(Bloomberg) — Ireland’s central bank hit a unit of Bank of New York Mellon Corp. with a record fine and a reprimand for breaking rules on outsourcing fund administration services as well as giving “inaccurate and incomplete information” to the regulator.
The central bank fined BNY Mellon Fund Services (Ireland) DAC 10.78 million euros ($11.8 million) for 16 regulatory breaches, it said in an emailed statement. The firm admitted the breaches, which took place between July 2013 and December 2019.
“The investigation into BNY DAC found systemic weakness across its entire outsourcing framework” that it “repeatedly failed to address,” central bank director of enforcement Seana Cunningham said. BNY Mellon “failed to act with expediency, transparency and openness even once it was aware that there were further issues with its outsourcing arrangements,” she added.
The penalty, which was reduced from 15.4 million euros because the company settled, is the largest imposed on a fund service provider in Ireland to date, the central bank said.
“BNY Mellon Fund Services (Ireland) DAC sincerely regrets failing to meet the regulatory requirements and expectations of the Central Bank of Ireland in relation to the oversight of outsourced fund administration activities and related regulatory engagement,” the company said in an emailed statement. “The firm has taken the necessary steps to rectify the deficiencies that gave rise to the breaches,” it added.
“We remain steadfastly focused on demonstrating fulfilment of our regulatory obligations and being a strong and trusted partner,” it said.
The breaches included:
- Not obtaining central bank approval before starting new outsourcing arrangements,
- Failing to monitor and assess the financial performance of service providers,
- Repeatedly failing to ensure that a senior member of staff completed, signed and dated a review of the final net asset value prior to its release,
- Failing to notify clients before commencing an outsourcing arrangement.
Once the central bank started its investigation, BNY Mellon “provided inaccurate notifications of further breaches of its outsourcing obligations” which “served to minimize the seriousness and extent of the breaches that BNY DAC was reporting,” the regulator said.
(Updates with BNY Mellon comment fifth and sixth paragraphs.)
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