Accountability Enforcement

Constitutional Requirements

Part 4 of the 2023 Act made changes to the operation of the ASP to clarify the processes involved, and to ensure that it conforms to the required standards of fairness in the administration of justice, in light of the decision of the Supreme Court in the case of Zalewski v. An Adjudication Officer and Others (2021).

 The Act makes changes to the procedures of an inquiry conducted by the Central Bank to determine whether someone committed or participated in a prescribed contravention. These include changes allowing the admission of documentary evidence, allowing the Bank to publish transcripts of inquiry proceedings, and protecting the confidentiality of material that may be disclosed in the course of an inquiry.

The Act makes changes to the requirements for confirmation by the High Court of a decision of the Central Bank to impose a sanction following an inquiry. Every such decision or, where the decision is appealed, any decision of IFSAT in relation to such a decision, requires to be confirmed by the High Court before taking effect. The High Court shall confirm such a decision unless there was a manifest and fundamental error of law, or the sanction is manifestly disproportionate.

The Act introduces additional safeguards to ensure the independence of decision-makers in relation to the operation of the ASP. Proceedings of an investigation or inquiry under that Part shall be absolutely privileged, and to facilitate the service of documents for the purposes of that Part.

RFSP Participant

For the purposes of Part IIIC, a person is concerned in the management of a body corporate or other entity if the person is in any way involved in directing, managing or administering the affairs of the body or other entity. The Act facilitates the breaking of the “participation link” by replacing the concept of a person concerned in the management of an RFSP with the concept of a person performing a controlled function in relation to an RFSP.

Part IIIC of the Act applies in relation to the commission or suspected commission by a holding company of a contravention of a provision of Part 3 of the Central Bank Reform Act 2010, of a direction given to, or a requirement imposed on, such a holding company under that Part, or of any obligation imposed on such a holding company by Part IIIC of the Act of 1942, or imposed by the Bank pursuant to a power exercised under that Part; and that Part IIIC of the Act applies in relation to participation by a person, while concerned in the management of such a holding company, in the commission by the holding company of such a contravention.

An RFSP shall ensure that a person is not permitted to perform a controlled function in relation to it if that would contravene a direction disqualifying the person from performing such a function.

Investigation

There are procedures that are to be followed to ensure that the subject of an investigation is kept adequately informed of the status of the investigation. The Act provides for the  preparation of a report of an investigation and for the right of the investigation subject to make submissions on the draft report; that neither the draft report nor the final report shall include any recommendation or opinion as to whether a sanction (or what sanction) should be imposed; that the draft and final reports shall include any material that in the opinion of the authorised officer is relevant to the consideration of the report by the Central Bank for the purposes of deciding whether to hold an inquiry; that a person who receives a final report or any submissions on a draft report shall not disclose their existence or content other than for the purposes of obtaining legal advice; and that any person who does so disclose shall commit an offence.

Whenever the Central Bank, after considering the final report of an investigation, and any submissions made by the subject of the investigation, suspects on reasonable grounds that the person is committing or participating in, or has committed or participated in, a prescribed contravention, it may hold an inquiry to determine the matter.

Before holding an inquiry under section 33AO, the Central Bank shall give notice in writing to the person concerned of the grounds on which the Bank’s suspicions are based, the date, time, and place, at which the inquiry will be held, and invite the person either to attend the inquiry or make written submissions to it; that a person concerned may lodge with the Bank any written submissions that the person wishes the Bank to take account of; that the Bank may adjourn an inquiry provided it ensures that the person concerned is notified of the date, time, and place, at which the inquiry will resume; and that the Bank may proceed with an inquiry in the absence of the person concerned so long as that person has been given an opportunity to attend the inquiry or to make written submissions to it.

At the conclusion of an inquiry to determine whether a person is committing or participating in, or has committed or participated in, a prescribed contravention, the Central Bank shall make a finding as to whether, on the balance of probabilities, the person is committing or participating in, or has committed or participated in, the contravention; that the Bank shall have regard to all relevant matters, including the final investigation report, any submissions provided with the report, and any evidence adduced or submissions made during the inquiry; that a notification of the Bank’s decision at the conclusion of an inquiry shall state that the inquiry subject may appeal against the finding, and any decision to impose a sanction, to IFSAT; and it facilitates the breaking of the “participation link” by replacing the concept of a person concerned in the management of an RFSP with the concept of a person performing a controlled function in relation to an RFSP.

Alternative procedure when acknowledged

The Central Bank if, after considering the final report of an investigation and any submissions provided with the report, it suspects on reasonable grounds that a person is committing or participating in, or has committed or participated in, a prescribed contravention, and the person acknowledges the commission of or participation in the contravention, it may, with the consent of the person, dispense with an inquiry and impose on the person any sanction that it could impose following an inquiry, or hold an inquiry to determine what sanction (if any) should be imposed on the person; that a sanction imposed, whether with or without the holding of an inquiry, does not have effect unless confirmed by the High Court; and that at the conclusion of an inquiry held to determine what sanction (if any) should be imposed, the Bank shall notify the person concerned of its decision, which shall set out the sanctions (if any) imposed.

Considerations relevant to imposition of sanctions

That the Central Bank, in determining whether to impose a sanction, what sanction to impose, or the level of any monetary penalty to be imposed, shall have regard to any relevant considerations including any consideration affecting the seriousness of the prescribed contravention concerned, the effect of the prescribed contravention, the conduct of the person during and after the commission of or participation in the prescribed contravention, the previous record of the person, any consideration relating to pending or possible criminal proceedings, including whether such proceedings may be prejudiced by the imposition of a sanction, and any matter relevant to the financial position of the person.

Prescribed Contravention Acceptance & Inquiry

Where the Central Bank suspects on reasonable grounds that a person is committing or participating in, or has committed or participated in, a prescribed contravention, it may enter into an agreement to resolve the matter without any acknowledgement by the person of the commission of or participation in the prescribed contravention. There is no requirement that any sanctions imposed under an agreement entered into pursuant to section 33AV of the Act of 1942 be confirmed by the High Court.

A finding of the Central Bank as to whether a person is committing or participating in, or has committed or participated in, a prescribed contravention, or a decision of the Bank to impose a sanction following an inquiry, may be appealed, on certain grounds, to IFSAT; to amend the requirements for confirmation by the High Court of a decision of the Bank to impose a sanction following an inquiry such that every such decision, or any decision of IFSAT in relation to such a decision, requires to be confirmed by the High Court before taking effect; that the High Court shall confirm such a decision unless there was a manifest and fundamental error of law or the sanction is manifestly disproportionate; and that, where the Court does not confirm such a decision, it may substitute any appropriate decision that the Bank or IFSAT could have lawfully made or remit the matter for reconsideration to the Bank or IFSAT, as the case may be.

Where the Central Bank imposes a sanction with the consent of a person who has admitted to the commission of, or participation in, a prescribed contravention, the Bank shall apply to the High Court for confirmation of the sanction; that the Court shall confirm the sanction unless it is manifestly disproportionate; and that where the Court does not confirm the sanction, it shall remit the matter for reconsideration by the parties.

Inquiry Matters

The functions of the Central Bank include the making of submissions, leading of evidence, and examination of witnesses on behalf of the Bank, and any other function required for conducting the inquiry; and that, for the purpose of performing any of those functions, the Bank may be assisted by a legal practitioner.

The Central Bank may publish a transcript of all or part of the proceedings of an inquiry.A decision at the conclusion of an inquiry is appealable to IFSAT.

The person presiding at an inquiry may order that specified information relating to specified proceedings before the inquiry, so far as it is held in public, shall not be disclosed; and that a person who contravenes such an order shall be guilty of an offence.

Where confidential information is provided to a person for the purposes of an inquiry, that person shall not disclose that information (other than to his or her legal representative) unless authorised to do so by the Central Bank or required to do so by law; and that a person who discloses such confidential information shall be guilty of an offence.

Where a person engages in obstructive behaviour at an inquiry, the Central Bank may apply to the Court for an order requiring the person to comply with any request or requirement under the Act and not to repeat the obstructive behaviour.

Information contained in a document shall be admissible in an inquiry as evidence of any fact in the document of which direct oral evidence would be admissible; that the party proposing to give such documentary evidence shall serve notice to that effect on each of the other parties to the proceedings; and that if any other party to the proceedings objects to the admission of the documentary evidence, the person presiding at the inquiry shall decide the matter in the interests of justice.

The 2023 Act replaces the concept of a person concerned in the management of an RFSP with the concept of a person performing a controlled function in relation to an RFSP; and provides that, if the Central Bank has entered into a settlement agreement, it may publish particulars of the agreement subject to considerations of professional secrecy, confidentiality and/or unfair prejudice to a person’s reputation.

The Central Bank may prescribe guidelines in relation to the determination of appropriate sanctions and monetary penalties to be imposed under Part IIIC of the Act. Certain functions in relation to an inquiry are restricted to ensure that the same person does not perform functions or exercise powers of the Central Bank such as could result in unfairness to any person concerned; the inquiry members shall be appointed by the Bank from a panel established by the Minister.

Leave shall not be granted for judicial review of a finding made at the conclusion of an inquiry as to whether a person is committing or participating in, or has committed or participated in, a prescribed contravention, or of a decision to impose a sanction at the conclusion of an inquiry.

Proceedings of an investigation or inquiry under Part IIIC shall be absolutely privileged.

Section 33BH of the Act of 1942 provides that the provisions relating to the service of documents in section 61G and in any regulations made under that section apply for the purposes of Part IIIC as if references to the Central Bank included references to an authorised officer.

Establishment of panel

The 2023 Act provides for the establishment of a panel from which decision-makers for ASP inquiries and other purposes may be appointed by the Central Bank. The members of this panel will be appointed by the Minister for Finance who must be satisfied, following consultation with the Bank, that the persons appointed have the skill, experience, and knowledge necessary to perform the functions that they may be appointed to perform.

The  Minister may establish a panel from which persons may be appointed as members of inquiries or for other purposes requiring an independent decision-maker to act on behalf of the Central Bank; that appointments to such a panel shall be made following a process conducted by the Bank in consultation with the Minister; that a person shall not be appointed to such a panel unless the Minister is satisfied, after consulting with the Bank, that the person has the skill, experience, and knowledge necessary to perform the functions that the person may be appointed to perform; and that the Bank shall ensure the independence of any member of such a panel.

The 2023 Act facilitates the changes to the appeals and court confirmation processes in Part IIIC. After hearing an appeal against a decision to impose a suspension or a prohibition under the Act of 2010, IFSAT may remit the matter for reconsideration by the Central Bank, together with any recommendation or direction of the Appeals Tribunal as to what aspects of the matter should be reconsidered and set aside the decision.

Privileged Legal Material

The 2023 Act makes amendments to the Central Bank (Supervision and Enforcement) Act 2013 in relation to the treatment of privileged legal material. These provide for a process whereby a person may agree to provide privileged material to the Central Bank for specific purposes without waiving the privilege to any other party.

This process will provide a legally robust and clear mechanism to facilitate this limited disclosure to the Central Bank should a person voluntarily wish to disclose legally privileged material for the purposes of the performance of the Central Bank’s functions under financial services legislation, and should the Central Bank agree to such disclosure. It will remove any doubt in relation to the status of the material following disclosure and insulate it from any potential litigation and disclosure requests by third parties. Information disclosed under such an agreement will not be released under the Freedom of Information Act 2014.

There is a mechanism to apply to the court for a determination where the privilege status of material is disputed. Information acquired by the Central Bank under a disclosure agreement under the 2013 Act may not be used for a purpose other than the purposes specified in the agreement.

Voluntary disclosure of privileged legal material

The Central Bank may enter into a disclosure agreement with a person entitled to waive legal professional privilege, under which the person agrees to produce or give access to the material, to the Bank and any specified person, for purposes specified in the agreement; the 1942 Act applies to disclosed material as it applies to confidential information; that the agreement does not constitute a waiver of privilege in any material not covered by the agreement or to any person other than the Bank or any person specified in the agreement; that the material is disclosed only for the purposes specified in the agreement; and that the material disclosed is not subject to the Freedom of Information Act 2014.

If a person refuses to provide information to the Central Bank on the grounds that it contains privileged legal material, the Bank may apply to the Court for a determination as to whether the information is, in fact, privileged.