Administrative Sanctions Procedure

Overview

Under the Administrative Sanctions Procedure (ASP), the Central Bank may carry out investigations and inquiries and may impose sanctions if it determines that firms or individuals have committed a prescribed contravention.

A prescribed contravention could be a contravention of any of the following:

• A provision of a designated enactment, including any instrument made thereunder, or a designated statutory instrument. Schedule 2 of the Central Bank Act 1942 (the 1942 Act) sets out which enactments and statutory instruments are designated in this regard.
• A code made, or a direction given, under such a provision.
• Any condition or requirement imposed under a provision of a designated enactment, designated statutory instrument, code or direction.
• Any obligation imposed on any person by Part IIIC of the 1942 Act or imposed by the Central Bank pursuant to a power exercised under Part IIIC of the 1942 Act. 

A detailed description of the ASP is contained in our Administrative Sanctions Procedure Guidelines   (December 2023) (the ASP Guidelines) which describes the following stages of an ASP:

• Investigation
• Inquiry
• Settlement
• Sanction
• Confirmation by High Court and Appeal

Investigation

Under the ASP, the Central Bank has the power to investigate whether a prescribed contravention has been committed by a firm or individual.

The Central Bank (Individual Accountability Framework) Act 2023 (the 2023 Act) amends the 1942 Act  to codify the Central Bank’s statutory investigation process, subject to transitional provisions with regard to ongoing investigations (see below for more detail on transitional arrangements).

The ASP Guidelines (Part 3) explain in detail the Central Bank’s process for conducting investigations and preparing investigation reports. The ASP Guidelines also provide information on related matters such as investigation confidentiality.

Inquiry

Where the Central Bank suspects on reasonable grounds that a subject has committed a prescribed contravention, the Central Bank may hold an inquiry. The purpose of the inquiry will be to determine whether or not the subject has committed a prescribed contravention. An inquiry may also be held to determine sanction(s) only where the subject has admitted the commission of a prescribed contravention.

An inquiry decision will not take effect until such time as the Central Bank has applied to the High Court and the High Court has confirmed the inquiry decision.

The ASP Guidelines (Part 4) provide detail on inquiries, including;

• How inquiries are commenced and concluded
• The functions and powers of inquiry members, and how they are appointed
• Other roles at inquiry, including the subject, Enforcement and witnesses
• Inquiry procedure and the decisions which may be made by the inquiry members.

View information regarding inquiry hearings relating to the Central Bank.

All inquiries in respect of which a Notice of Inquiry issued prior to 19 April 2023 will continue to be conducted in accordance with the inquiry guidelines and related guidance previously issued by the Central Bank (see belowfor more details on transitional arrangements).

Settlement

At the sole discretion of the Central Bank, it is open to a subject of an investigation or an inquiry and the Central Bank to resolve an investigation or inquiry by agreement. This process of early resolution by agreement is referred to as settlement.

The 1942 Act provides for three types of settlement process which may be made available at different stages of the ASP:

• Investigation Report Settlement Process
• Undisputed Facts Settlement Process
• No Admissions Settlement Process

The Central Bank operates a settlement scheme under which, subject to the Central Bank’s discretion, a subject of an investigation or an inquiry may be offered a discount to any monetary penalty proposed as part of a settlement.

Further detail on settlement is available in the ASP Guidelines (Part 5).

Sanction

The Central Bank may impose sanctions on firms and/or individuals either by way of a settlement process or following an inquiry.

The ASP Guidelines (Part 6) set out how the Central Bank generally approaches the determination of sanctions, and list the sanctioning factors that may be applied. These factors fall under four broad headings:

• The nature, seriousness and effect of the prescribed contravention.
• The conduct of a firm or individual during and after the commission of a prescribed contravention.
• The previous record of a firm or individual.
• Other relevant considerations.

The availability of particular sanctions depends on a number of factors, including the following:

• Whether the subject of an ASP investigation or inquiry is a firm or an individual.
• Whether the subject of an ASP investigation or inquiry is a firm authorised by the ECB.
• Whether a given prescribed contravention is a contravention of a provision of an EU financial services regulatory framework to which distinct sanctions apply as prescribed under the relevant framework.

Available sanctions in the case of both firms and individuals include the following:

• Caution or reprimand.
• Direction to pay the Central Bank a monetary penalty.
• Direction to cease a prescribed contravention, if it is found the prescribed contravention is continuing.
• Direction to pay the Central Bank all or part of the costs incurred by the Central Bank in holding an inquiry and in investigating the matter to which the inquiry relates.

Available sanctions in the case of firms only include the following:  

• Direction to refund or withhold all or part of an amount of money charged or paid, or to be charged or paid, for the provision of a financial service.
• Suspension of authorisation.
• Revocation of authorisation.

Available sanctions in the case of individuals only include the following:  

• Direction disqualifying an individual from performing controlled functions.
• Direction imposing conditions on the performance by an individual of controlled functions (only in the case of an individual to whom the transitional provisions under the 2023 Act do not apply – see below for more detail on transitional arrangements).

Available sanctions in the case of a firm authorised by the ECB only include the following:

• Submission of a proposal to the ECB to suspend the authorisation of a firm.
• Submission of a proposal to the ECB to withdraw the authorisation of a firm.

Confirmation by High Court and Appeal

Inquiry decisions, decisions of the Irish Financial Services Appeals Tribunal (IFSAT) following an appeal of an inquiry decision, and sanctions imposed following certain types of settlement require confirmation by the High Court. 

The ASP Guidelines (Part 7) explain how this confirmation process operates and also the procedures that may apply in relation to the appeal of certain Central Bank decisions following the conclusion of an inquiry.

The 2023 Act and the ASP – Transitional Arrangements

The 2023 Act was signed into law on 9 March 2023 and was commenced in relation to the ASP on 19 April 2023. It introduced a number of important changes to enhance the ASP. View our Individual Accountability Framework page (IAF) for more detail. These changes apply, subject to transitional arrangements, to the enforcement of prescribed contraventions under the ASP whether those prescribed contraventions are related to existing obligations under financial services legislation, new obligations introduced as part of the IAF or obligations that otherwise become subject to the ASP.

As of the 13 December 2023, the ASP Guidelines have revised and consolidated the following ASP guidance documents:

• Outline of Administrative Sanctions Procedure (2018).
• Inquiry Guidelines (2014)
• ASP Sanctions Guidance (2019)

The above guidelines and guidance will only continue to apply to inquiries in respect of which a notice of inquiry issued prior to 19 April 2023, in accordance with the transitional provisions in section 94 of the 2023 Act. The Central Bank’s Outline of the Administrative Sanctions Procedure (2018) will only continue to apply to investigations commenced before 19 April 2023 that were ongoing on 13 December 2023 to the extent that section 93 of the 2023 Act disapplies the new statutory provisions in respect of the investigative process.