BNY Mellon Fund Services fined €10.8m by Central Bank of Ireland

The Central Bank of Ireland has announced a €10.8m fine to BNY Mellon Fund Services (Ireland) for 16 breaches relating to outsourcing of fund administration activities. 

This is the largest monetary penalty imposed on a Fund Service Provider in Ireland to date.

According to the press release, issued on 24 March, the breaches included not having "adequate outsourcing governance frameworks" and its failure "to engage openly and transparently with the Central Bank" after the breaches were identified.

The CBI went on to BNY Mellon had provided "inaccurate and misleading information" to them and following their identification of the issues did not "fully remediate all of the issues".

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The duration of the breaches ranged from 26 days to 6 years, spanning the period from July 2013 to December 2019.

The Central Bank had determined the appropriate fine to be €15.4m, which was reduced "in accordance with the settlement discount scheme provided for in the Central Bank's ASP".

The Central Bank's Director of Enforcement and Anti-Money Laundering, Seana Cunningham, said: "If outsourcing is not effectively managed, it has the potential to cause investor detriment and threaten the operational resilience of regulated firms and the Irish financial system."

Cunningham added that, "the Central Bank expects firms to take the necessary actions to remediate weaknesses communicated to them and will hold firms fully accountable where they fail to do so".

A BNY Mellon spokesperson 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 firm has taken the necessary steps to rectify the deficiencies that gave rise to the breaches. We remain steadfastly focused on demonstrating fulfilment of our regulatory obligations and being a strong and trusted partner."