SENIOR EXECUTIVE ACCOUNTABILITY REGIME
The Senior Executive Accountability Regime (SEAR) goes live on 1 July 2024.
In advance of SEAR coming into force, the Central Bank published updated Guidance on the Individual Accountability Framework together with the final regulations (Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Senior Executive Accountability Regime)) Regulations 2024) (the SEAR Regulations) earlier this year.
The SEAR Regulations apply from 1 July 2024, save for the provisions in respect of non-executive directors, which will apply from 1 July 2025.
For more information, read our latest insights here: IAF/SEAR Update: Central Bank publishes final Guidance and SEAR Regulations
MARKETS IN CRYPTO-ASSETS REGULATION
The EU Markets in Crypto-Assets Regulation (MiCA) applies from 30 December 2024. However, Titles III and IV (the framework for stablecoins (asset-referenced tokens and e-money tokens)) have applied since 30 June 2024.
As MiCA is a regulation rather than a directive, it is directly effective in Ireland without the requirement for transposing legislation.
The Central Bank will run an industry event in July 2024, setting out its authorisation and supervisory expectations for in-scope firms, and will formally launch its expectations afterwards. It plans to open its "authorisation gateway" in Q3 2024.
Gerry Cross, the Central Bank's Director for Financial Regulation, Policy and Risk delivered a speech on 29 May 2024 in which he gave a flavour of the key authorisation and supervisory expectations that firms will need to meet.
From an authorisation perspective, the focus will be on transparency in the application process, firms being well prepared and appropriately resourced to engage in the assessment process; firms understanding the Irish regulatory environment, firms having a "strong local autonomy" and (particularly in the case of firms with retail-facing business models) having a strong focus on securing customers' interests.
From a supervisory perspective, full control over client assets will be a key theme, as will the need for firms to have appropriate "substance" in Ireland (with a knowledgeable board, high quality governance and strong risk management arrangements). As expected, AML will be a key concern, as will the robust identification and management of conflicts of interest.
The Central Bank also issued a notice in May 2024 on the impact of MiCA on those with existing virtual asset service provider (VASP) registrations. VASPs that are registered and authorised as such before 30 December 2024 can continue to operate until the earlier of a 12-month period or the grant or refusal of an authorisation as a crypto-asset service provider (CASP). A registered VASP that does not seek CASP authorisation by 30 December 2025, or whose application for CASP authorisation is refused, will need to cease operating.
New CASP applicants, or VASPs applying for CASP authorisation, will undergo the same Central Bank assessment. The assessment period is expected to take at least 10 months, and the Central Bank has asked intending applicants who are not already authorised as VASPs to focus on their CASP applications over the coming months, rather than seeking a VASP application at this stage.
CORPORATE SUSTAINABILITY REPORTING DIRECTIVE
Irish regulations transposing the Corporate Sustainability Reporting Directive (CSRD) have not been published yet, but are expected in advance of the 6 July 2024 transposition deadline.
The Directive postponing the adoption of sector-specific European Sustainability Reporting Standards (ESRS) and sustainability reporting standards to be used by certain non-EU companies by 2 years to 30 June 2026, to allow companies to focus on the implementation of the first set of ESRS and limit the reporting requirements to a necessary minimum, was published in the Official Journal as Directive (EU) 2024/1306 on 8 May 2024.
The Department of Enterprise, Trade and Employment's consultation on the Member State option to recognise, accredit, regulate and monitor independent assurance services providers closes for feedback on 19 July 2024.
For more CSRD-related insights, read the latest updates from our Corporate and M&A Group here:
ANTI-MONEY LAUNDERING / BENEFICIAL OWNERSHIP
The European Commission wrote to the Irish Government in April 2024 regarding issues with the transposition of parts of the Fourth Money Laundering Directive (as amended by the Fifth Money Laundering Directive) relating to the central register of beneficial ownership of trusts and the accessibility of related information.
While the letter was not shared publicly by the Commission, the Minister for Finance mentioned (in a written response to a Parliamentary Question) that the "issues cited by the Commission relate to the mechanisms for accessing the information and for ensuring that the information filed is both accurate and complete". He confirmed that, prior to receipt of the Commission's letter, the Department of Finance had already been "engaging on an ongoing basis with [the Revenue Commissioners as registrar of the central register of beneficial ownership of trusts (CRBOT)] on a number of legislative changes to augment the powers of the Registrar to help improve compliance with the relevant obligations". We may see the Department's response to the Commission over the next few weeks (the Commission had requested a response within 60 days).
LOAN SALES / FINANCIAL SERVICES OMBUDSMAN
We may see a change introduced (by way of a Committee stage amendment to the Financial Services and Pensions Ombudsman (Amendment) Bill 2023 that is currently before Dáil Éireann) to clarify a customer's ability to make a complaint to the Financial Services and Pensions Ombudsman (FSPO) in respect of a loan that was sold between 2015 and 2019.
The Minister for Finance recently noted (in a written response to a Parliamentary question) that he has "sought legal advice to ensure clarity on the scope of the FSPO's jurisdiction in relation to the issues raised, with the aim of ensuring the broadest possible access to the FSPO as an important part of the consumer protection framework. My officials continue to intensely engage with relevant stakeholders in relation to the legal advice and all potential legal avenues, with a view to progressing this issue as a matter of priority...I have made clear that I am willing to introduce further legislative amendments should that be necessary and possible."
This relates to an issue highlighted in February 2024 where we understand the FSPO's position to have been that he did not have jurisdiction to hear a complaint about how a borrower's Standard Financial Statement (SFS) under the Code of Conduct on Mortgage Arrears was dealt with / assessed where the mortgage loan was sold between 2015 and 2019. This was because, during that time, the legal title holder of the loan did not require regulation and the FSPO's view was that the SFS-related issue was a 'key decision' and therefore one that rested (between 2015 and 2019) with the legal title holder (who did not require to be regulated by the Central Bank during that period and therefore was not a regulated entity in respect of which a complaint could be made) and not with the credit servicer (against whom the borrower lodged the complaint).
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.