Date Published 12/07/2022
Update on VASPS in Ireland
Gerry Cross, Director of Financial Regulation: Policy & Risk, delivered a speech at Blockchain Ireland Week 2022 entitled “Blockchain, cryptography, and financial services: a regulatory perspective” on 31 May 2022. This included comments on their experiences in respect of VASP authorisation. These were provided with a view to assisting future applications for authorisation.
Although a “significant” number of firms are reported to have expressed interest in seeking registration through the completion of a pre-registration form to date, no firm has been granted VASP registration by the Central Bank. However a relevant register is maintained and will be updated to include firms as and when they become registered.
By way of background, Ireland transposed the fifth Anti-Money Laundering Directive (5AMLD) into Irish law by way of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (“2021 Act”). This includes provisions that relate to VASPs, which commenced on 23 April 2021. Consequently all VASPs established in Ireland are required to register with the Central Bank for anti-money laundering / countering of the financing of terrorism (AML/CFT) purposes.
The Central Bank has sought to raise awareness in relation to the related obligations on VASP entities, including by taking the following steps:
- Creation of a dedicated VASP section on the Central Bank’s website providing potential applicants with an overview of the requirements applicable to VASPs and outlining the registration process.
- Applicants are offered a pre-registration meeting to allow them to seek any clarity they require;
- Outreach events have been held involving potential applicants to assist them in understanding the VASP registration process.
The Central Bank has identified common weaknesses across a number of applications received to date. These include a failure to assess and document the money laundering / terrorist financing risks as they pertain to the firm’s customers and business activities; the use of group policies/procedures that were not sufficiently tailored to Ireland’s legislative and regulatory requirements; and procedures which failed to demonstrate screening for politically exposed persons (PEPs).
Irish Register of Virtual Asset Service Providers
The Central Bank of Ireland established a public register of Virtual Asset Service Providers (VASPs) in 2021 to list VASPs registered under Section 106A of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021.
This has been added to the series of public registers it maintains of regulated entities authorised by, or registered with, it. Given Ireland’s combination as a jurisdiction with both a strong Tech and FS sector (2nd largest EU fund centre), it is anticipated that multiple providers will become registered here in due course.
VASP services are broadly defined to include:
(a) exchange between Virtual Assets (as defined) (VAs) and fiat currencies;
(b) exchange between one or more VAs;
(c) transfer of VAs, that is to say, conduct a transaction on behalf of another person that moves a virtual asset from one VA address or account to another;
(d) custodian wallet provider;
(e) participation in, and provision of, financial services related to an issuer’s offer or sale of a VA or both;
with some exceptions.
Virtual Asset Service Providers are accordingly registered and supervised by the Central Bank of Ireland for anti-money laundering and countering the financing of terrorism.
A “Virtual asset” means a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets. The Central Bank has been zealously monitoring applications for this registration so that as yet no firm have yet received it.