2023 Dear CEO letter re Supervisory Findings and Expectations for Payment and Electronic Money (E-Money) Firms

Friday 20th January 2023: Central Bank of Ireland (CBI) issued a Dear CEO letter to the fintech industries of electronic money institutions and payments institutions.  The purpose is to reaffirm the CBI's supervisory expectations built on its supervisory experiences, both firm specific and sector wide, and enhance transparency around its approach to, and judgements around, regulation and supervision.

If you are looking to get authorised as an electronic money or payments institution in Ireland, contact us.  We are working with a number of such applicants and we advise those already authorised on their on-going regulatory obligations, business models and strategy.  See our Authorisation Page with links to useful Authorisation Guides. 

Busy start to the year with enquiries from UK, Asia and the US continuing to roll in about the benefits, opportunities and challenges of establishing a EEA regulated presence in Ireland, particularly for #emoney and #payments. While Ireland is in the top three of the final round, there remains stiff competition (so to speak) from two other leading jurisdictions.
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Thus it was good to see, , as I am sure others will agree, the Central Bank of Ireland most recent Dear CEO letter issued to emoney and payments institutions on Friday 20 January 2023 by Mary-Elizabeth McMunn, Director of Credit Institutions Supervision. It will help provide greater clarity not only to currently authorised emoney and payments firms, but also those in the authorisation pipeline and those thinking of filing in Ireland.

It is a meaty document at 5,168 words across eleven (11) pages. Download a copy of the letter and additional relevant reading material here - https://complireg.com/blogs--insights/2023-dear-ceo-letter-re-supervisory-findings-and-expectations-for-payment-and-electronic-money-e-money-firms
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If you wish to get a quick understanding of the letter in terms of your regulatory obligations search the words 'we expect'. You will see those appear eleven (11) times too!

Right now, best to mark in your calendar and work backwards, that an audit opinion on safeguarding, along with a Board response on the outcome of the audit, is to be submitted to the CBI by 31 July 2023. And it is not just a case of ringing your current external auditors and appointing them.  

• Emoney and payments firms will need to demonstrate that they exercised due skill, care and diligence in selecting and appointing auditors for this purpose; including satisfying themselves that the proposed auditor has, or has access to, appropriate specialist skill in auditing compliance with the safeguarding requirements under the PSR/EMR taking into account the nature, scale and complexity of the firm's business.  Let the beauty parades begin.  And so it should be the case!
• The auditor is to provide an opinion confirming:
  "whether the firm has maintained adequate organisational arrangements to enable it to meet the safeguarding provisions of the PSR/EMR on an ongoing basis, with the specific areas, at a minimum, that should be subject to review and assurance by the auditor outlined in Appendix 2 of the Dear CEO Letter.

The purpose of the letter is to reaffirm the CBI's supervisory expectations built on its supervisory experiences, both firm specific and sector wide, and enhance transparency around our approach to, and judgements around, regulation and supervision.


The breakdown of the letter is as follows:

(1)      Supervisory Approach for the Payment and E-Money Sector (provides wider and specific context to our supervisory approach).

(2)      Supervisory Findings (key findings from supervisory engagements over the last 12 months and actions the CBI expects firms to undertake)
➡ Safeguarding;
➡ Governance, Risk Management, Conduct and Culture;
➡ Business Model, Strategy and Financial Resilience;
➡ Operational Resilience and Outsourcing; 
➡ Anti-Money Laundering and Countering the Financing of Terrorism;

• ♻ Risk-Based Approach,
• ♻ Distribution Channels, 
• ♻ Electronic Money Derogation and Simplified Due Diligence

(3) Conclusion and Actions Required (CBI's expectation that this letter is provided to and discussed with your Board, and any areas requiring improvement that directly relate to your firm are actioned).

Next Steps:

Get in contact with Peter Oakes / CompliReg. Founded by the CBI's inaugural Director of Enforcement and AML/CFT Supervision & board director of payments, emoney and MiFID companies. Peter is also a former: FSA (now FCA) enforcement lawyer; senior officer (legal) at ASIC; and adviser to the deputy director of banking at SAMA.


Further Reading:

10 December 2021: Authorisation Guidance and Supervisory Expectations for Payment and Electronic Money Firms (Central Bank of Ireland)
09 December 2021: Central Bank of Ireland Dear CEO Letter on Supervisory Expectations for Payment and Electronic Money (E-Money) Firms