Most ASP lapses admitted prior to formal inquiry

At the Law Society this morning (5 July), Central Bank director of enforcement and anti-money-laundering Seána Cunningham said that penalty discounts of up to 30% would be available for settlements under the beefed-up Individual Accountability Framework.

Cunningham said that, since the enactment of the Central Bank (Individual Accountability Framework) Act, 2023 (IAF Act), the Central Bank had been advancing its implementation.

This morning’s Law Society event was part of a consultation process, she added.

Revised guidance

Revised regulations and guidance on enhancements to fitness-and-probity investigations, suspensions, and prohibitions, have already been published as part of the new Central Bank Administrative Sanctions Procedure (ASP).

The changes have also introduced court oversight, as well as new procedures and additional safeguards, which Cunningham said would enhance the “efficient and effective” operation of ASP.

Good financial regulation ensured that the financial system operated well, which was vital to the stability of the economy and the protection of consumers and businesses in the public interest, Cunningham stated.

Enforcement powers were guided by the principles of proportionality and fairness, and were necessary to combat emerging risks and misconduct, she said.

Enforcement action would be taken only in cases where it was warranted, Cunningham stressed.

ASP guidelines cover key components, such as investigations, inquiries, sanctions, settlement, court confirmation and appeals.

ASP operation will continue to include:

• Forensic investigation by the Central Bank of suspected breaches of financial services obligations,
• Holding inquiries,
• Power to determine and impose sanctions,
• Court confirmation of sanctions imposed and appeals, and
• Discretion to settle and resolve cases by agreement with Central Bank.

The IAF Act places the investigation phase on an express statutory footing for the first time, though the process remains similar to previous operations.

Notices of Investigation (formerly investigation letters) will set out the breaches of financial-services legislation at issue.

Investigations will be run by ‘responsible authorised officers’, who will gather and analyse relevant information.

Investigation reports will be shared with subjects on completion, and prior to any decision on an inquiry.

Investigation subjects will be able to make submissions in response.

Inquiries

There are several procedural changes to the inquiry process. The Regulatory Decisions Panel will be established by the Minister for Finance to enhance independence.

The enforcement unit, or its legal representatives, will now present the case at the inquiry by leading evidence, examining witnesses and making submissions.

Sanctions

Updated sanctioning factors address the new statutory position under the IAF Act.

Most ASP cases are resolved by settlement.

Cunningham said that this was “the best use of finite public resources by avoiding the additional costs, time commitment and administrative burden of full inquiries”.

The act provides for three distinct settlement processes:

• Undisputed-facts settlement,
• Investigation-report settlement, and
• No-admissions settlement.

There will be different statutory procedures for settlement, depending on the stage of the ASP process, and whether the settlement involves admissions or not.

Discounts

Discounts of up to 30% may be available for an undisputed-facts settlement prior to completing an investigation, and up to 10% for an investigation-report settlement prior to an inquiry.

Settlement-scheme discounts will apply to monetary penalties only and not to any other sanction, such as disqualifications.

The Central Bank will continue to require admissions from firms and individuals for the purposes of settlement in almost all cases.

All sanctions imposed through undisputed-facts settlements and investigation-report settlements will be subject to High Court confirmation for the first time, Cunningham explained, with public statements published immediately following conclusion.

The Central Bank wanted feedback from stakeholders up until 14 September, Cunningham said, promising a ‘holistic’ approach to enforcement.