International Asset Finance & Regulation Seminar 4 December 2019 DublinDublin London London New New YorkYork San SanFranscisco Francisco Welcome Christine O’Donovan, Partner & Head of International Asset Finance, Mason Hayes & Curran DublinDublin London London New New YorkYork San SanFranscisco Francisco Questions and Polls – Sli.do Visit Sli.do WiFi: Public Input #mhcaviation Password: Public DublinDublin London London New New YorkYork San SanFranscisco Francisco Regulatory Reporting and What to Expect From Subsequent Litigation Muireann Dennehy, Partner, Mason Hayes & Curran DublinDublin London London New New YorkYork San SanFranscisco Francisco Why should you care? DublinDublin London London New New YorkYork San SanFranscisco Francisco Introduction Today’s Topics • Regulation and Enforcement in Ireland • Financial Regulation as a model • Future Enforcement Trends • White Collar Crime Reforms • Risks posed to the aviation industry Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Specialist Units • Proceeds of Crime Act 1996 • Independent Statutory Body • Investigate suspected proceeds of criminal conduct Garda Bureau of Fraud Investigations • serious and complex economic crimes • financial crimes - major public concern • prevention and detection of fraud • cases of foreign bribery and corruption as per legislation Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Regulatory and Enforcement Agencies DublinDublin London London New New YorkYork San SanFranscisco Francisco J.P. Morgan Administrative Services (Ireland) Limited • €1.6 million for regulatory breaches relating to the outsourcing of fund administration activities “…these failings, JMPAS did not always have a clear understanding of, and controls around, its outsourcing arrangements. This undermined the ability of the Firm to effectively identify and manage the risks associated with its outsourcing arrangements. In addition, the Firm’s failings undermined the Central Bank’s ability to properly assess, monitor and supervise JPMAS… Persistently failed to remediate the root causes of these failings despite repeated supervisory intervention by the CBI… It is important for firms to have strong controls in place around the governance and oversight of all outsourcing arrangements JPMAS’s failures in this case demonstrated unacceptable weaknesses in its outsourcing framework. These weaknesses were further evidenced by the Firm’s repeated failures to satisfactorily remediate…” DublinDublin London London New New YorkYork San SanFranscisco Francisco Wells Fargo Bank International Unlimited Company • €5.88 million fine for “serious failings” in its regulatory reporting capability and compliance “Failure to calculate and report accurately the Firm’s capital position; Failure to periodically monetise…; Weak governance arrangements including lack of robust Board and senior management oversight… Inadequate internal control mechanisms including a failure to properly document processes and procedures; Inadequate review by internal audit of regulatory reporting processes and procedures; Weaknesses in IT systems” “It is a minimum requirement of being regulated that firms submit accurate and timely regulatory returns...Miscalculation and misreporting of the Firm’s capital position, in particular, is a fundamental failure.” Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Financial Action Task Force Review DublinDublin London London New New YorkYork San SanFranscisco Francisco White Collar Crime Package An Taoiseach Leo Varadkar “Like a lot of people, I am frustrated at our inability as a country to secure more convictions when it comes to corruption and white-collar crime. Corruption and white-collar crime damage our economy, breed cynicism in our society and are a threat to our international reputation. So, we have looked at best practice around the world and will be changing our approach into the future through new laws and better enforcement. We cannot change the past but we can change things for the future.” November 2017 DublinDublin London London New New YorkYork San SanFranscisco Francisco Criminal Justice (Corruption Offences) Act 2018 • Strict liability corruption offence for individuals and corporates • Presumption of Bribery in relation to PEPs or government officials (Sections 14-16) “shall be presumed to have been given and received corruptly as an inducement to, or reward for, or otherwise on account of, that official doing an act in relation to the performance of any of those functions, unless the contrary is proved” • Additional Offences: Trading in influence Use of confidential information False information Question? Intimidation Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco What does it mean in practice? • Company liable if act is committed by a director, manager, secretary or other officer of the body corporate; a person purporting to act in that capacity; a shadow director within the meaning of the Companies Act 2014 of the body corporate; or an employee, agent or subsidiary of the body corporate • Trial in the State will apply if one or more of the acts are “committed on an aircraft registered in the State” • Extraterritorial effect once dual criminality: all aspects of your business in all jurisdictions • OECD criticism DublinDublin London London New New YorkYork San SanFranscisco Francisco Corporate Liability • New anti-corruption offences Ireland: Strict liability UK: Failure to prevent • Ireland: Section 18(2) Corruption Offences Act 2018: “It shall be a defence for a body corporate… to prove that it took all reasonable steps AND exercised all due diligence…” • UK: Section 7 Bribery Act (Failure to prevent bribery): “It is a defence… had in place adequate procedures designed to prevent persons from committing an offence” Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco What must you do? • Anti-Bribery and Corruption Programme • ABC internal policies, training and ongoing monitoring • Gifts and Hospitality Policy •3rd party liability for anyone purporting to act on behalf of company • Lessons from R v Skansen: Company guilty for the failure to prevent bribery • Size doesn’t matter • Policy without implementation “Skansen argued at trial that it had adequate procedures in place to prevent bribery, but a jury found this not to be the case” • Employee and 3rd party compliance DublinDublin London London New New YorkYork San SanFranscisco Francisco New Investigations Agency: CEA • Corporate Enforcement Authority (CEA) •“an Irish FBI for white-collar crime” • Independent agency with enhanced investigatory powers • Led by 1-3 full time members with 5 year terms • International influences • European Context: • Loi Sapin II and French approach • Spainish Criminal Code • Staff appointments • Prosecution and relationship with DPP Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Deferred Prosecution Agreements • Law Reform Commission Recommendation • Permits company to continue doing business • UK Model • Judicial Oversight • Public Interest • Statement of facts • Issues with individual culpability • Duty to Self Report and Cooperate • Rolls Royce DPA Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Risks for Individuals Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco The Takeaways: Risks for you and mitigation strategies • Personal individual liability for officers and directors • Well structured compliance programme and risk assessment will create a Defence to regulatory prosecution/investigation • Ongoing compliance efforts must take place, particularly in high risk jurisdictions and operations concerning • Nature of aviation industry means interaction with governments and politically exposed individuals so much higher risk than most firms Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Corporate and Trust disclosure requirements in Ireland Nicholas Metcalfe, Partner, Mason Hayes & Curran DublinDublin London London New New YorkYork San SanFranscisco Francisco Introduction Corporate and Trust disclosure requirements in Ireland • Requirements for certain structures (e.g. tax, financing) commonly necessitate the use of SPVs – limited companies- registered in Ireland. • Assets often held on trust, e.g. through an orphan structure. • Companies and trusts have certain disclosure requirements. Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Companies Companies Act disclosure requirements • Companies required to file: • details of directors and secretaries; and • annual returns and financial statements. • Ongoing obligation to disclose changes to directors and secretary, allotments of shares. • Director’s residential address is disclosed on public register unless exemption obtained. • Register open to the public. Question? Visit Sli.do Enter: mhcaviation DublinDublin London London New New YorkYork San SanFranscisco Francisco Disclosure of beneficial interests Introduction • 2019 saw the introduction of: • The European Union (Anti-Money