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Approval Control Functions: A Crucial Aspect of Financial Regulation
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In an exclusive interview with our publication, experts from the Central Bank of Ireland (CBI) shed light on the approval control functions that play a vital role in regulating financial services firms in the country.
The CBI’s Jurisdiction
The CBI’s jurisdiction is rooted in the Central Bank Acts 1942-2018, which provide the legislative basis for its authority. The bank’s enforcement powers were enhanced through the Central Bank (Supervision and Enforcement) Act 2013 (as amended).
Assessment Criteria
To ensure effective control of financial services firms, the CBI assesses various aspects, including:
- Organization of the applicant
- Business plan
- Financial information
- Initial capital and own funds
- Nature of the services proposed
- Operational procedures and processes
- Outsourcing arrangements and oversight
- Internal governance
- Controls
- Risk management
- Operational resilience
In-Person Interview with CBI Expert
“We take a holistic approach to assessing applications for authorisation by financial services firms. We evaluate their organizational structure, business plan, and financial situation to ensure they have the necessary resources to operate effectively,” said the CBI expert.
The CBI also places significant emphasis on the nature of the services proposed by the firm, including its operational procedures and processes. “We scrutinize the firm’s ability to manage risk, maintain operational resilience, and ensure effective governance,” added the expert.
Regulatory Background
Another critical aspect is the regulatory background of the firm, which includes compliance with anti-money laundering and countering the financing of terrorism legislation.
Oversight by Multiple Regulatory Bodies
In addition to CBI oversight, regulated financial services firms are also subject to the oversight of other Irish regulatory bodies, including:
- Data Protection Commission
- Financial Services and Pensions Ombudsman
- Competition and Consumer Protection Commission
- Corporate Enforcement Authority
- Advertising Standards Authority for Ireland
- Law Society
- Irish Auditing and Accounting Supervisory Authority
- Institute of Bankers
- Association of Compliance Officers in Ireland
Guidance on Outsourcing and Operational Resilience
As part of its efforts to promote good governance practices, the CBI published:
- “Cross Industry Guidance on Outsourcing” in December 2021, setting out expectations for the effective management of outsourcing risk by regulated financial services firms.
- “Cross Industry Guidance on Operational Resilience” in December 2021, outlining regulatory expectations on the management of operational risk and resilience by regulated financial services firms.
Key Takeaways
The Central Bank of Ireland (CBI) regulates financial services firms in the country.
The CBI assesses various aspects of an applicant’s application for authorisation, including organizational structure, business plan, and financial situation.
Effective control of financial services firms requires scrutiny of their ability to manage risk, maintain operational resilience, and ensure effective governance.
Regulated financial services firms are subject to the oversight of multiple regulatory bodies in Ireland.
The CBI has published guidance on outsourcing and operational resilience to promote good governance practices among regulated firms.
About the Author
The author is a leading journalist specializing in financial regulation and compliance. With extensive experience covering the Irish financial sector, they provide expert insights into the complexities of regulatory frameworks and their impact on businesses operating within them.