclosure under the Act.
The PDA has been introduced into law this 15 July 2014. Under the PDA, a protected disclosure means
the disclosure by a worker of information that came to his attention in connection with his employment
and which he reasonably believes tends to show, among other things, “that an offence has been, is being
or is likely to be committed.”
While the PDA does not prohibit anonymously made disclosures and does not expressly require good
faith as provided under the Act, the PDA does direct that disclosure be made to either:
(1) his employer or some other person he reasonably believes has legal responsibility for the subject
matter of the disclosure;
(2) a prescribed person (the Minister would have to set out a list by order);
(3) a barrister, solicitor, trade union official or official of an excepted body (per the Trade Union Act,
1941) in the course of obtaining legal advice; or
(4) any third party if the worker reasonably believes the information disclosed is substantially true,
the disclosure is not made for personal gain, it is deemed reasonable for the worker to have 6
made such disclosure and one of the following applies: (i) the worker reasonably believes he will
be penalised if he makes the disclosure under (1) and (2); (ii) if there is no relevant prescribed
person under (2), the worker reasonably believes it is likely the evidence relating to the
wrongdoing will be concealed or destroyed; (iii) the worker has previously made disclosures of
substantially the same information in accordance with (1), (2) or (3); or (iv) the relevant
wrongdoing is of an exceptionally serious nature.
An employee who makes a protected disclosure under the PDA is protected in that they cannot be
penalised, for example dismissed from employment, suspended or transferred from duties, and the PDA
provides for a maximum compensation award of 5 years' remuneration. Furthermore, an employee is
protected from civil liability regarding making a protected disclosure under the PDA.
It is noteworthy that the PDA would amend the Act so that if a disclosure constitutes a protected
disclosure under the PDA, it would not constitute a protected disclosure for the purposes of the Act, save
for a S. 38 (2) protected disclosure. This appears to reduce the ambit of the criminal sanctions set out in
the Act (referred to above) against employers who penalise or threaten penalisation against an employee
who makes a protected disclosure under the Act, unless it is a S. 38 (2) protected disclosure.
It is recommended that RFSPs would be best served by implementing a whistleblowing policy, if they
have not already done so, with the intention of providing a procedure whereby whistleblowing disclosures
would be made in the first instance to the RFSP. The RFSP would then be in a position to carry out its
own investigation and to consider what further steps should be taken, including a possible report to the
CBI. Of course, the RFSP will have to consider at what point in time, if at all, it is obliged to report a
whistleblowing disclosure to the CBI under the Act.
Any such whistleblowing policy should expressly differentiate itself from the employer's grievance policy
so that there can be no confusion as to when a member of staff is purporting to make a whistleblowing
disclosure. This will also assist the employer to better understand the expectations of its staff.
As with all company policies, ideally staff should receive training on the whistleblowing policy and, at the
very least, acknowledge that they have read and understand the policy.
As a final point, many whistleblowing policies include access to a whistleblowing hotline. Companies
which have to comply with the US Sarbanes-Oxley Act will be familiar with the potential difficulties in this
area including consideration of the employer's data protection obligations where the hotline is outsourced 7
to a foreign jurisdiction and pursuing anonymous disclosures where there is insufficient detail and you
cannot ask follow-up questions.
Where more public attention is directed to whistleblowing, it can be expected that it will become an
increasing issue in the workplace generally. Third party bodies have been established in Ireland with the
sole purpose of supporting whistleblowing employees, for example, Transparency International. As
regards RFSPs and the Irish financial industry, there is also an increased focus on whistleblowing and
the CBI has a dedicated webpage on the matter.
For employers, the key concern regarding whistleblowing is containment. That should be secured
through clear procedures allowing good management of any disclosure made. The potential liability for
mismanagement could be large, including possible criminal sanction. More immediately visible to
employees will be the potential large compensation that can be awarded to them if their employer
breaches relevant legislation.
What should employers do?
Employers should put in place a company whistleblowing policy. In practice, it would be of great
assistance if the employer could point to a whistleblowing policy and whether or not it had been
complied with by the whistleblowing employee.
As with all company policies, ideally staff should receive training on the whistleblowing policy and,
at the very least, acknowledge that they have read and understand the policy. In particular,
individuals performing a pre-approval controlled function should be trained on the extent of their
obligation to report to the CBI, the S. 38 (2) protected disclosure.
As the PDA allows for anonymous disclosures, companies should consider any need for a
whistleblowing hotline. This would require consideration of the employer's data protection
Senior management need to be identified and trained on how to deal with whistleblowing events.
The employer would then be in a position to carry out its own investigation and to consider what
further steps should be taken, including assessing any obligation to report to the CBI and even
possibly the Gardaí (under the Criminal Justice Act 2011).8
If you would like further information, please speak with your usual Maples and Calder contact, or the
* Have your say on upcoming featured articles – please email us at [email protected]
+353 1 619 2074
Director, Financial Services, Dublin
+353 1 619 2056
+353 1 619 2025
+353 1 619 2022
+353 1 619 2052
+353 1 619 2716
James Scanlon Tríona Ryan
Associate, Dublin Associate, Dublin
+353 1 619 2061 +353 1 619 27409
Maples and Calder is a leading international corporate and finance law firm. Since establishing in
Ireland in 2006, the Dublin office has grown to over 200 people and has advised on many high
profile and complex transactions in Ireland. The firm's affiliated organisation, MaplesFS, provides
specialised fiduciary, accounting and administration services to corporate, finance and investment
funds entities. The Maples group comprises more than 1000 staff in 12 offices worldwide.
To find out more about the firm visit maplesandcalder.com and maplesfs.com
© Maples and Calder 2014
This update is intended to provide only general information for the clients and professional contacts of Maples and Calder.
It does not purport to be comprehensive or to render legal advice.