In our briefing below, the Dublin office outlines some of the key updates with regard to white collar and financial crime.

What this update covers:

Individual Accountability Framework Act 2023

• In November 2023, the Central Bank of Ireland (CBI) published its guidance on the Individual Accountability Framework (IAF) which was introduced under the Individual Accountability Framework Act 2023 (IAF Act).

• While compliance with the IAF guidance is not strictly mandatory, it does represent the CBI's key expectations in the implementation of the IAF. Its main purposes 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;
  • provide support to 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 which may arise;
  • outline the CBI's proposed approach to the implementation of the IAF which is founded in proportionality, predictability and reasonable expectations; and
  • 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 in-scope firms from 1 July 2024 and to (independent) non-executive directors at in-scope firms from 1 July 2025.

Systems and controls

A notable trend in the Irish market is increased scrutiny by regulators of the adequacy of systems and controls within regulated entities. It is not sufficient to show that systems are in place. Management, including non-executive directors, must satisfy themselves that the systems are operating effectively, that there are sufficient controls within the governance structures and that deficiencies are addressed. While this is being seen across the board, it is of particular importance in the financial services industry and is a key focus of the Central Bank of Ireland.

Competition law

A new administrative sanctions regime has been commenced under the Competition (Amendment) Act 2022 for competition law offences. This is a significant development as, prior to its implementation, enforcement for competition law offences was limited to criminal proceedings.

Anti-money laundering

• In November 2023, the Minister for Finance published Ireland's application to host the headquarters of the new EU Anti-Money Laundering Authority (AMLA). Ireland is one of 20 EU countries to apply. Ireland's bid places emphasis on the geographic spread of EU institutions and there is commentary that Ireland is well placed to win this.

• When established, the AMLA will be the centre of an integrated system which will work with national authorities tasked with the supervision of compliance with anti-money laundering and countering financing of terrorism rules. Its purpose will be to improve the detection of suspicious transactions and eliminate current avenues used for laundering illicit proceeds and financing terrorist activities. A decision is expected in late 2024.

Seizure of cryptocurrency

• In October 2023, An Garda Síochána seized an estimated €1.12 million in cryptocurrency following a cross-jurisdictional investigation relating to money-laundering and "smishing" scams involving organised criminal groups operating across Europe, the UK, Dubai and South Africa.

• This is the largest-ever sum of currency seized from an organised group involving "smishing" fraud and is the first major seizure of cryptocurrency by An Garda Síochána in the area of organised cyber-enabled frauds.

Cloning of authorised 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

• In October 2023, there was the first successful criminal conviction for insider dealing in Ireland under S.I. No. 349/2016 – European Union (Market Abuse) Regulations 2016 and section 1,368 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 1,368 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.

• It is anticipated that the Council will approve the proposals before the end of December 2023.

• 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 to assist in foreign criminal investigation

• 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.

• The case highlights the serious difficulties victims of fraud can face in porting information between jurisdictions in a cross-border fraud case.

Charity Regulator investigation into the sale of properties to a charity by its auditors

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.