Paul Kehoe (Wexford, Fine Gael)
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72. To ask the Minister for Finance the changes to criteria for penny bank saving funds in banks and credit unions; and if he will make a statement on the matter. [3789/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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I can advise the Deputy that there are no specific legislative or regulatory requirements relating to penny bank saving clubs (also commonly referred to as savings clubs.) Any such group savings scheme with a credit union would be required to comply with the same regulatory requirements that apply to an individual member’s savings account with a credit union.

Section 27 of the Credit Union Act, 1997 sets out provisions in relation to the ‘raising of funds by shares and deposits’. Section 27A of the Credit Union Act, 1997, requires that ‘a credit union shall maintain appropriate oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements to ensure the protection of members’ savings and that it complies with requirements imposed under the financial services legislation’

Under the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) no individual member in a credit union shall have total savings which exceeds €100,000. Under the 2016 Regulations there are a number of credit unions who have been granted approval by the Central Bank to retain individual members’ savings in excess of €100,000 which were held at commencement of the Regulations and a smaller number of credit unions have been granted approval to increase individual members’ savings in excess of €100,000.

Credit unions must also ensure that they are compliant with the customer due diligence requirements of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the 2010 Act). Section 33 of the 2010 Act requires that appropriate customer due diligence is undertaken to ensure that an entity has a means to identify and verify the identity of its customers.

The 2010 Act would therefore require that the identity of all savers in a savings club is known with appropriate customer due diligence undertaken by the credit union.