Gerald Nash (Louth, Labour)
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249. To ask the Minister for Finance the number of electronic money institutions licences that were authorised by the Central Bank in 2020 and 2021; the total and average length of time it is taking the Central Bank to assess these applications from the date of submission; if the Central Bank is adequately resourced to handle the volume of applications in tabular form; and if he will make a statement on the matter. [6197/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The authorisation and supervision of financial service firms such as electronic money institutions is the responsibility of the Central Bank of Ireland, as competent authority of such entities.

It should be noted that the approval or refusal of applications made by any firm to the Central Bank of Ireland is not a matter which the Minister or the Department of Finance has any role or involvement in.

I have been informed by the Central Bank of Ireland that it operates a transparent and robust process for applicants seeking authorisation. This process is an important part of the Central Bank’s work to protect consumers and investors, and to ensure the proper functioning of the financial system.

The Payment Services Directive (PSD) and the revised Payment Services Directive (PSD2) established common rules in relation to certain types of electronic payments, such as credit transfers, direct debits, card payments, and mobile and online payments and therefore allows for authorisation of different firms types in this sector. The main business models of these firms are; Electronic Money Institutions (EMIs), Payment Institutions (PIs), Account Information Service Providers (AISPs) and Payment Institution Service Providers (PISPs). There has been a 138% increase in applications processed and authorised in this sector since the legislation came into effect in 2018.

In 2020, the Central Bank authorised 8 such firms, the breakdown of which is below:

- 5 EMI's

- 2 PI's

- 1 AISP

In 2021, the Central Bank authorised 3* firms under PSD2, the breakdown of which is as follows:

- 2 PI's

- 1 AISP

*Other firms reached an advanced stage of the authorisation process but, ultimately chose not to take up the licence.

For applicants applying for authorisation under PSD2, the Central Bank commits to a 90-day assessment service standard in providing an authorisation outcome. The assessment period will be stopped and restarted where the firm does not provide the necessary information to perform the assessment or do not meet the authorisation requirements as set out in PSD2 and relevant European Banking Authority Guidelines. Therefore, the average length of time for the assessment is driven by the firm’s ability to meet the regulatory expectations, which are published on our website.

To date the Central Bank has experienced a varied timeframe to reach authorisation decisions. The timeframe is heavily influenced by the scale and complexity of the business model a firm is attempting to operationalise as well as its level of preparedness and the quality of its engagement with the Central Bank. In a number of cases, the Central Bank have experienced firms continuing to evolve their business model within the live authorisation assessment, which makes the assessment process longer, but which represents a firm using its discretion to change its proposed business model in line with its own business objectives.

The Central Bank provides feedback to ensure that all firms are clear on their authorisation status and their pathway through the authorisation process. The authorisation framework is designed to encourage early and frequent engagement in order to support firms in their preparations for authorisation and operate an effective and efficient authorisation assessment.

The authorisation process is an iterative process. It includes stages which enable firms to approach the Central Bank at the preliminary (or speculative) phase to gain information and guidance about the process. This is particularly the case in new and emerging sectors where applicants may be less informed as it allows them to understand what is required to be granted authorisation and to take the necessary steps to prepare an application that could meet approval.

The most productive engagements arise from firms who are well prepared for such pre-application exchanges. The standards applied by the Central Bank are also a reason why firms continue to apply to be authorised in Ireland as they demonstrate credibility and trustworthiness.

There is an onus on firms to submit rigorous and credible applications to allow a proper and timely assessment to take place Where there are deficiencies in certain areas, or ambiguity around the proposed business, it can take time for the firm and its advisors to furnish information or to put in place measures which brings them in line with the expected standards.

As the financial services sector continues to evolve at rapid pace, the Central Bank anticipates a continuing increase in authorisation applications, including from innovation in the sector.

The Central Bank of Ireland's new Strategy is designed to ensure it can meet the challenges of a changing world and deliver on its mission and vision.

With regard to resourcing for authorisations, I would highlight the strategy includes that the Central Bank’s leaders and the Central Bank Commission will assess and regularly review the status of, and resources deployed to deliver, the Central Bank's strategic objectives.

Gerald Nash (Louth, Labour)
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250. To ask the Minister for Finance the number of virtual asset service provider licences that have been authorised by the Central Bank in 2021; if his attention has been drawn to the delay by Ireland in implementing the procedures to process these licences; if this is hindering Ireland’s objectives under the Ireland for Finance strategy; and if he will make a statement on the matter. [6198/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland transposed the fifth Anti-Money Laundering Directive into Irish law by way of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021, and the provisions of the 2021 Act that relate to Virtual Asset Service Providers commenced on 23 April 2021.

In relation to the Deputy’s question, it is important to note that Virtual Asset Service Providers, or VASPs do not require a licence in Ireland. Instead, there is a “registration” process. Having said that, given how comprehensive the registration process is, and given the ability of the Central Bank of Ireland to refuse an application for registration as a Virtual Asset Service Provider, it is fair to say that the process is more akin to an “authorisation” or “licencing” process than that normally associated with a “registration” regime.

In order to provide a comprehensive response to the Deputy’s question, my officials consulted with the Central Bank and understand that the Central Bank web page relating to Virtual Asset Service Providers and details of their registration requirements went live on 23rd April 2021.

Furthermore, the Central Bank is currently engaging with a significant number of firms in relation to their registration applications, which are at varying stages of the application process. To date no firms have been registered as Virtual Asset Service Providers in Ireland. However once a firm has completed the process, and has been approved, the VASP Register on the Central Bank’s web page will be updated.

I have been informed that the Central Bank adopts a robust, structured and risk-based process that seeks to ensure that only those applicants that demonstrate that they are in a position to effectively comply with their AML/CFT obligations are registered. In order for the Central Bank to approve a VASP's application for AML/CFT registration, the Central Bank must be satisfied that the firm's AML/CFT policies and procedures are effective in combatting the money laundering and terrorist financing (ML/TF) risks associated with its business model. In addition, it must be satisfied that the firm's management and beneficial owners are fit and proper.

The Central Bank may refuse an application on any of the grounds set out in Section 106H(1) of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021.

The Ireland for Finance strategy was launched in 2019, and implementing its objectives is a commitment in theProgramme for Government Our Shared Future. The purpose of the Ireland for Finance strategy is the further development of Ireland’s international financial services sector to 2025. The process of the registration of Virtual Asset Service Providers is a robust process that must be completed, and as the providers complete the registration process it will progressively aid in meeting the objectives of the strategy.

Direct employment is the primary metric used to assess the benefit to Ireland of the international financial services sector and of the Ireland for Finance strategy. The target set for the strategy is an increase of 5,000 jobs over the target set in the previous strategy, Ireland for Finance 2020 (IFS2020). At the end of 2021, employment in the sector is a record 52,800 people.