01 11 2021 Information Hubs

RDJ CBI Enforcement Information Hub

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RDJ - CBI Enforcement Information Hub

About this Information Hub

Welcome to the RDJ CBI Enforcement Information Hub where you will find details of publicly-announced Central Bank of Ireland (“CBI”) enforcement-related activity that has occurred since January 2016.

Covering the period 2016 to-date, this Hub seeks to provide you with details of:

  1. Top 10 Fines Imposed by CBI
  2. Fines Imposed on Firms
  3. Fines/Sanctions Imposed on Individuals
  4. Prohibition Notices Imposed on Individuals
  5. Revocation of Authorisation
  6. Enforcement Orders

We regularly update the Hub to reflect new enforcement-related developments. Bookmark the page so you can stay up-to-date.

Central Bank Enforcement Actions Tracker

This RDJ CBI Enforcement Actions Tracker provides a high-level overview of settlement agreements that have been concluded by the CBI since 01.01.2016. To access the RDJ – CBI Enforcement Actions Tracker click here.

Central Bank of Ireland and Enforcement

The credible threat of enforcement is one of the key tenets of Central Bank of Ireland’s (“CBI”) approach to ensuring the orderly functioning of the financial services sector in Ireland.

According to Seána Cunningham, Director of Enforcement and AML at the CBI (13.09.18), the credible threat has been firmly established:

“To my mind, the Central Bank has established the credible threat of enforcement that it set out to achieve with the establishment of the separate enforcement function.  My message for firms, their boards and their senior management, is that the Central Bank has and will continue to take robust enforcement action where serious or significant regulatory failings arise.”

The CBI’s approach to enforcement is guided by reference to what is referred to as the “escalation pyramid”:

Pyrmaid - Central Ban-RDJ LLP
Escalation Pyramid (Source: Law Reform Commission Report on Regulatory Powers and Corporate Offences (LRC 119-2018) at p.44)

The Administrative Sanctions Procedure

The Administrative Sanctions Procedure which derives from Part IIIC of the Central Bank Act 1942, provides the CBI with the power to administer sanctions in respect of the commission of prescribed contraventions by regulated financial service providers and by persons presently or formerly concerned in their management who have participated in the prescribed contraventions committed by the regulated financial service provider.

In practice, what this means is that where the CBI suspects on reasonable grounds that a breach has been committed, it may put in place an Inquiry panel to inquire into the matter, determine whether the breach did in fact occur and, if so, to then decide what sanctions ought to be imposed. On foot of such an Inquiry or where a case settles prior to a formal determination being made by the Inquiry, the CBI may impose a very substantial monetary penalty. In circumstances where an individual has been identified as being culpable, the CBI may also disqualify an individual from being concerned in the management of a regulated entity.

Imposition of Fines on Firms

Under the Central Bank (Supervision and Enforcement) Act 2013, the CBI has the power to impose a fine on a firm which is the greater of (i) €10m, or (ii) an amount equal to 10% of the annual turnover of a regulated financial service provider.

Individuals and Fines

In respect of individuals, the maximum fine that can be imposed on an individual is €1 million.

Individuals and Disqualification

The CBI has the power to disqualify an individual from being concerned in the management of a regulated entity. Such a disqualification may be imposed where an individual has been identified as being culpable in the wrongdoing on the part of a firm.

Individuals and Prohibition Notice

In the context of the fitness and probity regime, the CBI has the power to prohibit an individual from performing a controlled function for a specified period or even indefinitely.

Revocation of Authorisation

The CBI may compulsorily revoke a regulated financial service provider’s authorisation (or cancel its registration), where certain grounds set out within the applicable legislation are met.

The revocation of a firm’s authorisation results in the compulsory discontinuation of a firm’s business. In addition, a firm may seek to have its authorisation revoked on a voluntary basis.

Revocation of authorisation is amongst the most serious actions that the CBI can take in the context of its toolkit of supervisory and enforcement powers. According to the CBI, compulsory revocation is pursued only where other interventions have not achieved compliance.

Snapshot of Central Bank of Enforcement Action in 2021

During 2021 the CBI concluded 5 Settlement Agreements with regulated firms resulting in fines totalling €66.8m – representing a vast increase on the €24.5m imposed in 2020 or the €28.1 in 2019.

The average level of fine imposed during 2021 was €13.3m, an increase on the 2020 average of €8.1m and the €4.3 average fine of 2019. (As the number of settlements reached in a given year is relatively low, caution is advised when considering the average level of fines imposed.)

The CBI fines were directed at a fairly wide range of firm types – 2 banks, 1 fund management company, 1 investment firm and 1 insurance intermediary.

Two of the largest penalties ever handed down by the CBI were imposed during 2021, both on banks – a fine of €37.7m on Ulster Bank and a fine of €24.5m on Bank of Ireland.

For further details on CBI Enforcement activity during 2021, please see the RDJ – CBI Enforcement Actions Tracker.

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