At a well attended recent ACOI event Seána Cunningham, Director of Enforcement and Anti Money Laundering at the Central Bank of Ireland, set out current priorities in the two areas within her remit. Although such presentations do not represent official guidance by senior Central Bank officials, they always provide useful insight into the regulator’s current thinking and areas of focus. The main takeaways I took from the presentation and the Q&A session that followed it were:
AML/CFT:
- The Central Bank’s focus has moved on from ensuring that regulated firms understand and meet their basic obligations. They are now interested in assessing the depth, quality and sophistication of controls that firms have in place to ensure that they do not inadvertently facilitate money laundering or terrorist financing.
- Although the Fourth EU AML Directive has not yet been implemented in Ireland its provisions are well known and I took away from remarks made in the Q&A session that there is an expectation on the part of the regulator that firms should be taking steps now to comply with requirements of the Directive, rather than waiting until the legislation is enacted later this year. In her presentation the Director of Enforcement and Anti-Moneylaundering said that “I would emphasise, in particular, the importance of firms bringing their risk assessment and policies and procedures in line with the Fourth EU AML Directive”
- The presentation touched on a very common theme with the Central Bank, namely that “Outsourcing is not a defence for regulatory failings.” In this instance the context was the use of FinTech solutions to assist with AML/CFT obligations
Enforcement:
The main point that resonated with me from this part of the presentation was the increasing emphasis of the Central Bank on holding individuals accountable for regulatory failings, currently by using its enforcement powers against individuals holding Pre-Approved Control Functions (“PCF”) or Control Functions within regulated financial services providers. While the Central Bank has never publicly refused a PCF application, an increasing number of PCF applications are being withdrawn following discussions with the regulator.
The Central Bank is also committed to the introduction of a Senior Executive Accountability Regime in Ireland and made a proposal in this regard to the Law Reform Commission earlier this year. During the Q&A session the Director of Enforcement and Anti Money Laundering noted that the Central Bank is working with the Department of Justice in this regard and will consult with industry before introducing the regime.