Brokers Ireland CPD Seminars April 2019
Compliance Update Emily Corcoran
Items Covered • No-Deal Brexit • Anti Money Laundering Regulation • GDPR • Insurance Distribution Regulation (IDR) • Investment Intermediary Act 1995 (IIA) • Non- Life Insurance (Provision of Information) Regulation 2018
No Deal Brexit Dealing with UK Wholesalers/MGAs • The use of UK wholesale brokers to place risks into the UK market would not be permissible under the IDR, under a hard Brexit scenario. • The use of UK wholesale brokers to sell products of an EU insurer to EU brokers is only permitted if the UK broker registers in the EU in line with the requirements of the IDR. • It is permitted to use Lloyds MGAs as Lloyds Brussels (that has opened a branch in the UK) has outsourced its underwriting activity to the MGAs. 4
No Deal Brexit Temporary Permissions Regime (TPR) & Authorisation under the FCA. • The Temporary Permissions Regime will allow EEA firms passporting into the UK to operate for a limited period while they seek authorisation if the passporting regime falls away. • This means that firms under the TPR will be subject to the same regulatory and supervisory framework as any UK regulated firm. • Brokers should keep in mind the cost associated with becoming registered with FCA. These costs include levies along with Professional Indemnity Insurance costs etc which Brokers must apply to their UK authorisation. 5
No Deal Brexit Temporary Permissions Regime (TPR) & Authorisation under the FCA. Change to notification deadline • Firms and funds now have until the end of 11 April 2019 to notify the FCA if they want to enter the Temporary Permissions Regime (TPR). • To enter the TPR, you need to notify the FCA by using their Connect system. 6
No Deal Brexit Financial Services Contracts Regime (FSCR) • The FSCR will automatically apply to EEA passporting firms that do not notify the FCA that they wish to enter the Temporary Permissions Regime, but have pre-existing contracts in the UK which would need to continue to be serviced. • The FSCR comprises two regimes: Contractual Run-Off (CRO) and Supervised Run-Off (SRO). 7
No Deal Brexit Financial Services Contracts Regime (FSCR) (UK legislation) Contractual Run-off (CRO) • CRO applies to firms without a UK branch (which operate under a freedom of services (FOS) passport immediately before exit day) • Firms enter CRO automatically (if they haven’t availed of the TPR) • Firms in CRO are principally permitted to carry out regulated activities which are necessary to perform pre-existing contracts. 8
No Deal Brexit Financial Services Contracts Regime (FSCR) (UK legislation) Supervised Run-Off (SRO) • Multiple categories of firms fall within the SRO. • This includes firms with a UK branch (operating under a freedom of establishment (FOE) passport immediately before exit day) that did not enter the Temporary Permissions Regime. • Qualifying firms also enter the SRO automatically. • If you are unsure of which category you fall into, you should contact the FCA. 9
No Deal Brexit Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 • The Irish legislation will allow a temporary run-off regime, which, subject to a number of conditions, will enable UK insurance undertakings and intermediaries to continue to fulfil contractual obligations to their Irish customers for a period of three years after the date of the withdrawal of the UK from the EU. • However, those insurers/intermediaries will no longer be able to write new insurance contracts or continue insurance distribution in respect of new insurance contracts in Ireland until they obtain a relevant authorisation from the Central Bank. 10
No Deal Brexit Green Cards • Green Cards are internationally recognised insurance documents which provide proof of insurance cover to law enforcement agencies. It is a hard copy document which is printed on green paper or with a green background. • Any motorist who plans on driving their Irish registered vehicle in Northern Ireland or the UK is advised to ensure they have a Green Card or they could possibly be subjected to the penalties for driving uninsured after that date. • Different means for distributing Green Cards have been adopted by insurance providers. Some are issuing Green Cards to all their policyholders, some are issuing Green Cards to policyholders in select areas (particularly Border counties) and some are issuing Green Cards to policyholders upon request. • You must process a Green Card request. 11
4 th AML Directive The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act, 2018 What does this mean? • Transposed on 14 November 2018 • Effective 26 November 2018 • Purpose is to give effect to the recommendations of the Financial Action Task Force, 12
4 th AML Directive Business Risk Assessment • Identify and assess risks to the firm; assess the level of risk of money laundering/terrorist financing involved in carrying out your business activities. • Various specified risk factors must be taken into account: the type of customer, products and services, countries or geographical areas, type of transactions, delivery channels. • The Business Risk Assessment must be documented • Reviewed and managed by a designated person at regular, predefined intervals and it must be approved by senior management . • It is an offence to fail to comply with these requirements. 13
4 th AML Directive Customer Due Diligence • CDD must be executed at any time , including situations where the relevant circumstances of a customer have changed, where the risk of money laundering/terrorist financing warrants its application. • Where a person purports to act on behalf of a customer, you must verify • the identity of that person, and • that they are authorised to so act. 14
4 th AML Directive Customer Due Diligence • Simplified Due Diligence • Low Risk • Enhanced Due Diligence • High Risk Third Country • Relationship/transaction presents a higher risk • Politically Exposed Persons - now also apply to PEPs resident in Ireland. • It is an offence to fail to comply with these requirements. 15
4 th AML Directive Life Assurance Policies/PEPs • Additional requirements are imposed where the PEP is a beneficiary of a life assurance policy . • Where you know or have suspicions that a beneficiary/beneficial owner is a politically exposed person, or an immediate family member or a close associate of a politically exposed person, you must: (a) inform senior management before pay-out of policy proceeds and (b) conduct enhanced scrutiny of the business relationship with the policyholder • Due diligence measures that previously applied only to PEPs resident outside of Ireland now also apply to PEPs resident in Ireland. 16
4 th AML Directive Internal Policies, Controls and Procedures • Policies, controls and procedures must be approved by senior management and shall keep these policies, controls and procedures under review in particular when there are changes to the business profile or risk profile of your firm. These policies, controls and procedures shall have regard to any guidelines issued by the competent authority. • A designated person must ensure that persons involved in the conduct of the business (includes directors, other officers and employees) receive instruction and training in respect of the law and on how to identify transactions or other activity that may relate to money laundering or terrorist financing (suspicious transactions) and how to proceed once identified. • As list of the policies, controls and procedures are included in our AML Summary as issued to members on 7 February. 17
GDPR Came into force 25 May 2018 • Enhanced rights for individuals and their data • Enhanced obligations on firms • Non- compliance can result in up to €10m or 2% of global annual turnover for some infringements, or up to €20m or 4%, whichever is the higher 18
Processing Personal Data GDPR requires you to maintain a record of your data processing activities and the parties involved. Applicable to data controllers and data processors alike • Company Details, contact name of our Data Protection Officer (if you have one) • Purpose of the processing • Description of the categories of data subjects and categories of personal data • Categories of recipients of the personal data • Where applicable transfers to countries outside the EEA • Retention policy • General description of technical and organisational measures taken to ensure security of the data 19
Data Mapping Must implement appropriate and effective measures to demonstrate compliance of processing activities with our data protection legislation. In order to do this you must know what data you have and where you keep it. • What personal data do you gather? • For what purpose? • What categories of data do you hold? • Who has access? • Who do you share it with? • Where is it stored? • How secure is it? • How long will you retain it? • How will you destroy/erase it? 20
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