The Central Bank of Ireland has reprimanded and imposed a fine on Bank of Montreal Ireland for breaching a condition of its banking licence by failing to submit three operational risk returns to the Irish Central Bank, and failing to establish and maintain effective processes and internal controls to ensure compliance with this regulatory reporting condition. The Firm has admitted the breaches in full. This is the Firm’s second reprimand and fine for deficiencies in regulatory reporting.

The Central Bank’s investigation found that the breaches were caused by:

  • the Firm’s failure to establish and maintain effective processes and controls to ensure the submission of operational risk returns;
  • an over-reliance on Bank of Montreal group policies; and
  • the use of an informal process to comply with its obligation to submit operational risk returns.

The Central Bank determined that the appropriate fine was €1,780,269 which was reduced by 30% to €1,246,189 in accordance with the settlement discount scheme provided for in the Central Bank’s Administrative Sanctions Procedure (“ASP”).

Seána Cunningham, the Irish Central Bank’s Director of Enforcement and Anti Money Laundering, said “All firms operating in Ireland must do so in line with their regulatory licence, and all conditions attaching to it. Compliance with licence conditions is not optional, and breaches are treated seriously by the Central Bank as demonstrated in this enforcement action against the Firm.”

“The licence breach in this case centres on the Firm’s failure to submit three operational risk returns. As the risks facing the financial sector continue to grow and become more complex, it is essential that the Central Bank has a clear line of sight to any potential risks, including operational risks, within regulated firms to ensure effective supervision and to assess the resilience and integrity of all firms and the financial sector as a whole. All firms must ensure the highest standards in identifying, properly managing and monitoring, and reporting on its operational risks in line with the Central Bank’s requirements.”

“As a result of this investigation, the Central Bank reminds international firms, whether already established or seeking to establish a presence in Ireland, that they must put in place adequate policies, processes and controls necessary to comply with all licence conditions and regulatory obligations specific to their licence conditions to operate in Ireland.”