In February, the Central Bank published its annual statements of enforcement priorities and programme of themed inspections for 2015.
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.
The Central Bank identified the following enforcement priority areas applicable to all regulated entities:
- Compliance with prudential requirements, e.g. capital adequacy
- Proper functioning of a firm’s systems and controls
- Provision of complete and accurate information to the Central Bank in a timely manner
- Appropriate governance and oversight of outsourced activities
- Compliance with anti-money laundering / counter terrorism financing requirements
- Compliance with fitness and probity requirements
The Central Bank also identified the following sector-specific enforcement priority areas:
- MiFID conduct of business rules and client asset requirements
- Governance of credit unions
- Consumer protection, including code of conduct on mortgage arrears, suitability of sales and fair treatment of customers
- Compliance of “low impact firms” (see above)
The Central Bank identified the following themes for inspections:
- Operational and cyber security controls and procedures
- Integrity of regulatory returns
- Processes in respect of pricing errors in the calculation of a fund’s net asset value and compensation
- Oversight of funds by a fund’s depositary including the depositary’s annual report to investors
- Governance and controls of proprietary trading by MiFID firms
- Review of MiFID conduct of business requirements
- Filing of suspicious transaction reports
- Notification of relevant trading activity by persons discharging managerial responsibilities in listed firms
- Examination of the ongoing application of risk-management processes employed by UCITS
Contributed by Sergey Dolomanov.