Source: https://www.dilloneustace.com/legal-updates/quick-guide-the-cbis-regulatory-toolkit-part-4
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Quick Guide: The CBI’s Regulatory Toolkit - Part 4 | Dillon Eustace
Regulatory InvestigationsMay 07, 2020
Quick Guide: The CBI’s Regulatory Toolkit - Part 4
Part 4: Compulsory Information Gathering Powers
This is the fourth in a series of four short briefings which looks at some of the key powers which the Central Bank of Ireland (“CBI”) has at its disposal under the Central Bank (Supervision and Enforcement) Act 2013 (the “Act”). The powers in the Act apply to all types of regulated financial service providers, and in some cases also apply to “related undertakings” of such entities.
This briefing looks at the CBI’s compulsory information gathering powers, which are set out in Part 3 of the Act. The other three briefings can be found here: Directions; Skilled Persons’ Reports; and Redress.
The CBI’s compulsory information gathering powers can be applied in respect of the broad range of parties which are listed at section 21 of the Act. The CBI can collect the information itself or through an individual who it has appointed to act as an Authorised Officer (“AO”).
The parties who can be compelled to provide the CBI with information include the following:
a regulated financial service provider (“RFSP”);
a person who the CBI or an AO reasonably believes has been holding itself out as being a RFSP;
a related undertaking of a RFSP;
any person who the CBI or an AO reasonably believes may possess, or have control of, information about a financial service or an investment, a security, or other financial instrument which is trading on a regulated market; and
present and former employees, officers, legal advisers, accountants and auditors of any of the above mentioned parties.
What are the CBI’s powers?
Section 22 of the Act deals with the CBI’s information gathering powers, while section 27 deals with an AO’s information gathering powers. As mentioned above, AOs can collect information on the CBI’s behalf and usually are, though do not have to be, CBI employees.
Where the CBI is using the powers set out in section 22 of the Act, the information required must be set out in a notice. Where the CBI’s powers are being exercised through an AO, the AO must have a written letter of appointment from the CBI, authorising him/her to act as an AO.
Under Part 3 of the Act the CBI/AO may do any of the following (this is not an exhaustive list)1:
require a person to provide records, forecasts, plans or other documents which are specified in a notice by the CBI and to provide a statutory declaration confirming the relevant document’s authenticity;
search and inspect a premises and remove any records found on the premises;
require a person to answer questions and to provide a declaration of truth in relation to the answers to those questions;
require a person to provide a report on any mater about which an AO reasonably believes the person has relevant information; and
require a person to provide the AO with the password to access documents on any computer or data equipment.
The CBI can use these powers where it is necessary to do so for the purpose of performing any of its functions under financial services legislation, relating to the proper and effective regulation of financial service providers.
It is a criminal offence for a person not to comply with a requirement which is imposed on them under Part 3, unless the person has “reasonable excuse” not to comply with the requirement. Although the Act does not state what will be considered to be a “reasonable excuse,” it is clear that a refusal to provide the CBI with privileged legal material will be considered to be valid grounds for non-compliance. This is because the Act makes provision for the CBI to apply to the High Court for a determination to be made as to whether documents consist of privileged legal material, where a person refuses to provide access to them on that basis.
However it is also clear that concerns about incriminating oneself will not be considered to be a “reasonable excuse,” as the Act explicitly states that a requirement must be complied with even where a person expresses concerns about self-incrimination. However, any information given by the person will not be admissible in evidence against him/her in any subsequent criminal proceedings (unless it relates to the person’s failure to comply with a Part 3 requirement).
Separately, the CBI or AO can certify non-compliance to the High Court. The High Court may then make such orders or issue such directions as it thinks fit, after hearing from any witnesses produced either for or against the person concerned, and any statement which may be offered in defence.
Part 3 of the Act gives the CBI extremely broad powers to collect information from a large range of parties. Once acquired, the information can be used for the purpose of any of the CBI’s statutory functions. For example, the CBI mentioned in one of its Tracker Mortgage Examination updates that it used these powers to set specific timelines for lenders to complete a phase of the Examination. Outside of supervisory interaction these powers can be used by the CBI for other functions, including investigations under its Administrative Sanctions Procedure. RFSPs and individuals should be aware of the scope of these powers.
1 Readers should refer to Part 3 of the Act for the full suite of the CBI’s powers.