IRELAND AWM REGULATORY UPDATE - NOVEMBER 2018 - JANUARY 2019 - PWC
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Ireland AWM
Regulatory Update
November 2018 - January 2019
Ireland AWM Regulatory Update | A
B | Ireland AWM Regulatory Update
Table of Contents
The Irish funds industry in numbers 02
AWM Regulatory Landscape: November 2018 - January 2019 03
Topics in focus from an AWM perspective 05
What do your clients need to know? Upcoming Deadlines 08
PwC Asset & Wealth Management credentials 09
Regulatory Watch Service 11
Our Team 12
Ireland AWM Regulatory Update | 01
The Irish funds industry in numbers (30 Sept 2018) €4.5tn €2.5tn €2tn Total assets under Total domiciled Total non domiciled administration in funds in Ireland funds in Ireland Ireland €99bn 40% 7,111 Net sales of domiciled Percentage of hedge Number of funds funds in the funds that Ireland domiciled in period services Ireland 57.6% €1.908tn €627bn Ireland’s share of Net assets of UCITS Net assets of AIFs European ETFs in Ireland in Ireland 02 | Ireland AWM Regulatory Update
AWM regulatory landscape:
November 2018 - January 2019
Anti-Money Laundering
Outsourcing
On 14 November 2018, the Criminal Justice (Money
Laundering and Terrorist Financing) (Amendment) On 19 November 2018, the CBI published
Act 2018 was signed into law by the President of a Discussion Paper on their findings on
Ireland. outsourcing activities in financial service
providers.
The Bill introduces a series of amendments to existing
anti-money laundering legislation set out in the • Part A of the paper emphasises the
Criminal Justice Acts 2010 and 2013. Key Provisions most obvious and minimum supervisory
of the Bill include customer due diligence (verifying a expectations around the management of
customer’s identity and assessing risk) and extending outsourcing risks.
the designation of a “politically exposed person” to
• Part B highlights some of the key risks and
those residents in this jurisdiction.
evolving trends associated with outsourcing
and invites feedback on these matters.
The full text is available here.
On 19 December 2018, the CBI published new Funding Levy
registration requirements for Firms providing certain
On 2 November 2018, the CBI published the
services. These Firms are already obliged to comply
Central Bank Act 1942 (Section 32D) S.I. No. 445
with anti-money laundering (AML) and counter-
of 2018.
terrorist financing (CTF) obligations even though they
are not authorised or licenced by the CBI, but are The Regulations provide details on the basis
required with effect from 26 November 2018 to register of calculation for the levy contribution for
with the CBI by virtue of new legislation passed to Investment Firms, Investment Funds, Alternative
transpose the 4th AML Directive into Irish law. Investment Fund Managers and other Investment
Fund Service Providers.
The full text is available here.
The Regulations are available here.
On 21 December 2018, the CBI published Anti-
Money Laundering and Countering the Financing
of Terrorism Guidelines for the Financial Sector.
AIFMD
These Guidelines set out what the CBI expects from
firms in terms of what they should take into account On 19 November 2018, the CBI published a
when identifying, assessing and managing money notice setting out its intention to allow entities
laundering and terrorist financing risks. to seek authorisation under Regulation 22(3)(b)
of the AIFM Regulations to act as a depositary
The Guidelines are available here. for specific types of AIFs which generally do not
invest in assets that must be held in custody.
The CBI invites general feedback on the Guidelines It outlines the CBI’s proposed regulatory
in addition to responses to the specific questions framework for these types of entities.
contained in a Consultation Paper (CP 128).
The Notice of Intention is available here.
CP 128 is available here.
Ireland AWM Regulatory Update | 03AWM regulatory landscape:
November 2018 - January 2019
Investor Money Requirements Companies Act
On 10 December 2018, the CBI published revised Guidance On 7 January 2019, Seanad Éireann
and revised Q&As on Investor Money Requirements. published the Companies (Amendment)
Bill 2019 entitled an Act to amend the
The Investor Money Requirements Guidance and Q&As are
Companies Act 2014.
published to assist fund service providers in complying
with the Regulations. The CBI has therefore revised its The purpose of the Bill is to amend section
Guidance and Q&As on this topic to be consistent with Part 343 of the Companies Act 2014 with
7 of the Regulations. respect to the time periods allowed for filing
a company’s annual return.
The updated Q&A document is available here.
The text of the Bill is available here.
The Guidance is available here.
UCITS
On 19 November 2018, the CBI released its On 4 December 2018, the CBI announced that
twenty fourth edition of the UCITS questions and they are reviewing over 2,000 Irish UCITS funds
answers (Q&A) document. Following on from the that report to be actively managed. The CBI is
intention the CBI set out in its Feedback Statement concerned that some of these funds may be taking
to Discussion Paper 6, it has updated one UCITS a more passive approach and tracking an index or
Q&A and will publish another new UCITS Q&A. an exchange.
These address the ability to establish unlisted share
classes in an ETF, and the possibility of having In particular, the CBI is investigating scenarios
different dealing cut-off times for hedged and where funds claim to actively purchase
unhedged share classes in an ETF. investments, but wind up with a portfolio not
much different from the benchmark.
The UCITS Q&A document is available here.
UCITS/AIFMD
Reporting Requirements Minimum Capital Requirement
On 27 November 2018, the CBI published updated The Minimum Capital Requirement Report must
reporting requirements for UCITS management be submitted to the CBI by a Firm holding an
companies and AIF management companies. authorisation as an AIFM and/or as a UCITS
Management Company. On 15 November 2018, the
• Reporting requirements for UCITS management CBI published an updated Guidance Note on the
companies are available here. Minimum Capital Requirement Report.
• Reporting requirements for AIF management
One of the main changes in the report relates to the
companies are available here.
inclusion of the figure on any agreed defined
excess arising from Professional Indemnity
Insurance for firms authorised as an AIFM.
The updated Guidance Note is available here.
04 | Ireland AWM Regulatory UpdateTopics in focus from an
AWM perspective
GDPR
AML
KYC PRIIPS
LIBOR Dodd
DFA Frank
& BMR Reform AIFMD II
MiFID II
FATCA MiFIR CMU I, II, III, ...
UCITS IV, V CSDR UCITS VI MiFID III
MAD/MAR
InvStRefG DAC6 & further tax reforms
AIFMD
Basel III, IV
BREXIT FTT
T2S
EMIR, SFTR
2010 2015 2020 2025
today
In this quarter, PwC is focusing on:
•Brexit; and
•ESG investment.
Ireland AWM Regulatory Update | 05Brexit:
the latest developments
Temporary Permissions Regime Update from Central Bank of Ireland
The notification window for the temporary permissions on the MoU with the FCA and
regime (TPR) opened on 7 January 2019 on the FCA’s delegation of Portfolio Management
website and closes at the end of 28 March 2019. In January, Deputy Governor of the Central Bank of
Ireland Ed Sibley provided an update in relation to a
TPR allows EEA-based firms and new Memorandum of Understanding (MoU) with the
EEA-domiciled investment funds to FCA.
continue to operate in the UK within
the scope of their current permissions Mr Sibley stated that a new MoU needs to be in place
for up to three years while they seek with the FCA ahead of Brexit date (29th March) in the
to obtain permanent authorisation or case of a no deal Brexit. He also advised that it is
recognition from UK regulators. reasonable for firms to plan on the basis that MoUs
will be in place by 29th March.
Firms and funds managers should
Firms that delegate portfolio management to the UK
notify the regulators of their intention
can have sufficient confidence that this will continue to
to take advantage of the TPR without
be allowed post 29th March.
waiting for confirmation of whether
there will be an implementation period.
More information is available here.
Once authorised, firms will leave the
TPR. Those firms that do not seek or
are denied authorisation, will have their
permissions cancelled and there will be
an orderly run off of their activities in
the UK.
More information is available here.
Firms seeking authorisation in Ireland
Number
17 UCITS
of new firms
Management 24 AIFMs 9 MiFID firms
authorised in
Companies
2018
Frequently Asked Questions for Financial Services firms applying for
authorisation in light of Brexit can be found here.
06 | Ireland AWM Regulatory UpdateSustainability/ESG:
the latest developments
ESMA consults on integrating Rising interest for
sustainability risks and sustainable investing
factors in MiFID II, AIFMD • Global sustainable investment assets presented a
and the UCITS Directive strong CAGR of 14.6%.
The European Securities and Markets Authority • About one third of institutional investors incorporate
(“ESMA”) has launched two public consultations ESG factors in their overall investment portfolio.
to seek input on its draft technical advice for the
• The vast majority of investors have reported
integration of sustainability risks and factors into:
performance in line with their impact and financial
• MiFID II as regards securities trading, and expectations.
• AIFMD and the UCITS Directive as regards • The IORP II Directive in Europe came into force on
investment funds, as well as on 13 January 2019 and contains a broader scope for
pension funds, including ESG factors. The directive
• credit rating agency guidelines aimed at improving
requires pension funds to invest in accordance with
the quality and consistency of disclosures of
the “prudent person” rule taking into account the
environmental, social and governance (“ESG”)
potential long-term impact of investment decisions
factors when considered as part of a credit rating
on ESG factors.
action.
ESMA will consider the responses it receives to the ESG investment in Ireland
consultation papers and will finalise the draft technical
advice for submission to the European Commission by More information on the ESG landscape in Ireland can
end of April 2019. be found in Ireland’s First Responsible
Investment State of Play Report.
Read the full consultation paper on MiFID II here Contact us for a copy.
Read the full consultation paper on AIFMD and
the UCITS Directive here
Global sustainable investing trends, USD tn Proportion of ESG factors of institutional
investors’ portfolio
22.9
1.0
18.3
0.2 17%
9.8
13.3 7.3 44%
0.2
4.3
39%
10.8 12.0
8.8
2012 2014 2016 50%
Europe North America Asia Pacific
Ireland AWM Regulatory Update | 07What do your clients need to
know?
Upcoming Deadlines
February 2019 • 19 February: a UCITS must update its key investor information document (KIID)
on an annual basis for each sub-fund/standalone fund within 35 business days of the
end of each calendar year. For 2019, the annual update of the KIID must be filed no
later than 19 February 2019 (where required).
• 28 February: management companies, AIFMs, self- managed/internally-managed
UCITS/AIFs and other regulated financial service providers (RFSPs), where they
have not already done so, will need to obtain their annual certification from persons
performing PCFs (e.g. directors) and CFs (e.g. money laundering reporting officer and
company secretary) in order to demonstrate that they are aware of the Fitness and
Probity Standards and agree to continue to abide by those standards.
March 2019 • 21 March: MMFs are required to notify the CBI that they have ceased using the
reverse distribution mechanism by 21 March2019.
• 28 March: The FCA in the UK has advised that notifications for firms and funds
wishing to enter the Temporary Permissions Regime (TPR) must be made by 28
March 2019.
• 29 March: At 11pm on 29 March 2019, the UK will leave the European Union.
April 2019 • 30 April: UCITS Funds with calendar year ends have to file their Annual Report
and Audited and their Annual FDI Report with the CBI. UCITS Management
Companies and AIFMs with calendar years ends have to file their Annual Audited
Accounts and their Minimum Capital Requirements Report and bank statements
with the CBI.
08 | Ireland AWM Regulatory UpdatePwC Asset & Wealth
Management Credentials
As a firm we are proud of the depth and breadth of insights and access to
networks we can bring to our clients. In Ireland and internationally, we have an
unrivalled client base that allows us to identify and share developing trends and
issues.
A dedicated Asset & Wealth Management team with unrivalled experience.
It is our people, our experience and our passion to contribute to your success that
makes us the right team for you. Our Asset & Wealth Management group is the
largest in Ireland with nearly 400 investment professionals and staff.
Building on our track record of delivering alternative thinking. We use
our knowledge to both shape and drive regulation and help our clients, not
just in implementing new standards and requirements, but to prepare for future
requirements and to ensure that products are properly designed.
Financial Statements Audit Regulatory Advisory Services
Trust is an important factor in gaining Regulatory change has imposed
and sustaining the confidence of your significant additional requirements and
stakeholders. costs on all fund managers. Our suite of
services includes:
Using our experience and proven track
record we can provide the smooth and • Advice on regulatory obligations
efficient audit needed to give comfort to
• Assurance on regulatory reporting
you and your stakeholders.
systems and controls
Tax Advice • Assistance with Central Bank of
Ireland regulatory authorisations
We have a dedicated group of tax
professionals, focused on international • Regulatory remediation support
and local tax issues facing fund
managers. We have a wealth of
resources and expertise to assist you in
addressing the various tax challenges
such as:
• Corporate tax advice
• Financial transactions taxes
• Transfer pricing
• International tax consulting services
• Global tax compliance services
• VAT services
Ireland AWM Regulatory Update | 09Operations Effectiveness Governance
Asset management companies face people, Boards of Directors often need support to
process and cost challenges similar to many adapt to the fast pace of change within the
other financial services companies. Our suite industry. In addition, they will often seek an
of services to help firms to overcome these additional layer of comfort over the companies
challenges includes: they are over-seeing. Our suite of services
includes:
• Process intelligence
• Corporate governance reviews
• Drafting or updating process maps and
procedures manuals • Assistance with Compliance or Risk
Management Frameworks
• Pre/Post acquisition/disposal services
• Reviewing approaches to Organisation
• Client Assets/Investor Money advice
Effectiveness
• Outsourcing/off shoring advice and reviews
• Tailored director training
Digital, Data, Technology and Cyber
Services
Asset management entities are faced with
digital, technological, information security and
data issues similar to many other financial
services companies, while they also seek
to simplify business models and improve
efficiency. PwC can assist by improving
existing technology and helping with new
solutions, while keeping your systems secure.
Our suite of services includes:
• Digital strategy and system selection
support
• System implementation
• Cyber security services
• Project management of IT/Digital projects
10 | Ireland AWM Regulatory UpdateRegulatory Watch Service
To cover your clients’ Topic News Issuer Date Impact
regulatory monitoring
AML Criminal Justice (Money Irish 14/11/2018
needs, we produce a
Laundering and Terrorist parliament
monthly report on what
Financing) (Amendment)
has been happening in
Act 2018
the asset and wealth
management space in UCITS Central Bank of Ireland Central Bank 19/11/2018
Ireland. issues updated UCITS of Ireland
Questions and Answers
document
Outsourcing Central Bank of Ireland Central Bank 19/11/2018
publishes paper on of Ireland
outsourcing activities
in Financial Service
Providers
One single impact
rating matrix
MiFID - Markets in Financial Instruments
Act 2018 signed into law
Background
The Markets in Financial Instruments Directive (“MiFID II”) entered into application
0n 3 January 2018, it is the framework of European Union (EU) legislation for
investment intermediaries that provide services to clients around shares, bonds,
units in collective investment schemes and derivatives (collectively known as
financial instruments).
What’s new?
On 29 October 2018, the Markets in Financial Instrument Act was signed into law
by the President of Ireland. In relation to the European Union (Markets in Financial
Instruments) Regulations 2017, the Act provides for indictable offences that carry
greater maximum penalties than are permitted by the European Communities Act
1972 and fees in respect of the performance by the Central Bank of Ireland of
(“CBI”) certain functions.
In addition, the Act repeals and amends a number of legislative provisions
concerning credit reporting and Financial Services and Pensions Ombudsman.
The legislation is available here.
What’s next?
Firms should be aware that breaches of the MiFID Regulations also fall within the
remit of the CBI’s Administrative Sanctions Procedure. Administrative sanctions can
also be applied to entities which are not “regulated financial service providers” in
certain circumstances.
Ireland AWM Regulatory Update | 11Our Team Ken Owens Lesley Bell Partner Director Asset & Wealth Management Advisory Asset & Wealth Management Advisory T: +353 1 7928542 M: +353 1 792 8133 ken.owens@pwc.com lesley.bell@pwc.com Emma Barker Geraldine Brehony Louise Treacy Senior Manager Senior Manager Senior Manager Asset & Wealth Management Advisory Asset & Wealth Management Advisory Asset & Wealth Management Advisory emma.barker@pwc.com geraldine.brehony@pwc.com louise.m.treacy@pwc.com T: +353 1 792 8359 T: +353 1 792 8037 T: +353 1 792 8086 Eileen Molenaar Philip Cullen Assistant Manager Associate Asset & Wealth Management Advisory Asset & Wealth Management Advisory eileen.molenaar@pwc.com cullen.philip@pwc.com T: +353 1 792 5568 T: +353 1 792 5866 12 | Ireland AWM Regulatory Update
Ireland AWM Regulatory Update | 13
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