Financial Crime World

Central Bank Moves to Suspend Authorization of RFSP Over Breaches

The Central Bank has proposed to suspend or revoke the authorization of [RFSP Name], a major financial institution, following a series of widespread and regular breaches that have caused loss and damage to its customers.

Reasons for Suspension

According to sources close to the matter, the Central Bank’s decision is based on findings of significant non-compliance with applicable Irish financial services legislation, including:

  • Breaches of the Code of Practice on Lending to Related Parties
  • Anti-money laundering (AML) and counter-terrorism financing (CTF) regulations

Proposed Direction

The proposed direction would require [RFSP Name] to:

  • Cease any “prescribed contravention” that may be continuing
  • Pay the Central Bank’s costs in relation to the matter

This move marks a significant escalation of the Central Bank’s enforcement powers under the Supervision and Enforcement Act 2013.

Previous Enforcement Actions

In recent years, the Central Bank has taken action against several banks over breaches of financial regulations. Notable examples include:

  • A significant fine levied on one bank in 2018 for breaches of the Code of Practice on Lending to Related Parties
  • A fine imposed on another bank in 2016 for similar breaches

Tracker Mortgage Examination

The Central Bank’s ongoing Tracker Mortgage Examination is also underway, covering all lenders that offered tracker mortgages to customers. By the end of 2017, lenders had been required to pay €316 million in redress and compensation, with further payments expected.

Government Takeovers: A Look Back

Background

In the aftermath of the 2008 global financial crisis, the state took ownership interests in several major banks, including:

  • AIB
  • Bank of Ireland
  • Permanent TSB
  • Anglo Irish Bank (taken into full state ownership and is now being wound up)

The Irish government introduced stabilization and resolution legislation in 2010 and 2011 to address the banking industry’s woes.

Current Responsibilities

While some provisions have ceased to be in force or been superseded by EU regulations, the Central Bank remains responsible for resolving failed banks under the European Union (Bank Recovery and Resolution) Regulations 2015. The Single Resolution Mechanism has divided recovery and resolution tasks for “significant” banks between the Single Resolution Board and national resolution authorities.