'Reckless' behaviour by bankers to be criminalised
The Central Bank has thrown its weight behind a push to tighten laws on white-collar crime, recommending that the heads of financial services firms be held criminally liable in the event of "egregious recklessness".
The tougher stance - adopted almost a decade after the economic crash - was contained in the watchdog's long-delayed official response to an issues paper released by the Law Reform Commission (LRC).
If the regulator's proposals are endorsed and adopted into law, the heads of banks or other financial services companies could face criminal sanctions for "recklessly" driving a corporation into the ground.
The Central Bank's bullish approach follows the introduction of strict laws in the UK which came into force in March 2016.
Under the new regime there, senior management at UK banks face a maximum seven-year jail sentence or stiff fines if their actions cause an institution to fail.
The UK crackdown sparked debate about the burden of proof required for a successful prosecution, and top legal experts here echoed those concerns.
One leading barrister questioned whether the proposed reform "was really necessary".
But in its response the Central Bank argued there "are undoubtedly cases where misconduct by individuals is so egregious as to merit criminal sanction. The Irish legislative framework deserves to be strengthened to take account of such egregious recklessness in risk-taking by those who were in charge of failed financial firms".
Legal experts were more enthusiastic about the Central Bank's decision to support the establishment of a special investigations unit for white-collar crime.
One lawyer, who spoke on the basis of anonymity claimed the current "fragmented" and "multi-layered system" is not working and argued Ireland needed a dedicated agency similar to the UK's Serious Fraud Office.
The Central Bank said "the creation of a dedicated division within an existing criminal agency" together with a possible "specialised prosecution unit... would allow for more effective investigations into white collar offences".
The raft of proposed reforms also included a recommendation to extend the amount of time individuals can be suspended from senior positions in regulated firms.
The regulator's recommendations to the Law Reform Commission envisaged the introduction of "certain core common standards" that could be embedded "within a legislative framework", meaning they would "sit alongside prescriptive rules".
Penalties could then be enforced "where entities or individuals fall below them."
The Central Bank's response was due to be submitted to the LRC in 2016. However the document was only completed in December and it is understood the watchdog delayed the publication until this week to ensure public attention, after the festive break.
According to Professor Ciarán Burke, director of research at the LRC, the independent body will conclude work on its final position paper "by the end of the first quarter". It is expected to be published in the second quarter.
He said the report will take into account events, including the aftermath of the banking crash.