Firms that provide virtual asset services under the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the 2021 Act) are considered ‘designated persons’. These are captured by the obligations of the 2021 Act. Virtual asset services include the following:
Exchange between virtual assets and fiat currencies
Exchange between one or more forms of virtual assets
Transfer of virtual assets
Custodian wallet providers, and
Participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset, or both.
Virtual Asset Service Providers (VASPs) are entities that provide any of the above services, and they must now adhere to AML/CFT obligations.
Registration with the Central Bank
All VASPs established in Ireland are now required to register with the Central Bank for AML/CFT purposes. VASPs established in Ireland and carrying on business before the 2021 Act coming into force, have three months to apply to the Central Bank for registration.
Firms not established in Ireland and/or not carrying on business as a VASP before the 2021 Act must be registered with the Central Bank before the commencement of any services relating to virtual assets from Ireland.
It is important to note that firms that are otherwise regulated by the Central Bank must also register as VASPs if they intend providing virtual asset services.
The registration process
VASPs applying for AML/CFT registration will have to submit an application to the Central Bank. The Central Bank must be satisfied that an applicant VASP’s AML/CFT policies and procedures are effective in combatting the ML/TF risks associated with its business model. In addition, the Bank must approve that its management and beneficial owners are fit and proper.
On-going AML/CFT obligations
Once authorised, VASPS are considered “designated persons” for the purposes of the CJA 2010 to 2021. They will be required to comply with AML/CFT obligations. These are contained under Part 4 of the CJA 2010 to 2021 which include, but not limited to, the following:
- Undertaking customer due diligence (CDD) of their customers
- Carrying out ongoing monitoring of customers and customer transactions
- Reporting of suspicious transactions to the relevant authorities, and
Providing AML/CFT training to all staff on an ongoing basis.
It is a criminal offence to operate as a VASP in Ireland without getting the appropriate registration with the Central Bank. Existing Irish VASPs should take immediate steps to ensure compliance with AML requirements. VASPs who are considering entering the Irish market must take steps, prior to providing virtual asset services, to ensure that they have been properly registered with the Central Bank.
For more information, contact a member of our Financial Regulation team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.