Central banks using policy of enforcement, forum told

ENFORCEMENT IS playing an increasingly important role in central bank regulation, according to the head of enforcement at the Irish regulator.

Addressing the Association of Compliance Officers in Ireland at a lunchtime briefing in Dublin yesterday, Peter Oakes said that enforcement “now sits at the forefront of the central bank and other regulators, not just within the EU , but also in the US, Asia and Australasia”.

Responding to a question from an audience member as to whether the Central Bank’s fitness and probity tests for bankers extended to the bank’s own staff, Mr Oakes said that staff were subject to a very strong code of ethics and performance-assessment exercise every 12 months, while supervisory and enforcement staff had extensive skills training.

He pointed out that a number of senior personnel changes had taken place at the Central Bank, while the current governor is the first not to have come to the bank via the Department of Finance. “You also have to look at the function we serve versus the function of firms which may for example look after the assets of individuals,” he said.

The enforcement division of the Central Bank had undergone an extensive recruitment regime since late 2010, he said, and now employs a range of staff from the public and private sector, and the legal, accounting and financial services professions.

On the specific issue of anti-money laundering (AML) and counter terrorist financing (CTF), Mr Oakes said that some companies had not comprehensively reviewed their business models to take account of the most recent 2010 Act.

The Central Bank’s concerns focus on four main areas, he said: governance, ie whether companies are taking appropriate steps to ensure their businesses are compliant with the 2010 Act; training, whereby inadequate training arrangements are in place for staff, including directors; insufficient customer due diligence, specifically a delay in obtaining information on the purpose and intended nature of relationships; and, finally, the requirement to report suspicious transactions.

“Firms must put AML and CTF on the boardroom agenda,” Mr Oakes said.