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Administrative Sanctions - Central Bank's Powers

On 9 September 2011, the Central Bank reached a settlement with Goldman Sachs Bank (Europe) plc under its administrative sanctions procedure. Under the settlement, Goldman was fined €160,000 for failing to monitor and report accurately, its regulatory counterparty risk capital requirement. This brings to seven the total number of settlements reached by the Central Bank this year, and to 41 the total number of settlements reached since 2006. To date nine people concerned in the management of a regulated entity have been disqualified for periods of between one to five years and fines of up to €11 million have been imposed.

The Central Bank and Financial Services Authority of Ireland Act 2004 gives the Central Bank the power to conduct an examination into a regulated entity, and persons concerned in the management of such entities, where it believes a prescribed contravention has occurred. Broadly speaking, a prescribed contravention is a breach of legislation or other regulatory requirement. At any time up to the conclusion of a formal inquiry, the Central Bank may enter into a binding settlement agreement with a regulated entity, and/or a person concerned in its management. A condition of settlement is that a statement will be published on the Central Bank website, detailing the name of the entity or person with whom the settlement has been agreed, the sanctions imposed and any other terms. 

In certain circumstances a breach of a regulatory requirement by a regulated entity will constitute both a prescribed contravention and a criminal offence in respect of which the Central Bank may institute criminal proceedings. It is Central Bank policy to pursue prescribed contraventions pursuant to the administrative sanctions procedure in preference to bringing a criminal prosecution. This policy is currently being scrutinised to ensure that criminal prosecutions are pursued in all appropriate cases.

With a view to further enhancing its enforcement powers, the Central Bank is reported to be seeking powers to deal with claims of legal professional privilege and to improve its ability to gather information and prosecute civil or criminal proceedings. In a speech given in April this year, Central Bank Director of Enforcement, Peter Oakes, stated that the Central Bank intends to use either supervisory methods or stronger enforcement to address concerns about senior management and their regulated entities. The Central Bank has been very clear that it is focusing significant resources and attention on the area of enforcement and that it intends to use all of its powers to pursue its enforcement strategy.

Contributed by John Larkin, Lisa Carty.

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