Central Bank fines JP Morgan unit €1.6m in first crackdown on fund companies
An Irish-based subsidiary of US banking giant JP Morgan Chase has been fined €1.6m by the Central Bank for regulatory breaches.
The fine - which was reduced by 30%, from almost €2.3m - relates to three breaches of Irish regulations surrounding the outsourcing of fund administration activities.
The breaches occurred between July 2013 and June 2016.
It marks the first enforcement action taken by the Central Bank against a fund administration firm relating to outsourcing failures.
Outsourcing allows Irish-regulated fund administrators to use a third party to manage funds.
"When firms outsource activities, they do not outsource their responsibilities. It is important for firms to have strong controls in place around the governance and oversight of all outsourcing arrangements to ensure that they comply with all legal and regulatory requirements," said Seána Cunningham, the Central Bank's director of enforcement and anti-money laundering.
"Outsourcing plays a key role in the provision of regulated financial services and it is vital that regulated firms can demonstrate a clear understanding of their outsourcing arrangements," Ms Cunningham said.
She said outsourcing is - and will continue to be - an area of "particular focus" for the Central Bank.
The Central Bank ruled that JP Morgan Administration Services (Ireland) - or JPMAS - failed to obtain its approval ahead of outsourcing fund administration activities and didn't have adequate controls to ensure it satisfied the regulator's outsourcing requirements.
The Central Bank said JPMAS' failures showed "unacceptable weaknesses".
"These weaknesses were further evidenced by the firm's repeated failures to satisfactorily remediate the issues identified by the Central Bank as part of its supervisory engagement with the firm. The fine imposed reflects JPMAS' failure to address the root causes of these weaknesses over several years," Ms Cunningham said.
The sanction brings to €91m the total value of fines handed out by the Central Bank since 2006, over which time 130 settlements have been made.
