Central Bank of Ireland Feedback Statement on CP160

PCFs as CF-1 and CF2

• All PCFs can be said to have the ability to exercise significant influence on the conduct of a firm’s affairs and are therefore, at a minimum, a CF-1.
• There are PCF roles that should also be classified as CF-2 given their compliance focus (PCF-12, Head of Compliance; PCF-13, Head of Internal Audit; PCF-52, Head of Anit-Money Laundering and Counter Terrorist Financing Compliance).
• There are no new requirements or expectations associated with dual classification, and this does not introduce additional due diligence for PCFs.
• Where a firm certifies that an individual in a PCF role complies with the Standards, it does not have to make certifications in respect of the CF-1 or CF-2 aspects of that role.

Company Secretary

• Designation of a Company Secretary as a CF-1 should be determined on a case-by-case basis.
• Where a firm determines that the role carried out by its Company Secretary is purely the administration of company law matters, such individuals need not, for those activities alone, be designated as a CF-1.

Compliance Function

CF-2 does not extend to administrative or support staff within the compliance function.

If you have any questions or would like to discuss the implications of this feedback statement in more detail, please let us know.

• Firms should take a proportionate approach to fitness and probity.
• Firms can apply an approach consistent with the nature, scale and complexity of the firm and the roles within the firm.
• Firms may have difficulties obtaining certain evidence for the purposes of due diligence. The expectation is that firms carry out due diligence on a best-efforts basis and the Central Bank will take into account the limitations of public records.
• The principle of proportionality cannot be applied in relation to probity, and the assessment must be conducted for all firms in the same manner.
• While a 10 year look-back period can be applied when assessing fitness and probity (except where a custodial sentence has been imposed):
  • if there are aggravating circumstances that come to light during the course of assessing due diligence that could materially impact a person’s fitness and probity, the Central Bank expects that this is investigated and disclosed, even if the event occurred more than ten years ago.
  • firms should nevertheless seek information in relation to all criminal, civil or regulatory actions in respect of an individual regardless of when they may have occurred.

Financial soundness

• Reference to the need for the provisions of “evidence of financial soundness in order to uphold expected standards” has been removed.
• Bank statements are not required to demonstrate financial soundness.
• Checks should be performed on a best-efforts basis and checks of public records should be sufficient.
• In general, absence of judgements or default will suffice.

• Assessment of time commitments should be performed on a case-by-case basis.
• Full-time time commitment may not always be practical or necessary.
• Firms should be in a position to explain why a full-time role in not necessary.
• Requests to perform a PCF role outside of the State will be assessed by the Central Bank on a case-by-case basis.

• Central Bank expects independence of mind of board members to be taken into account by firms when assessing the fitness and probity of board members.
• In general, a firm can assume that a person sufficiently qualified and experienced to act as a board member will have sufficient independence of mind to carry out the role.

• While inherent responsibilities apply to all of the controlled function population, this is not to be taken as extending the scope of SEAR.
• Inherent Responsibilities are defined at a high-level, rather than on a sector-specific basis, and accordingly are relevant across all sectors.

• While the objectivity of setting out a minimum number of years of experience has been retained, the Guidance has been amended to allow for greater flexibility in the types of knowledge and experience considered appropriate.
• The Central Bank also reaffirmed its view that there may be sectoral or firm specific circumstances where an individual does not hold the specified level of experience but may nevertheless be considered suitable for the role due to, for example, firm or role specific factors that should be taken into account.
• Accordingly, an individual who does not possess the level of experience set out may still be considered fit and proper where there is an appropriate justification.

• Firms are permitted to appoint a Temporary Office for up to 6 months (which may be extended in certain circumstances), provided certain conditions are met.