Asset Management & Investment Funds: Irish Practice Developments – August 2022

CBI's Beneficial Ownership Register for CFVs - PPSNs

The Central Bank of Ireland (CBI) is implementing changes to the beneficial ownership register for Certain Financial Vehicles (CFV). The changes were expected to be effective from 13 September 2022 but this date has now been pushed out to Q4. When the changes come into effect, PPS numbers or, if the beneficial owner has not been issued with a PPS number, a CBI reference number, will be required for all CBI Beneficial Ownership Information Returns. The requirement for PPS numbers is already in place for companies reporting to the Register of Beneficial Ownership for Companies.

CFVs (ICAVs, CCFs, ILPs, Unit Trusts) will then be required to report PPS numbers to the CBI's Beneficial Ownership Register of CFV. The purpose of collecting PPS numbers is to verify the information delivered to the CBI's Beneficial Ownership Register. When the change comes into effect, the following will apply:

  • Where beneficial owners hold a PPS number – this must be provided
  • Where a beneficial owner has never been issued with a PPS number in Ireland, but has been previously appointed in a Pre-Approval Controlled Function (PCF), under Fitness and Probity Standards - the corresponding CBI reference number provided under this process may be used
  • Where a beneficial owner has never been issued with a PPS number in Ireland, nor been previously appointed in a PCF role, a separate Verification of Identity Process will apply, involving the following steps:
  • Step 1 – Declaration as to Verification of Identity Form | pdf 435 KB  must be completed by the beneficial owner and signed. The form should be completed and signed by the beneficial owner, and witnessed by a Notary Public where completed outside the State or, where the declaration is made within Ireland, witnessed by a Notary Public, Peace Commissioner, Commissioner for Oaths or a person authorised to take and receive statutory declarations.
  • Step 2 – Signed declaration submitted via “BOR Verification of Identity Return" in CBI's ONR by the CFV.
  • Step 3 – CBI will review the declaration and where all information has been provided, CBI will issue the CBI reference number via email to the beneficial owner.
  • Step 4 – On receipt of a CBI reference number via the above process, the beneficial owner provides the CBI reference number to the CFV, in order to submit the return.
  • Step 5 – Presenter submits the Beneficial Ownership Information Return via updated template to allow reporting of PPS number or CBI reference number.

The current reporting template is being updated to provide for the mandatory inclusion of a PPS number, or CBI reference number, for each beneficial owner.

For any individuals who cease being a beneficial owner before the change comes into effect, CFV are encouraged to update the CBI's Beneficial Ownership Register of CFV promptly and so avoid the need to furnish a PPS number for that beneficial owner.

The CBI advises that CFV should continue to engage with the Verification of Identity Process to ensure a CBI reference number is available, if required, for beneficial owners who do not hold a PPS number, and do not currently hold a CBI reference number.

Irish whistleblowing legislation

The Protected Disclosures (Amendment) Act 2022 has been signed into law but has not yet been commenced. Regulated entities, including fund management companies and corporate funds, are likely to have internal whistleblowing reporting procedures in place and will likely review and update these. You can read more here.

IMF recommendations to CBI on oversight of Investment Funds and Special Purpose Entities

The IMF published recommendations to the CBI in the form of a Financial Sector Assessment Program paper on Oversight of Market-Based Finance: Investment Funds and Special Purpose Entities.

Recommendations include that CBI should:

  • Proceed with the updates to the SEAR regime, finalise the CBI's internal framework to operationalise execution of the upgraded accountability regime, ensure that CBI powers provide a sound basis for direct enforcement action against individuals.
  • Prioritise guidance to the funds sector on the use of a full range of liquidity management tools, including encouraging adoption of tools such as swing pricing which result in subscribing or redeeming investors bearing the associated transaction costs.
  • Engage with ETF providers to ensure their arrangements with authorised participants and market makers are robust and promote the smooth functioning of the sector, including in times of market stress.
  • Expand data coverage of the investment funds sector including on delegation arrangements, credit lines and UCITS leverage.
  • Continue efforts to improve visibility on underlying IF investors.
  • Proceed to finalise its new approach to Irish Fund pricing errors, including on the categorisation of errors and how they should be resolved.
  • Work with ESMA, ESRB and EU Commission, as part of the Commission's review of the EU MMF Regulation, to promote MMF resilience. Suggested reforms are listed.
  • Push for the adoption of common approaches at EU level to UCITS eligible assets requirements (referencing bank loans, delta-one securities and digital assets).
  • Strengthen oversight of governance of Special Purpose Entities and introduce rules on directors' time commitments, making legislative changes where necessary.
  • Fill gaps in the legislative framework (working with the Department of Finance) for the winding-up of Irish Funds, including by clarifying the steps to be taken when fund investors cannot be contacted.
  • Continue efforts to bring all market participants to the same level, including through the follow-up of the CBI's December 2020 “Dear CEO" letter on the “Thematic review of fund management companies' governance, management and effectiveness".   

The note also references that the CBI is currently reviewing its supervisory impact model (or PRISM) for funds, including the merits of using different quantitative metrics.

For more information please contact a member of the Asset Management & Investment Funds team.

Date published: 25 August 2022