The firm admitted to three breaches of the Outsourcing Requirements and one breach of the Prudential Handbook for Investment firms 2008.

The duration of the breaches varied between seven months and two years and 11 months spanning the period from July 2013 to June 2016.

The Central Bank determined that the appropriate fine was €2,286,000, which was reduced by 30 per cent in accordance with the settlement discount scheme.

The Central Bank’s investigation identified serious failings in the firm’s outsourcing framework including: failure to obtain the prior approval of the Central Bank to outsource fund administration activities and a failure to have adequate control systems to ensure that the firm satisfied the Central Bank’s outsourcing requirements for fund administrators.

As a result of 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’s outsourcing of regulated activities.

The Central Bank’s Director of Enforcement and Anti-Money Laundering, Seána Cunningham, said: “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, the associated risks and the effectiveness of the governance and risk management measures in place in respect of those arrangements. This is the first enforcement action taken by the Central Bank against a fund administration firm in relation to outsourcing failures.

“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. The requirement for fund administrators to seek the approval of the Central Bank prior to outsourcing fund administration activities is a core regulatory requirement. Compliance with this requirement ensures that the Central Bank is in a position to effectively assess, monitor and supervise the outsourcing of regulated activities.

“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 the issues identified by the Central Bank as part of its supervisory engagement with the firm. The fine imposed reflects JPMAS’s failure to address the root causes of these weaknesses over several years.

“Outsourcing is, and will continue to be, an area of particular focus for the Central Bank. This enforcement action reflects the importance the Central Bank places on firms’ compliance with their legal and regulatory obligations where they seek to outsource regulated activities. Where firms fail to comply with these obligations, the Central Bank will follow targeted supervisory intervention with robust enforcement action.”