Financial Services Regulation and Compliance - General Cross Sectoral January 2023

Domestic

Financial Services and Pensions Ombudsman Act 2017 (Financial Services and Pensions Ombudsman Council) Financial Services Industry Levy Regulations 2023 (the regulations)

The regulations require each financial service provider to pay an annual levy in respect of the services provided by the Ombudsman to the financial services industry. The regulations provide for the collection and recovery of the levy and provide for certain obligations in respect of self-assessment and record keeping by financial service providers.

The regulations also provide for the calculation of the required levy contribution payable by each category of financial service provider for the year ended 31 December 2023 and come into operation on 1 February 2023.

Minister for Justice has issued guidelines under section 37 (12) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

On 20 January 2023, the Minister for Justice, with consent of the Minister for Finance, issued guidelines to provide clarification on what functions will qualify as a prominent public function in the State under Section 37 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.

A "Prominent Public Function", in respect of such functions within the State, shall be an office or other employment in a public body in respect of which the remuneration is not less than the lowest remuneration in relation to the position of Deputy Secretary General in the civil service. The guidelines then include a schedule setting out the application of provisions to specific roles in the State.

"Dear CEO" letter on Supervisory Findings and Expectations for Payment and Electronic Money (E-Money) Firms

On 20 January 2023, the CBI published a "Dear CEO" letter on supervisory findings and expectations addressed to payment and e-money institutions. The purpose of the "Dear CEO" letter is to reaffirm the CBI's supervisory expectations and to enhance transparency around its supervision. The letter clearly highlights and communicates the expectations of the CBI with regard to a number of areas which the CBI will be paying close attention to. The CBI expects the letter to be discussed with each firm's board and to reflect on the findings set out in the letter.

One key action arising from the letter is the requirement for all payment institutions that safeguard user's funds to obtain a specific audit of their compliance with the safeguarding requirements under the PSR, carried out by an external audit firm. The audit opinion, along with a Board response on the outcome of the audit, must be submitted to the CBI by 31 July 2023.

European

European Commission request for advice to the EBA regarding delegated acts under MiCA on certain classification criteria for asset-referenced tokens and e-money tokens

On 4 January 2023, the European Commission published a letter it had sent to the EBA with a provisional request for advice on delegated acts that the Commission intends to adopt under the Markets in Crypto-Assets (MiCA).

The request for advice concerns delegated acts on certain criteria for classification of asset-referenced tokens and e-money tokens as significant as well as a delegated act on supervisory fees to be charged by the EBA to issuers of significant asset-referenced tokens or e-money tokens.

The Commission has asked the EBA to deliver the technical advice by 30 September 2023.

European Commission requests advice from the ESAs on designation criteria and fees for the DORA oversight framework

On 4 January 2023, the EBA published a request for advice from the European Commission sent to the European Supervisory Authorities (ESAs). The request asked for advice on further specific details aimed at shaping-up the designation criteria for critical ICT third-party service providers (CTPPs) and amount of fees to be levied on such providers. It also requested advice on the way and methods in which the fees are to be paid.

The deadline for the ESAs to deliver the technical advice is 30 September 2023.

Peer review on authorisation of payment institutions and e-money institutions under the revised Payment Services Directive (PSD2)

The EBA published its peer review on authorisation of payment institutions and e-money institutions under the revised Payment Services Directive (PSD2). The review generally found increased transparency and consistency of the information required in the authorisation process. However, significant divergences were also identified in competent authorities’ assessment and the level of scrutiny of applications. The review sets out a series of measures to address such divergences, to level out the supervisory playing field and to mitigate against ‘forum shopping’.

The peer review identified divergent practices in relation to the assessment of business plans, applicants’ governance arrangements and internal control mechanisms. It also highlighted differences in applicants’ compliance with PSD2 requirements on ‘local substance’.

The report also shows that the average duration of the overall authorisation process varies significantly across competent authorities, ranging from four to 20 months or more. The quality of applications and applicants’ timeliness in addressing issues identified appear to be key reasons for delay, however, different timelines set out in national laws and different procedural approaches in the acceptance and assessment of applications also cause variations in the duration of the application process.

Sanctions imposed in response to the crisis in Ukraine

Since February 2022, the EU imposed a number of sanctions in response to the crisis in Ukraine. The most recent sanctions package (the Ninth Package) was issued on 16 December 2022 and expanded existing sanctions on investments in certain Russian sectors, including energy and mining, and further restricts engagement with certain Russian State-owned and controlled entities. An additional 141 persons and 49 entities were also added to the list of persons, entities and bodies subject to restrictive measures. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.

For more information on these topics please contact any member of A&L Goodbody's Financial Regulation team.

Date published: 8 February 2023