Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Investor Money Regulations 2015 for Fund Service Providers

• Jurisdiction: Ireland
• Citation: IR SI 105/2015

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 27th March, 2015.

In exercise of the powers conferred on the Central Bank of Ireland (the “Bank”) by section 48 of the Central Bank (Supervision and Enforcement) Act 2013 (the “Act”), the Bank, having consulted with the Minister for Finance and the Minister for Jobs, Enterprise and Innovation in accordance with section 49(1) of the Act, hereby makes the following Regulations:

1. These Regulations may be cited as the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Investor Money Regulations 2015 for Fund Service Providers.

2. In these Regulations:

“assurance report” has the meaning provided in Regulation 8(1);

“authorised person” means an employee or officer of a fund service provider who has the authority to commit the fund service provider to a binding agreement;

“Bank” means the Central Bank of Ireland;

“collection account” means an account opened with a third party by a fund service provider to hold money to deliver from an investor to an investment fund or from an investment fund to an investor and has the following features:

(a) is in the name of the fund service provider or its nominee;

(b) includes in its title the description, “collection account”, to distinguish assets in the account from the fund service provider’s own firm assets held elsewhere; and

may include an account where the assets of multiple investors are held in one account;

“credit institution” means an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account;

“fund service provider” means a person who is:

(a) authorised pursuant to section 10 of the Investment Intermediaries Act 1995 to carry out:

(i) the administration of collective investment schemes or fund accounting services or acting as a transfer agent or registration agent for such schemes, or

(ii) custodial operations involving the safekeeping and administration of investment instruments,

(b) authorised pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ( S.I. No. 352 of 2011 ) as a management company,

(c) authorised pursuant to the European Union (Alternative Investment Fund Managers) Regulations 2013 ( S.I. No. 257 of 2013 ) as an alternative investment fund manager,

(d) referred to in the Unit Trusts Act 1990 as a management company,

(e) referred to in Part 24 of the Companies Act 2014 as a management company,

(f) referred to in the Investment Limited Partnerships Act 1994 as a General Partner,

(g) referred to in the Investment Funds Companies and Miscellaneous Provisions Act 2005 as a management company,

(h) a credit institution who acts as a depositary for investment funds or who provides fund administration services to such funds.

“Head of Investor Money Oversight” has the meaning given in Regulation 7(1);

“investor” means any person:

(a) from or on behalf of whom the fund service provider receives money for the purposes of subscribing to an investment fund,

(b) in respect of whom the fund service provider transfers money to an investment fund for the purposes of subscribing to or participating in that investment fund,

(c) in respect of whom the fund service provider receives from an investment fund money for transmission to the person, whether in respect of redemption proceeds or otherwise;

“investor money” means any money, to which an investor is beneficially entitled, received from or on behalf of an investor or held by the fund service provider on behalf of an investor and includes (without limitation):

(a) investor money held by or with a nominee of the fund service provider,

(b) in the case of money that is comprised partly of investor money and partly of money of any other type, that part of the money that is investor money,

“investor money management plan” means the plan created pursuant to Regulation 7(3) for the purpose of safeguarding investor money;

“investor money requirement” means the total amount of investor money that a fund service provider should hold on behalf of investors;

“investor money resource” means the total amount of investor money held in a fund service provider’s collection accounts;

“investor money facilities letter” has the meaning provided in Regulation 4(4);

“investment fund” means an undertaking within the meaning of Article 1(2) of Directive 2009/65/EC or an AIF collective investment undertaking within the meaning of Article 4(1)(a) of Directive 2011/61/EU;

“nominee” means a body corporate acting on behalf of a fund service provider to hold investor money;

“own firm money” means any money that is owned by the fund service provider;

“related party” in relation to a fund service provider means:

(a) if the fund service provider is a company, another company that is related to it within the meaning of section 2 of the Companies Act 2014 ,

(b) a partnership of which the fund service provider is a member,

(c) if the businesses of the fund service provider and another person have been so carried on that the separate business of each of them, or a substantial part thereof, is not readily identifiable, that other person,

(d) if the decision as to how and by whom the businesses of the fund service provider and another person shall be managed are, or can be, made either by the same person or by the same group of persons acting in concert, that other person,

(e) a person who performs a specific and limited purpose by or in connection with the business of the fund service provider, or

(f) if provision is required to be made for the fund service provider and another person in any consolidated accounts compiled in accordance with the Seventh Council Directive 83/349/EEC of 13 June 1983, that other person.

Segregation

3. (1) For the purposes of these Regulations, a fund service provider is deemed to hold investor money where:

(a) it has been lodged into a collection account in any of the credit institutions listed in Regulation 3(9);

(b) is held in the name of the fund service provider or any nominee of the fund service provider; and

(c) the fund service provider has the capacity to effect transactions on that collection account.

(2) A fund service provider shall act honestly, fairly and professionally in accordance with the best interests of investors.

(3) A fund service provider shall keep investor money separate from all non-investor money and take all steps as may be necessary to ensure that investor money is held by it in trust for the benefit of the investor on behalf of whom such investor money is being held.

(4) Without prejudice to Regulation 3(11), a fund service provider shall not place in a collection account any money other than investor money except in accordance with Regulation 6(3).

(5) Except in accordance with a legally enforceable agreement, a fund service provider shall not use the money of an investor for any purpose other than for the sole account of that investor.

(6) A fund service provider shall not use, or transfer investor money otherwise than in accordance with an instruction relating to that investor money received by the fund service provider from the investor for whom that investor money is held or as required by law or by order of any court of competent jurisdiction.

(7) Without prejudice to the generality of Regulation 3(4) and Regulation 3(11), a fund service provider is not required to pay into a collection account such investor money that it receives on behalf of an investor where to do so would result in the fund service provider breaching any law or order of any court of competent jurisdiction.

(8) Where, in accordance with an instruction from the relevant investor, investor money is transferred to a third party, the fund service provider shall ensure that such transfer is overseen and approved by a member of staff other than the staff member who conducts the transfer.

Holding Investor Money

(9) Investor money may only be held by a fund service provider in a collection account maintained by the fund service provider at any of the following:

(a) a credit institution authorised in the EEA;

(b) a credit institution authorised within a signatory state, other than a Member State of the EEA, to the Basle Capital Convergence Agreement of July 1988;

(c) a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand.

(10) Any investor money received shall be deposited into a collection account without delay and in any event not later than one working day after the receipt of such money.

(11) Without prejudice to Regulation 3(12), where a fund service provider receives money that is comprised of a mixture of investor money and other money, the fund service provider shall first pay all of that money into a collection account of that fund service provider and, thereafter shall, without delay, transfer out of or withdraw from the collection account such money as is not investor money.

(12) If a fund service provider receives investor money where:

(a) it is not clear which investor owns such money; or

(b) there is insufficient documentation to identify the investor who owns such money;

the fund service provider, having due regard to other legislation, shall first pay the investor money into a collection account and, thereafter, shall within 5 working days of the initial receipt of such money, either identify the investor concerned or return the money.

(13) Investor money shall only be deposited with any one of the credit institutions listed in Regulation 3(9) where the fund service provider:

(a) is satisfied that the legal, jurisdictional, regulatory requirements and market practices relevant to the holding of investor money with that credit institution in the manner proposed do not adversely affect...