Thursday, 8 February 2018
Department of Finance
Financial Services Regulation
122. To ask the Minister for Finance the regulation of penny banks here; the number of regulated penny banks in each of the years 2013 to 2017 ; his views on the future of penny banks; and if he will make a statement on the matter. [6660/18]
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.
I am informed by the Central Bank that it does not receive information on the number of penny bank savings clubs operated by credit unions.
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 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.
123. To ask the Minister for Finance if his Department or the Central Bank gather data on trading in crypto currencies; if his Department or the Central Bank have undertaken an in-depth analysis on the technology behind crypto currencies; if crypto currencies are traded on platforms here; the number of trades in crypto currencies made here in each of the years 2013 to 2017; the value of those trades; the number of trades in a crypto currency (details supplied) made here in each of the years 2013 to 2017; the value of those trades; the value and quantity of the currency circulating here; the consumer and financial regulation that exists here in relation to crypto currencies; and if he will make a statement on the matter. [6661/18]
I am advised, that due to the nature of the technology underpinning bitcoin and other cryptocurrencies, it remains challenging to measure the number, and value of transactions that take place in any one country or jurisdiction. Cryptocurrencies possess capabilities that allow for individuals to transact anonymously if they so wish. This makes it difficult for regulators and authorities to gain oversight of the beneficial owners associated with each cryptocurrency transaction. This is as true for Ireland, as it is for any other country.
The exchanges and platforms on which cryptocurrencies are traded are currently not regulated, and do not require an authorisation or licence from the Central Bank of Ireland (Central Bank). Consumers should note that virtual currencies remain unregulated, and that there are no regulatory protections for consumers when holding, buying or selling virtual currencies.
In December 2017, the Central Bank issued an “Alert on Initial Coin Offerings” (ICOs). An ICO refers to the process by which newly issued cryptocurrencies can be exchanged for traditional fiat currencies. The Central Bank’s alert outlined numerous risks associated with ICOs, and can be found on the Central Bank’s website at: .
With regard to forthcoming regulation, The Fifth EU Anti-Money Laundering Directive (5AMLD) will introduce measures to mitigate some of the money laundering and terrorist financing risks presented by cryptocurrencies. Agreement has been reached at EU level on the 5AMLD proposals. However, transposition into domestic legal frameworks has not yet taken place.
As part of 5AMLD, Virtual Currency Exchanges (providers of exchange services between virtual currencies and fiat currencies) and Custodian Wallet Providers (entities providing services to store and transfer cryptocurrencies on behalf of its owners) act as a gateway between the cryptocurrency “ecosystem” and the traditional financial system. 5AMLD, once implemented, will mean that Virtual Currency Exchanges and Custodian Wallet Providers will be subject to Anti Money Laundering (AML) laws as “designated persons” under Irish law. As such, they will be subject to regulatory supervision and oversight in respect of their anti-money laundering and counter-terrorist financing obligations.
Officials in my Department have been monitoring, and will continue to monitor, any developments that arise in relation to this matter. They have also been liaising with the Central Bank in the context of the National Money Laundering and Terrorist Financing Risk Assessment. Finally, at a European level the Central Bank continues to contribute to the work of the European Supervisory Authorities in this area.