KYC in Ireland – The Ultimate Guide

As the number of FinTechs skyrocket, KYC in Ireland is more important that ever. According to The FinTech Times, the number of FinTechs incorporated in Ireland grew by 30% over the last two years, fuelled by Brexit and Ireland’s growing reputation as a financial services centre. Although Ireland has long sought to enhance its reputation as a centre for financial services of all kinds, the history of its development has not been unblemished, with the EU imposing a 2 million Euro fine on the country’s central bank in July 2020 for the late implementation of earlier anti-money laundering (AML) and counter-terrorism financing regulations.

KYC in Ireland Regulation

Most recently, the country has updated its KYC regulations to bring them into line with Europe’s 5th Anti-Money Laundering Directive, or 5AMLD. Effective since August last year, it mandates that companies registered in Ireland need to provide proof of incorporation/registration, an up-to-date list of directors, identification documents for the ultimate beneficial owners of the company, and confirmed personal identification of at least one director (including recent utility bills, passport and driver’s license.) Companies are also required to disclose the employment of any politically exposed persons. FinTech’s doing business in Ireland but not incorporated in the country are subject to the same requirements, although there are no additional requirements for those companies opening branch offices in Ireland. Despite the majority of Europe now updating regulations to the 6th Anti-Money Laundering Directive, Ireland decided not to include this in national law. However, it was the view that the national law currently in place is equivalent if not more comprehensive than 6AMLD.

While businesses may sometimes baulk at increased regulation, FinTechs operating in Ireland should welcome last year’s arrival of new regulations since these bring Ireland into line with the rest of Europe. In recent years, some of Ireland’s numerous crypto-focused companies began to report a tougher environment when it came to their relationships with banks, which many put down to the delay in adopting 5AMLD.

Companies such as Boinnex, which provides Bitcoin ATMs in the country, and Bitcove, which had even previously received a Bank of Ireland start-up grant, have reportedly had their accounts with large Irish banks shut down over the last two years, due to concerns over a lack of regulatory alignment with the EU. With 5AMLD transposed into Ireland’s national law, Virtual Account Service Providers (VASPs), the category of company that issues crypto wallets among other services, will now be governed by the same anti-money laundering and counter terrorist financing laws as banks and other financial institutions across Europe. Overall, FinTechs operating in Ireland should now enjoy a smoother regulatory experience.

The Central Bank of Ireland has set out its KYC obligations for companies operating in the country, and specifies a schedule of reporting in addition to internal training and record-keeping requirements. Alongside compliance with European legislation, Ireland also adopts recommendations from the United Nations published through its Office on Drugs and Crime, a body which works closely with the global Financial Action Task Force (FATF). Both the UN and FATF had previously issued mild criticism of Ireland’s progress towards better KYC, and the combination of an EU fine plus this previous criticism appears to have galvanized the Irish authorities into action. As we say above, FinTechs should welcome Ireland’s new regulatory scrutiny, since it now aligns with Europe, although we recommend seeking professional advice on how best to implement KYC and AML requirements for those looking to locate or do business in Ireland.

Make sure your business is fully prepared for forthcoming regulatory changes related to KYC in Ireland. Contact us here.

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