Key Takeaways
- In its recent AML Bulletin, the Central Bank of Ireland highlighted several issues with the VASP registration applications.
- VASPS that are offering or planning to offer services to Irish customers, both individuals and institutions, have been required to register with the Central Bank of Ireland since April last year.
- The Central Bank also made it clear that it only ensures AML/CFT compliance among VASPs and plays no role in consumer protection.
OnJuly 11th, the Central Bank of Ireland issued a bulletin outlining anti-money laundering (AML) and countering the financing of terrorism (CFT) rules for the virtual asset service providers (VASPs).
What’s the Bulletin all About?
The Bulletin primarily covers the critical issues with VASP registrations in Ireland and the bank’s expectations with VASP applications.
It is meant to guide firms to strengthen their VASP application by avoiding the common AML/CFT pitfalls.
The regulation set forth by the Central Bank aims to prevent financial crime while supporting innovation in the virtual assets market.
“We seek to regulate for a rapidly evolving financial system so that the opportunities presented by the current unprecedented period of change and innovation can be realized for citizens and the economy,” said Tommy Hannafin, Head of Anti-Money Laundering Division Central Bank of Ireland.
Since April last year, VASPs wishing to offer services in Ireland must comply with the relevant AML/CFT obligations and apply to the Central Bank for registration.
Currently, the Bank assesses the registration application and provides feedback on the applicants’ proposed AML/CFT frameworks.
With the “Anti-Money Laundering Bulletin,” the Central Bank aims to assist VASPs in strengthening their applications and frameworks by outlining the critical issues identified during the assessment process.
The Central Bank identified that several VASP registration applications have insufficient information.
Meanwhile, the vast majority of applications had a lack of understanding and compliance with essential AML/CFT obligations.
This, coupled with significant control weaknesses, meant many applicants couldn’t meet their AML/CFT obligations.
And a firm will “only” be registered when the Bank is satisfied that the firm can meet its AML/CFT obligations on an ongoing basis.
The Bank also reminded that a failure to register by firms undertaking VASP activities might result in significant criminal and administrative sanctions.
Furthermore, registered VASPs will be subject to a supervisory levy, in line with what other financial institutions have to face in the country.
When it comes to developing AML/CFT policies, controls, and procedures, the Bank pointed to several recurring issues, including:
According to Buletin, Customer Due Diligence involves more than just verifying a customer’s identity.
Firms are also required to collect and assess all relevant information to ensure they know their customers, if the customer is a Politically Exposed Person (“PEP”), and understands the purpose of their account.
However, the Central Bank clarified that it only supervises VASPs for AML/CFT purposes, and its mandate “does not extend to consumer protection.”
About a week after the Bulletin was released, the cryptocurrency exchange Gemini became the first VASP to receive approval from the bank.
The authorization allowed Gemini to offer crypto trading services in the Irish market to individuals and institutions.
The Bank’s approval means Gemini meets high compliance standards for AML and CFT.
The Central Bank of Ireland is a gatekeeper in Ireland’s fight against money laundering and terrorist financing (ML/TF).
It seeks to ensure that regulated financial service providers have the necessary risk and control frameworks in place in order to minimize the risk of the use of their products or services by criminals for money laundering & terrorism financing.
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