RegSol Blog

JPMorgan Administration Ireland Fine: A Case of Compliance Mismanagement

July 2019

On the 24th of June 2019, the Central Bank reprimanded and fined JPMorgan Administration Services (Ireland) Limited (JPM) €1.6 million. 

In March 2014, following a themed inspection with outsourcing requirements, the Central Bank issued a Risk Mitigation Programme requiring JPM to take measures to fix issues with its outsourcing arrangements with third parties. 

JPM persistently failed to remediate the root causes of these failings despite repeated supervisory intervention by the Central Bank. And yet, someone senior in JPM continued to tell the Central Bank that all was well and had been fixed, whilst JPM continued to outsource core activities without supervisory approval. And, despite the establishment of an oversight and governance committee to regularise these issues, a thinly veiled attempt to provide assurances to the regulator, nothing changed. 

In a way, the enforcement action against JPM, we would argue, represents a microcosm of scandals that continue to plague large international financial institutions such as Danske, ING and Deutsche Bank. Dare we question, why do big institutions continue to fail in their regulatory obligations as supervisory authorities increase the regulatory burden for entities large and small? Can internal compliance departments continue to justify their position that they are not risk owners and therefore not responsible? 

Gatekeepers and frontline staff are overburdened with operational requirements, targets, customer pressures and bureaucracy while Senior Management, Compliance and Risk teams “oversee” their colleagues. Is it time the Central Bank takes a closer look at the Heads of Compliance and Senior Management and acts on its administrative sanctions programme? 

With only 6 prohibition notices issued against individuals for failures in fitness and probity and the latest Central Bank’s speeches commenting on individual accountability, perhaps it’s only a matter of time.

Click here for details of the Central Bank’s enforcement action

By Judy DeCastro for RegSol