White Collar and Financial Crime Insights - December 2023

Key Updates on White Collar and Financial Crime in Ireland

In this briefing, we outline key updates on white collar and financial crime in Ireland, covering individual accountability framework act 2023, cloning of authorized investment firms, insider dealing, sanctions, Irish courts refuse to unseal affidavits, and charity regulator investigation.

Individual Accountability Framework Act 2023

The Central Bank of Ireland (CBI) has published its guidance on the Individual Accountability Framework (IAF), which was introduced under the Individual Accountability Framework Act 2023. The main purposes of the IAF are to:

• Provide increased clarity about the steps that firms and individuals can take to comply with the key elements of the IAF, including the Senior Executive Accountability Regime (SEAR), Conduct Standards, Certification, and the extension of the Fitness and Probity Regime to holding companies.
• Support firms and senior management in implementing an effective governance framework by identifying how the business and its risks are being managed, who is responsible for what, and any gaps that may arise.
• Outline the CBI’s proposed approach to the implementation of the IAF, which is founded in proportionality, predictability, and reasonable expectations.
• Explain the interaction of the SEAR, Conduct Standards, and Certification with the Fitness and Probity Regime.

The Conduct Standards and enhancements to the Fitness and Probity Regime are set out in the IAF Act and will be applicable from 20 December 2023. The SEAR Regulations will apply to firms on or after 31 March 2024.

Cloning of Authorized Investment Firms

The Central Bank of Ireland continues to issue warnings regarding fraudulent entities cloning financial institutions and investment firms to deceive consumers by purporting to sell financial products as part of push payment scams. There have been more than 30 warning notices by the Central Bank since the start of October.

Insider Dealing

There was a first successful criminal conviction for insider dealing in Ireland under S.I. No. 349/2016 – European Union (Market Abuse) Regulations 2016 and section 1368 of the Companies Act 2014. The conviction relates to transactions involving shares in a pharmaceutical company in May 2020.

The individual pleaded guilty to one count of possessing information used in the acquisition and disposal of financial instruments and will be sentenced in December 2023. An offence under section 1368 of the Companies Act 2014 can result in a fine not exceeding €10 million or a term of imprisonment not exceeding 10 years, or both.

Sanctions

On 14 November 2023, the High Representative and the Commission submitted to the Council a proposal for the 12th round of sanctions against Russia and its supporters in the war against Ukraine. The proposal includes more than 120 additional individuals and entities, including those in the military, defence, arms, and IT sectors for their role in undermining the sovereignty and territorial integrity of Ukraine.

The proposal also seeks to adopt new import and export bans and will seek to prohibit the sale of second-hand tankers to crack down on those seeking to circumvent existing trade sanctions. The proposal also includes actions which seek to tighten the oil price cap.

We understand there are currently a number of criminal investigations by the DPP into self-reported sanctions breaches by financial institutions to the Central Bank of Ireland.

Irish Courts Refuse to Unseal Affidavits

The High Court recently refused to grant the application of a victim of a serious fraud to unseal documentary evidence which had not been opened to the court in order to provide the evidence to Monegasque authorities in relation to a related criminal investigation in Monaco.

The applicant, who is the plaintiff in Irish proceedings (and whom Dentons Ireland LLP represented in this application), obtained judgment against a number of entities in 2022 relating to the fraud, arguing that the content of a number of affidavits contained evidence which was likely to be relevant to the investigations in Monaco relating to allegations of money laundering and fraud.

The court, in refusing the application, noted that the applicant had failed to establish that the provision of the documents was in accordance with the due administration of justice and that the provision of the documents to the Monegasque authorities could unfairly prejudice those under investigation in Monaco. However, the court did note that the Monaco authorities, or indeed the Monaco courts, could request the documents themselves should they wish to do so.

Charity Regulator Investigation

There is a controversy surrounding revelations that Ireland’s largest housing charity purchased a number of properties from its auditors at the time. We understand from media reports that the Charity Regulator is currently conducting a statutory investigation into the matter.

This briefing highlights the key updates on white collar and financial crime in Ireland, covering individual accountability framework act 2023, cloning of authorized investment firms, insider dealing, sanctions, Irish courts refuse to unseal affidavits, and charity regulator investigation.