Central Bank of Ireland Regulatory and Supervisory Outlook 2026: Implications for fund managers

• Governance risk is heightened where there are diverging cultural values or geopolitical positions between parent and local entities.
• Focus will be on themes such as:

(a)            delegation;

(b)            board effectiveness; and

(c)            depositary oversight of fund managers.

• Continuation of sectoral assessment of delegation in fund management companies (“FMCs“) with the first industry communication from the review in H1 2026.
• Conclude review of the effectiveness of fund administration and depositary management of outsourcing (2026).
• Review of governance and board effectiveness in fund administrators and depositaries (H2 2026 – H2 2027).
• Review of compliance functions across fund administrators and depositaries (Commencing engagement in H1 2026).
• European Securities and Markets Authority (“ESMA”) Common Supervisory Action (“CSA”) (Subject area will be confirmed by ESMA in due course) (2026 – 2027).
• Supporting the transition to AIFMD II for funds and fund service providers (“FSPs”) (2026 – 2027).

CRD VI will result in material business model restructuring for financial groups engaged in cross border core banking activities.  This includes existing Irish depositary business with global custody operations, or more specifically, to their related banking activities which are required to deliver those custody services to Irish funds.  Any authorisations and related plans will need to be successfully executed in 2026 to ensure compliance with CRD VI.

• Focus on FMC and FSP implementation and monitoring of the requirements of the Digital Operational Resilience Act (“DORA”) including threat-led penetration testing. Survey issued in H1 2026.
• A risk-based approach to anti-money laundering and countering the financing of terrorism (“AML / CFT”) will continue into 2026 through supervisory data requests including the new, enhanced Risk Evaluation Questionnaire (“REQ”). The enhanced REQ will capture detailed quantitative and qualitative risk information on ML / TF risk and the quality of AML / CFT controls. This data will be used to: (a) identify firm and sector-specific issues and emerging trends; (b) guide supervisory strategy; and (c) satisfy incoming data requirements for the EU’s Anti-Money Laundering Authority (“AMLA”).
• A thematic inspection focused on transaction monitoring and suspicious transaction reporting and engagements with firms across the sector.
• Engagement on the execution by impacted depositaries of their CRD VI compliance plans.

• Private credit and private equity valuations remain opaque, with limited observable inputs relying on models and professional judgment that may not reflect true economic value.
• The increase in private asset strategies and distribution channels (such as platforms) heightens the need for effective, consistent and well-evidenced valuation practices.

• Responsive supervision of proposed and implemented changes in firms operating processes and arrangements, with a focus on capacity to respond effectively to stresses in market conditions (2026 – 2027).
• Further examination of the appropriateness of industry approaches and processes for monitoring investment restrictions and reporting regulatory breaches (H2 2026 – 2027).
• Value at Risk (VaR) model review with a focus on UCITS that opt to the use of the VaR approach and the effectiveness of the levels of oversight by depositaries (2026).
• Continued enhancement and use of fund data and risk models by the Central Bank to deliver a data-led, agile and risk-based approach to the effective and efficient oversight of the funds sector (2026 – 2027).
• Review of valuation oversight with a focus on hard to value assets and the oversight role of the depositary (2026).

• The Central Bank will conduct a thematic review on cohorts identified by the Central Bank’s fund risk model as engaging in significant liquidity transformation. Initial focus will be on selected Irish authorised bond funds and managers.
• Under Article 25 of the Alternative Investment Fund Managers Directive (“AIFMD“), the Central Bank will analyse leverage-related systemic risks across funds and cohorts, identify the most leveraged alternative investment funds and undertake targeted reviews of those funds and their Irish AIFMs, including where Irish AIFMs oversee non-Irish funds.

• Review on liquidity risk management in bond funds to assess how firms manage the mismatch between investor redemptions and asset liquidity (2026 – 2027).
• Review the progress of relevant AIFMs on leverage reduction and maintenance plans across property funds (2026 – 2027).
• Property funds questionnaire issued in Q1 2026. Submission of return, assessment of responses and follow up engagement through H2 2026 (2026 – 2027).

• There has been a continued increase in engagement by funds and FSPs in relation to proposals for investment in complex and innovative investment strategies and alternative assets including crypto-assets, private debt and novel exchange traded fund (“ETF“) constructions.
• Tokenisation has the potential to introduce efficiencies and broaden access to investment products for investors.  There have been strong levels of engagement with organisations working on tokenised proposals, with live applications currently under review.
• The Central Bank will continue to constructively engage with industry in relation to the potential to establish funds that give exposure to instruments which have previously been considered as presenting comparatively higher risk.

• Continued engagement both domestically with regulated firms in the funds sector and internationally with ESMA on costs and fees with a focus on value for money.  Ongoing supervisory engagement where breaches relating to inappropriate cost / fee structures or disclosures have been identified (2026 – 2027).
• Gatekeeping will continue to be a vital tool for the Central Bank regarding assessing fund disclosures, levels of costs and transparency for prospective investors (2026 – 2027).
• Consistent application of the principles of the Consumer Protection Code, assessing how firms are implementing it (2026 – 2027).

• The risk remains that poor data quality, accuracy and reliability can undermine effective governance and decision-making within firms and the Central Bank’s ability to supervise.
• The increasing use of AI across the funds sector brings its own set of risks when awareness, governance and controls are inadequate.

• Continued enhancement and use by the Central Bank of fund data and risk models to deliver a data-led, agile and risk-based approach to the effective and efficient oversight of the funds sector (2026 – 2027).
• Continued engagement to understand firms’ approach to and usage of AI in their business models (2026 – 2027).

• The Central Bank continues to see a level of regulatory divergence across the theme of ESG which can impact the consistent application of sustainability standards and market conduct.
• The CSA report published in 2025 identified areas for improvement including inconsistent sustainability risk monitoring, data quality challenges and unclear product disclosures.

• Sustainability work will continue using the Central Bank’s ESG dashboard tool to assess firms’ compliance with Sustainable Finance Disclosure Regulation (“SFDR”) (2026 – 2027).
• Compliance with the Fund Naming Guidelines will continue to be monitored at both the gate and through data-led supervisory reviews (2026).