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White Collar Crime Update: Reforms for the Financial Services Industry?

24 November 2017

The Irish Government’s “White Collar Crime Package” proposes a range of reforms for the financial services industry. On closer inspection, it is clear that many of the measures have already been implemented over the past number of years. One of the key new developments, however, is the publication of the​​ Criminal Justice (Corruption Offences) Bill, 2017.

The majority of measures listed in the “White Collar Crime Package” will not come as a surprise to members of the financial services industry. The reforms described in the package include:

  • Enhancing regulatory powers to deal with offences in the financial sector
  • Countering money laundering and corruption

The main action points announced by the Government include:

  • Enacting the Criminal Justice (Corruption Offences) Bill, 2017
  • Transposing MiFID II, now complete by way of the European Union (Markets in Financial Instruments Regulations), 2017
  • Transposing the Fourth Money Laundering Directive (Directive (EU) 2015/849) (4MLD) into Irish law

Previous reforms

The “White Collar Crime Package” outlines some important reforms put in place in Ireland and Europe since the financial crisis, many of which are specific to the financial services industry. The reforms undertaken include:

  • The introduction of corporate governance codes for banks and insurance undertakings by Ireland’s financial services regulator, the Central Bank of Ireland
  • The Central Bank Reform Act, 2010, which established the Central Bank and abolished its predecessor, the Irish Financial Services Regulatory Authority
  • The Central Bank (Supervision & Enforcement) Act, 2013 was enacted. This afforded the Central Bank extensive powers to make regulations, to gather information from financial services providers, and to require the appointment of independent experts by financial services providers. The 2013 Act also gave the regulator powers to deal with imminent risks affecting financial services providers and introduced a protected disclosures regime for the financial services industry
  • The Central Bank’s Administrative Sanctions Procedure and Fitness and Probity Regime
  • The Market Abuse Regulation, introduced as part of the Companies Act 2014, broadened and strengthened the market abuse framework and increased penalties for contraventions of market abuse law

4MLD

The “White Collar Crime Package” also includes the transposition of the 4MLD.

4MLD introduces a more risk-based approach to combating money laundering and terrorist financing. This was due to be transposed into Irish law by 26 June 2017. While Ireland has implemented some aspects of 4MLD, such as the requirement for a beneficial ownership register, it is now behind in transposing the other aspects of 4MLD.

The “White Collar Crime Package” says that the aim is to finalise the draft legislation transposing the rest of 4MLD in Q4 2017. The package notes that the legislation will place the Irish Financial Intelligence Unit (FIU) on a statutory basis and will provide it with explicit powers to obtain information required in order to carry out its functions with regard to combating money laundering and terrorist financing.

Conclusions

In short, the measures announced by the "White Collar Crime Package" do not contain any surprises for the financial services industry. The industry has long been aware and preparing for the likes of 4MLD and MiFID II and has already been exposed to the increased powers of enforcement and sanction afforded to the Central Bank.

The key new development for the financial services industry is the Criminal Justice (Corruption Offences) Bill 2017 which will look to consolidate Ireland’s corruption and anti-bribery laws and introduce new penalties for corruption and bribery offences. Companies should consider the bribery and corruption risks they may be exposed to and put in place appropriate anti-bribery and corruption policies.

For more information on how the reforms could affect your business, please contact a member of our Investigations & White Collar Crime or Financial Regulation teams.


The content of this article is provided for information purposes only and does not constitute legal or other advice.

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