For a big international banking group, JP Morgan seems to be, on occasion, a slow learner.
The group's Irish funds administration business has been reprimanded and fined by the Central Bank for repeated transgressions of rules on outsourcing work over a three-year period.
The bank found that the company’s control systems “repeatedly failed to prevent the firm from outsourcing fund administration activities without approval” between June 2013 and June 2016.
The regulator said it had to issue two separate risk mitigation notices requiring the company to take specific actions to bring itself back into compliance, and described the “repeated failure to address and remediate weaknesses” in its outsourcing arrangements as an aggravating factor in the case.
Having clearly run out of patience, it has now fined the American financial services giant’s subsidiary €1.6 million – and that’s after giving it the benefit of a 30 per cent standard settlement discount on the original penalty of €2.28 million.
Active enforcement
It could have been worse for JP Morgan. The bank had the power to hit it with a fine of up to €10 million or 10 per cent of its annual turnover, whichever was the greater.
The regulator has been active in enforcement actions across a range of sectors as a wave of financial services firms consider Ireland as a possible destination if they have to relocate from London post Brexit.
Since 2006, it has fined companies a total of €91 million in 130 enforcement actions. However, the penalties appear to be getting stiffer, with six of the eight cases in the past year settling for periods in excess of€1 million. Those eight cases have involved fines of €30 million, almost a third of the total raised over 13 years.
The (presumably intended) message is clear: companies fleeing London needn’t come here if they’re looking for a light regulatory touch.
