On 25 February 2014, the Central Bank published its ‘Programme of Themed Reviews and Inspections’ and ‘Enforcement Priorities’ for 2014.
Of particular interest to the Funds Industry is the inclusion of the following within the list of targets for reviews and inspections:
- Corporate governance of Investment Funds and Fund managers
- Outsourcing activities by Fund Administrators
- Anti-Money Laundering, Countering the Financing of Terrorism and Financial Sanctions (AML/CTF)
Whereas AML/CFT has long been the focus of inspections and enforcement by the Central Bank, fund and fund manager boards should take note in particular of the planned review of the corporate governance arrangements put in place by funds and managers. It should be noted that the Central Bank has, for some months, been conducting a sample survey of fund boards and fund managers as to their compliance or otherwise with the IFIA Corporate Governance Code. It appears that this will now be followed by inspections. Firms should note the Central Bank’s comment in the press release announcing the programme “The publication of planned themed inspections enables firms in the relevant sectors to self-assess and raise compliance standards, where necessary, in these key risk areas.”
In the context of Enforcement Priorities, compliance with the Central Bank’s Fitness and Probity Regime is included as is also AML/CTF compliance.
The Central Bank’s press release has indicated that resources have been “specifically allocated to enforcement actions for firms with a low impact PRISM rating.Smaller firms will have lesser engagement with the Central Bank. For that reason, where breaches by small firms are discovered, we will use enforcement as a reminder that the regulatory rule book is mandatory, and non-compliance is regarded as serious.”
The Enforcement Priorities and Programme of Themed Reviews and 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.