The Minister for Finance, Michael McGrath TD, has today (19 April 2024) published a Mapping Report on the development of a National Financial Literacy Strategy in Ireland.

1. Financial literacy and education is an important part of financial consumer protection. Financial literacy covers people’s awareness, behaviour, knowledge, attitudes and skills in relation to money and is an important skill that everyone should have throughout their lives.
2. This report collates the extent of the current provision, across many organisations, of financial education in Ireland, and provides evidence, analysis and recommendations for the next stage of the design and development of a national strategy.
3. On the basis of extensive stakeholder engagement to date, including responses to a stakeholder survey issued in August 2023, this report describes the various bodies currently involved in delivering financial education in Ireland. It also sets out potential gaps and themes to be addressed in a financial literacy strategy and stakeholder expectations of that strategy.

Where and how is fintech referred to in the Mapping Report? 

Fintech referenced in the National Financial Literacy Strategy Mapping Report?

• "This is in addition to emerging risks with non-bank lending, Fintech, and climate change" (Hmm - Fintech is a risk?)

 

• "In recent years, the banking landscape in Ireland has changed significantly. According to the 2023 Consumer Banking Sentiment Survey15 , published by the Department of Finance in September 2023, while the two pillar banks continue to dominate the market in terms of market share of current accounts held, the survey results show that the use of ‘fintech’ (which includes a growing use of apps on smartphones and contactless payments by customers of traditional banks) has increased as has a rise in the market share of “digital only” banking providers, such as Revolut."

 

• "In terms of FinTech providers, the Survey results show that the top features of such providers for consumers are instant money transfer, free banking and a great/user-friendly mobile app. This is followed by splitting bills, spending information, foreign exchange and saving vault, while investment opportunities are the least important. Switching of banking products is very low in Ireland with many citing a general perception of it being difficult to switch, but general inertia being the most prominent reason."

 

• "The use of ‘fintech’, which includes a growing use of apps on smartphones and contactless payments by customers of traditional banks, has increased, as has a rise in the market share of “digital only” banking providers." 

 

• "One of the priority themes of the strategy is ‘Fintech & Digital Finance’. Under this theme, recent Ireland for Finance Action Plans included actions on financial literacy in order to support the public to adapt to the growth of fintech in retail activity. This involved the development of educational consumer resources by the CCPC in cooperation with the Department of Finance and the Central Bank"

See also https://www.gov.ie/en/press-release/23ccb-minister-mcgrath-publishes-mapping-report-on-the-development-of-a-financial-literacy-strategy-in-ireland/

This blog and others are joint efforts between Fintech Ireland and CompliReg.

First Published Tuesday 9th April 2024

Before we dive into the detail contained in the new (issued 9 April 2024) "Central Bank Expectations for Authorisation as a Payment Institution or Electronic Money Institution, or Registration as an Account Information Service Provider", a couple of things to note:
​

1. the format, look and feel of the new webpage on the CBI's website;
2. the links from How We Regulate leading to the Authorisation Page, regardless if you clicked on Payments Institutions, Electronic Money Institutions, Small Electronic Money Institutions or Account Information Service Providers redirect you to the same page. That page ends in payment-authorisation.  Seems that from a pragmatic and practical stance, the CBI is getting ready for the merging of the e-money and payment services regimes under the current PSD3 legislative proposal;
3. [12+ months for authorisation] although buried away at the bottom of the CBI's webpage, there is this very welcome statement about how long it may take to get authorised. "Experience suggests that it can take over 12 months for firms to provide all of the information necessary to enable a decision to be made" ;
4. [requirement for a pre-application meeting] each proposed Applicant must meet with the CBI before an Application is filed;
5. [no triple hatting] the Central Bank informs that it has not approved applications which propose triple hatting.  It also states that "Proposals to triple hat roles present significant doubt as to the commitment of an applicant firm to have adequate governance in place."
6. [dual hatting].  Dual hatting is permissible on a case-by-case basis, depending on the nature, scale and complexity of the proposal, and insofar as there is no potential or perceived blurring of the three lines of defence. Any proposal for dual hatting of PCF roles should be accompanied by a detailed rationale setting out how the role holder would have sufficient capacity, and the appropriate qualifications/experience, to effectively perform the proposed roles.
7. [appointment of CEO, chair & others] the Central Bank states that "the appropriateness of resources will be determined at each stage on a case-by-case basis, applicant firms which have made senior appointments (for example Chair and Chief Executive Officer) at the application point tend to progress through the authorisation process in a more timely manner.". The Central bank also states that "Applicant firms which have made the necessary senior appointments early in the process generally submit a more complete application and, therefore, tend to progress through the assessment process in a timelier manner."
8. currently, there is no fee for submitting an Application (but there is of a course the separate Industry Funding Levy);
9. Dormancy Policy - the CBI's dormancy policy applies when an applicant has not provided an adequate response within 60 working days following the issuance of comments. A “Minded to Deem Withdrawn” letter is sent to the applicant after 50 working days of comments issued, notifying the applicant that it has 10 working days to provide all outstanding documentation or the application will be considered withdrawn. If the applicant does not respond within the 10 working days, a “Deemed Withdrawn” letter is sent and the application is not considered further by the CBI.    

Now that we have covered the burning issues on most applicants' mind, let's turn to what the CBI has set out in its new/updated "Expectations for Authorisation as a Payment Institution or Electronic Money Institution, or Registration as an Account Information Service Provider"

Referred to below is the Pre-Application Key Facts Document (“KFD”). Issued 9 April 2024. The purpose of the KFD is to provide sufficient detail to the CBI on an applicant's proposal for authorisation/registration.  It would normally consist of c.15-20 pages. It should be included in first batch of documents an Applicant reads.

As you will note from the above diagram, the authorisation assessment process consists of the following three stages:

1. Exploratory Stage. This consists of two phases:

• Initial meeting with the applicant firm; and
• Submission of required information (Key Information Check) and initial assessment;

2. Assessment Stage; and

3. Authorisation/Registration Decision Stage.

Phase 2 – Key Information Check and Initial Assessment

In addition to ensuring that all required documentation has been provided, this phase encompasses an initial assessment of the submission.

At the end of this phase, the Central Bank will notify the firm of the outcome which is either:

• Progression

The Central Bank considers that the application can progress to the Assessment Stage.  A specific case manager is assigned who will lead the assessment, and will be the primary point of contact for the applicant firm during the assessment process.

• Issues have been Identified Precluding Progression

The Central Bank considers that the application cannot progress to the Assessment Stage.  The applicant will be advised as to the rationale for not progressing and will be provided with an opportunity to address the issues identified (through written submissions and/or meetings).

During this stage the Central Bank conducts its assessment of the application. The Central Bank may request additional information, and detailed assessment meetings in relation to one or more areas of the application will be undertaken with the applicant. High quality applications with comprehensive and complete information and explanations reduce the need for additional information requests. Individuals proposed for certain key roles (Pre-Approval Controlled Function roles) may be invited for interview as part of the assessment of their Fitness and Probity for the role for which they are applying.

At the end of the assessment process, the Central Bank will notify the firm of the outcome of its assessment. There are two possible outcomes:
​

• Positive Outcome (“Minded To Authorise/Register” letter)

Where the applicant firm has positively demonstrated that it will meet all authorisation/ registration requirements and expectations, the Central Bank will issue a “Minded to Authorise/Register” letter which will include, inter alia, requirements to be addressed prior to authorisation/registration, conditions to be addressed post-authorisation, and the proposed level of capital to be held (neither conditions nor capital are applicable to Account Information Service Providers).

or

• Negative Outcome (“Minded to Refuse” letter)

In the event that the Central Bank is not satisfied following the conclusion of its assessment phase that it can authorise/register the firm, a “Minded to Refuse” letter will be issued. This will include the reason(s) for the Central Bank’s proposed decision. The letter will specify the period within which the applicant firm may make submissions in writing in relation to the proposed refusal. Any submissions made will be considered by the Central Bank before making a decision on the matter.

This is the stage in which the final decision as to authorisation/registration is made. There are two possible outcomes:

• Positive Outcome (Letter Granting Authorisation/Registration)

Subject to the pre-authorisation/registration requirements in the “Minded to Authorise” letter having been addressed, no new adverse information coming to the Central Bank’s attention in the interim, and agreement from the applicant firm as to the proposed conditions and capital (not applicable to Account Information Service Providers), a letter granting authorisation/registration will be issued, and the applicant firm will then be able to commence its regulated activities.

or
​

• Negative Outcome (Letter of Refusal)

Where a “Minded to Refuse” letter has issued, the Central Bank will review any submissions made by the applicant firm. If the Central Bank is still not satisfied to approve an application following the review of any submissions to a ‘Minded to Refuse’ letter, it will issue a letter of refusal.

​The 90 day Service Standard clock for the Assessment Stage will be paused where an information request has been issued to the applicant until such time as a satisfactory response has been provided. In addition, the clock can be switched off entirely where any of the following arise:
​

• Another regulatory authority has to be contacted;
• Persons are subject to interview;
• Significant legal issues arise;
• Significant fitness and probity issues arise;
• The business model is complex or novel in nature;
• Significant changes to the business model, the applicant’s shareholder structure or other key aspects of an application arise during the review process, or where the application becomes dormant; or
• The CBI is minded to refuse an application.  

The CBI has Dormancy Policy.

This means that when an applicant has not provided an adequate response within 60 working days following the issuance of comments. A “Minded to Deem Withdrawn” letter is sent to the applicant after 50 working days of comments issued, notifying the applicant that it has 10 working days to provide all outstanding documentation or the application will be considered withdrawn. If the applicant does not respond within the 10 working days, a “Deemed Withdrawn” letter is sent and the application is not considered further by the Central Bank.

A) You need to read the following before you put pen to paper on the actual application documents:

Thereafter read through the relevant Application Form from the list below:

B) Then you will need to get to grips with:

• the Irish Anti-Money Laundering, Counter-Terrorist Financing and Financial Sanction regime
• the Qualifying Shareholders of Payment Institutions and Electronic Money Institutions requirements
• Pre-Approval Controlled Function Roles regime

The following forms should be completed:

1) Legal Persons/Entities

• Application for a Legal Person
  

2) Natural Persons

• Application for a Natural Person 

3) Executive Directors of Legal Persons/Entities

• Application for a Director of a Legal Person or Entity with a Qualifying Holding

​While the above forms are not required to be completed for Account Information Service Providers, the Central Bank will assess the suitability of all legal and natural persons with a qualifying holding.

For all Pre-Approval Controlled Function roles (typically board members, senior management, key function holders), the following should be completed:

• Fitness and Probity Individual Questionnaires

These should be submitted electronically via the Central Bank of Ireland Portal. Please note access to the Portal is only provided once an application has progressed to Stage 2 - Assessment Phase.

In addition to the foregoing documents accessible above, it would make sense for Applicants to read and become familiar with:

Service Standards

• ​Service Standards issued by the CBI

Is there a fee?
There is currently no fee for submitting an application. Once authorised, a firm is subject to an annual Industry Funding levy. For further information on the levy see here.

How do I submit the application?
Applications must be submitted via Kiteworks. Please contact applications@centralbank.ie to obtain access.

How long is the process expected to take?
The time taken to receive an authorisation decision is primarily dependent on the preparedness of an applicant firm to undertake the assessment process, and on the quality and timeliness of submissions. The Central Bank will, in accordance with relevant legislation complete its assessment within 3 months of the receipt of the application, or if the information is incomplete, within three months of receiving all of the information required for the Central Bank to make a decision on the application. Experience suggests that it can take over 12 months for firms to provide all of the information necessary to enable a decision to be made. See above for further information on Service Standards.

Is a Pre-Application meeting required before an Application can be submitted?
Yes, see above for details of the Initial Meeting which forms part of the Exploratory Stage.

What to do if I need more help?
For any authorisation related queries, you contact the Payments Authorisation Team (applications@centralbank.ie). If you have a query in relation to new technologies, email fintech@centralbank.ie.

If you need help and support too file your Application, talk to Peter Oakes at CompliReg via office@complireg.com.

If you are:

• a regulatory adviser in Ireland, including a consultant, a law firm, an accounting firm,
• an aspiring CEO/CFO/CCO etc looking to join a fintech seeking authorisation,
• especially a founder looking to get his/her fintech (#emoney institution, #payments institution or #crypto asset institution),
• company formation firms (i.e. TCSPs), or
• a recruiter in the fintech arena,

be very careful with what can only be described as middle-men sharks / charlatans operating in the industry claiming that they are based in Eastern Europe (inside and outside of the EU depending upon your questioning), that they have clients requiring authorisations in Ireland and that they need assistance from you with the business set-up and authorisation paperwork.

These sharks/charlatans mislead and lie about their credentials and their experience. It seems that Ireland has become the go to jurisdiction for firms wanting credible supervision and regulation and the sharks are trying to exploit this. However these middle-men/sharks have no idea of the regulatory regime in Europe, let alone Ireland, and a few pointed questions catch them out. Then the fun begins as you watch them squirm in their seats.

It is clear that these are the "fintech advisers" which have and continue to fail to get their clients authorised elsewhere (or are perhaps just a scam from the outset). With Ireland's reputation riding high, these sharks are bombarding me (and others) with poorly thought-out offers/plans. I think I receive at least four approaches a week from these bad actors.

Unusually, I took a call from one of these firms today. It was an advisory firm with a name I did not recognise. When the video feed went live it was the same person who approached me last year under a different corporate name. When he saw my face, the stuttering began. His lead generators had clearly let him down.

These firms try to hire/appoint people in Ireland and increase the amount of any fees guided upon and add a margin to 'their clients'. I asked if they disclose this margin to the underlying client? Together with that question, and a few other due diligence questions, they quickly got the message that Ireland doesn't welcome their type of business nor that of their clients.

I am pretty sure that no one in Ireland wants dodgy companies and UBOs accesses and thereby diminishing the value of Ireland's hard fought high levels of regulatory reputation, prudential soundness, conduct risk, consumer protection and anti-financial crime standards.

I am pretty sure that my peers in other EU Member States feel the same way.

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• Need assistance with an emoney or payments authorisation or an account information service provider or virtual asset services provider registration application, check out Fintech Ireland and CompliReg's handy authorisation guides at https://fintechireland.com/fintech-authorisations.html.  

​Welcome Intuit Ireland Software Limited to the regulated fintech ecosytem in Ireland!  Its authorisation brings the pool of regulated fintech in Ireland to 69, comprised of:
​

• 27 authorised electronic money institutions
• 21 payments institutions,
• 5 standalone open banking firms
• 11 virtual asset services providers and
• 5 crowdfunding services providers. 

​Intuit Ireland Software Limited registration is the 1st standalone open banking firm to be registered in Ireland since July 2022. 

The company was incorporated in Ireland just under one year ago on 6 April 2023. and was registered by the Central Bank of Ireland on 2 April 2024.

Ireland now has 16 entities which are authorised or registered to provide open banking services.  These include 5 standalone entities and a mix of 11 emoney and payment firms which can provide such services. 

As we said back on 20 February 2024, we are pretty sure that these numbers will continue to grow in 2024.

Intuit Ireland Software Limited  has been registered by the Central Bank of Ireland to provide payment services #8 (Account information services) ​

​

• Sign up to our Newsletter here.
• Need assistance with an emoney or payments authorisation or an account information service provider or virtual asset services provider registration application, check out Fintech Ireland and CompliReg's handy authorisation guides at https://fintechireland.com/fintech-authorisations.html.  

Welcome Decta Limited to the regulated fintech ecosytem in Ireland!  Its authorisation brings the pool of regulated fintech in Ireland to 68, comprised of:

• 27 authorised electronic money institutions
• 21 payments institutions,
• 4 standalone open banking firms
• 11 virtual asset services providers and
• 5 crowdfunding services providers. 

Decta Limited's authorisation is the 2nd emoney institution to be authorised so far this year. The most recent payments company authorised was Etsy Ireland Limited and previous to that it was emoney firm Navro Payments Europe Limited.

As we said back on 20 February 2024, we are pretty sure that these numbers will continue to grow in 2024.

In what must have felt as extended St Patrick Day's long weekend for the Irish Decta Team, the company was authorised by the Central Bank of Ireland on Tuesday 19 March 2024 as an emoney institution. 

Decta Limited has been authorised to provide emoney services and payment services #3 (Execution of credit transfers, including standing orders) and #5 (Issuing of payment instruments and/or acquiring of payment transactions). 

Some observations:

• ​Why did Decta seek an authorisation in Ireland when another Decta Limited became authorised in Cyprus for emoney services on 10 August 2023?
• The Irish company was incorporated back on 1 October 2021.  That seems a long time from its incorporation date to today for an entity to become authorised - nearly 30 months. While a firm may not start an application immediately after it is incorporated, most firms - where they are the subsidiaries of foreign firms - start the journey no later than three to six months following incorporation.  If one was conservative and went with the six month timeline, it may have taken Decta Limited 24 months to become authorised.    
• It appointed its first set of Irish resident NEDs on 1 June 2022, with one of them leaving just after Christmas Day 2023 following the appointment of another NED just before that Christmas period.
• In addition to the NEDs, the company's local CEO sits on its board together with two group executives including its Cypriot authorised company's CEO and its Deputy CEO. 
• The Irish comapny's shareholders are RRE Tradecenters Holding Limited based in Cyprus and SIA "Suharenko Family Investments" based in Latvia, holding 67% and 33% of the Irish company respectively.   
• SIA "Suharenko Family Investments" is a shareholder in the Latvia Bank, AS “Rietumu Banka”.  
• Irish billionaire Dermot Desmond owns a one-third stake in Rietumu Banka.  Its group profits fell 37pc to €11.4m in the first nine months of 2023.
• Decta's operations in the UK, Decta Limited (UK), are authorised by the Financial Conduct Authority for emoney and payment services. 
• Decta was cited by Transparency International UK in a report focused upon financial crime risk.  The very informative report titled 'Together in Electric Schemes, Analysing Money Laundering Risk in E-Payments' was issued in December 2021.  The Bank was hit by two regulatory sanctions.  The largest sanction was a fine of €80mn later reduced by a French appeals court to €20mn.  According to The Baltics Times on 24 April 2023 "The Supreme Court in Paris concluded that the money laundering would not have been possible without Rietumu Banka. The case materials showed evidence of at least EUR 200 million laundered through the bank."  

• According to CRO records for Decta Limited as at year end December 2022 the company incurred a loss of €114.1K, had Net Current Assets of €46.9K and Net Liabilities of €110.6K.

​The Decta brand was called out by Transparency International UK in a report focused upon financial crime risk.  The very informative report titled 'Together in Electric Schemes, Analysing Money Laundering Risk in E-Payments' and issued in December 2021 carried a case study in which it noted that:

"[s]ome Latvian banks now own UK EMIs. Decta Limited, a UK EMI, lists its PSC as Rietumu Holding, the firm behind Rietumu Bank in Latvia.  In 2017, Rietumu was fined €80 million by French authorities after it was found to be involved in major tax and money laundering schemes. In response to an investigation by independent global media organisation, openDemocracy, Decta Limited stated it “acts in strict accordance with the requirements of FCA”, adding “we regularly pass anti-money-laundering (AML), Anti-Fraud, Know Your Customer and Combating the Financing of Terrorism audits held by Visa, Mastercard and big-four auditors, proving Decta to be complying with all latest AML standards.” 

In June 2021, Rietumu was fined again for money laundering failings in Latvia, this time in relation to its association with payment service providers, including those based outside of the country. A page on the website of Latvia’s central bank (Latvijas Banka), shows Rietumu has correspondent banking relationships with at least six UK EMIs.

It is becoming increasingly clear that British EMIs using Baltic banks for clearing services raises money laundering risk for both the UK and Baltic states. UK EMIs with unsuitable owners or weak AML controls are unlikely to carry out sufficient checks on their clients, while Baltic banks may believe firms regulated by the FCA have higher AML standards than they do in reality. This situation would lead to international payments being made from British EMI accounts using Baltic correspondent banks without sufficient checks being carried out on who was making them. This is similar to the scenario that occurred in the “Laundromats” exposed by the OCCRP, which resulted in billions of pounds in suspicious transactions being sent around the world." (see page 15 of this document).

Read more media here:

19/04/2022 - Last year also saw an appeals court in Paris reduce to €20 million a previous €80 million fine levied by a French court in 2017 against the bank for allegedly enabling clients of a company called France Offshore to evade taxes and launder money through companies in tax havens.

24/04/2023 - Verdict of French court on fine on Rietumu Banka for money laundering takes force

• decision on EUR 20 million fine for money laundering has come into force

17/06/2021 - Latvian bank Rietumu fined 5.85 mln for money laundering failures 

​

• Sign up to our Newsletter here.
• Need assistance with an emoney or payments authorisation or an account information service provider or virtual asset services provider registration application, check out Fintech Ireland and CompliReg's handy authorisation guides at https://fintechireland.com/fintech-authorisations.html.