AuthorPeter Oakes is an experienced anti-financial crime, fintech and board director professional. Archives
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CompliReg is a leading provider of consultancy services to MiFID, Payments and Emoney firms. Our founder, Peter Oakes is an independent non-executive director of two Central Bank regulated MiFID firms, an emoney firm and a payments firm. Peter is a member of the Audit, Risk, Nomination, Remuneration and Internal Audit Committees of a number of firms. Read more about his NED services and CompliReg's services. UPDATE 22/04/2022: If below below on suitability requirements is of interest, then you should also look at our post of 22 April 2022 on the Central Bank's review findings on issues in marketing of complex investment products. Central Bank review finds firms providing investment services need to improve suitability assessments
The Central Bank of Ireland has published a Dear CEO letter outlining the findings of a review of investment firms’ compliance with the suitability requirements under MiFID II. The review was conducted as part of a Common Supervisory Action (CSA) coordinated by the European Securities and Markets Authority (ESMA). The purpose of the review was to assess firms’ compliance with the suitability requirements under MiFID II by simultaneously conducting supervisory activities throughout the EU/EEA. The findings, which are highlighted in ESMA’s recent public statement, incorporate the findings from the Central Bank’s own supervisory analysis, and engagement with other National Competent Authorities (NCAs). When providing investment advice and/or portfolio management, Firms are required to take all reasonable steps to ensure that a client’s investments align to their objectives and personal circumstances. This is a key measure to protect investors from the risk of purchasing unsuitable products. The review identified evidence of positive practices, particularly where firms took a personalised and comprehensive approach to suitability assessments for their clients. However, it also identified instances where further action is required by firms. For example:
The Central Bank will continue to engage with firms where specific supervisory actions have been imposed, which require firms to take specific action on foot of our findings. In addition, the Central Bank is requiring all Irish authorised MiFID firms and credit institutions, who provide portfolio management and advisory services to retail clients, to conduct a thorough review of their individual sales practices and suitability arrangements. This review must be documented and must include details of actions taken to address findings in the ESMA public statement and this letter. This review should be completed, and an action plan discussed and approved by the board of each firm, by end of Q1 2022. Director of Consumer Protection, Colm Kincaid, said: “Investing in an unsuitable investment product can lead to unexpected losses, which can have devastating consequences for individual investors and their families. Regulated firms play a key role in protecting consumers against this risk. “However, the findings from this review show that regulated firms need to improve their performance when it comes to assessing the suitability of investment products they recommend or advise consumers to purchase. These assessments must be of high quality, based on a good understanding of the customer’s circumstances and capacity for financial loss, and properly documented.” Source: Central Bank of Ireland, 01 December 2021
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"On the whole, I agree with you that there is a limited amount of directorships that can be held with a job being well done." This is around minutes 55-57 (around 2:25pm-2:27pm) at https://media.heanet.ie/page/0382d466362a4d90b07d8e7d7f27fdd9
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Multi-CBDC prototype shows potential for reducing costs and speeding up cross-border payments (BIS)28/9/2021 Big news today - well big news if you are interested in central banking and digital currencies - with release of the #mBridge project report on the Multi-CBDC prototype which the Bank for International Settlements says has potential for reducing costs and speeding up cross-border payments.
In summary, the mBridge kicked off as an initial experimentation from the Hong Kong and Thailand central banks. The Bank of Thailand and the Hong Kong Monetary Authority (HKMA) were joined by the Digital Currency Institute of the People's Bank of China and the Central Bank of The UAE. The BIS Innovation Hub found the platform to be an alternative to complexities and inefficiencies of the correspondent banking system and an enabler for the joining up national digital currencies in common interoperable platforms - all performed on a 'clean slate' - an attractive proposition of technology for central banks. In the words of Benoît Cœuré, Head of the BIS Innovation Hub "The prototype is part of our efforts to design CBDC technology. The project includes experimenting with use cases and trials, balanced with analysis of governance, policy and legal considerations with a focus on cross-border use." The report is about a prototype of multiple Central Bank Digital Currencies (known as 'mCBDCs') developed by the BIS Innovation Hub and the four central banks. The report finds demonstrable evidence for the potential of using digital currencies and distributed ledger technology (DLT) to deliver real-time, cheaper and safer cross-border payments and settlements under the mBridge project. The common prototype platform for mCBDC settlements was able to complete international transfers and foreign exchange operations in seconds, as opposed to the several days normally required for any transaction to be completed using the existing network of commercial banks and operate in a 24/7 basis. The cost of such operations to users can also be reduced by up to half, according to the report. Read more here:
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Using an image with a colour scheme reminiscent of a nearby overseas regulator with a similar senior executive regime, Ireland's Minister of Finance, Paschal Donohoe, has announced that today (27 July 2021) he has received agreement from Cabinet to approve the drafting of the Central Bank (Individual Accountability Framework) Bill, the main purpose of which is to improve accountability in the financial sector. What does this mean for regulated firms and individuals particularly senior executives? Read below where you can download both the (i) General Scheme - Central Bank (Individual Accountability Framework) Bill and (ii) Regulatory Impact Assessment - Central Bank (Individual Accountability Framework) Bill. If you need to know more, contact the team at CompliReg via the details here. We will soon be announcing details of our S.E.A.R Hub website. To find out more, follow Peter Oakes and CompliReg on Linkedin. Ministerial announcement by Paschal Donohue“The changes to Central Bank legislation will put individual accountability at the centre of decision making in financial services organisations. The provisions will ensure that there is clarity around the roles and functions of senior executives. There are four main aspects to the proposed Heads along with necessary technical changes to existing legal processes. All of these make up the Individual Accountability Framework. This draft legislation provides for: 1. The introduction of a Senior Executive Accountability Regime (SEAR), which places obligations on firms and senior individuals within them to set out clearly where responsibility and decision-making lies. SEAR will apply to those in management roles within:
2. The introduction of: a. Common conduct standards to apply to all persons in controlled function roles; b. Additional conduct standards for individuals in senior positions; and c. Business conduct standards for all regulated firms in the financial sector. The introduction of these conduct standards will give the Central Bank powers to set and impose binding and enforceable obligations on all Regulated Financial Service Providers (RFSPs) and individuals working within them with respect to expected standards of conduct. 3. Enhancements to the Fitness & Probity Regime to ensure the effective operation of and ability of the regime to support the Individual Accountability Framework and the conduct standards for individuals and firms. 4. Breaking the “Participation Link”, which addresses the known deficiency in the legislation which requires the Central Bank to first prove a contravention of financial services legislation against an RFSP before it can take action against an individual. Sanctions to apply under the Central Bank’s Administrative Sanctions Procedure for breaches of SEAR or Conduct Standards; and Technical amendments to improve existing legislation and clarify certain statutory processes. The additional powers that will be provided to the Central Bank are significant and, in drafting these Heads, care has been taken to adopt the correct balance between these powers and the protection of individuals’ constitutional rights. SEAR’s focus is on preventing misbehaviour or mismanagement by senior management. By requiring individual accountability from senior management, supported by enforcement powers, there is an incentive for senior management to comply with financial services law. SEAR also fulfils the purpose of incentivising and assisting regulated firms in strengthening their internal processes through management responsibility maps and clarification of senior management responsibilities. The adoption of conduct standards across all regulated financial service providers sets out the standards expected of relevant individuals who work in such firms. Given that more junior staff will be in scope of the common conduct standards being introduced, there is a range of safeguards included, so that staff will be aware of what is expected of them. Ultimately a key challenge will be the rebuilding of trust in the financial sector. The rebuilding of trust will require ongoing cultural and practical change in the banking sector and throughout the financial services industry. The Central Bank (Individual Accountability Framework) Bill will make a significant contribution to bringing about this needed cultural change. It is anticipated that the introduction of the Framework will mean that:
Next steps The Minister for Finance will write to the Chair of the Committee on Finance, Public Expenditure and Reform and the Taoiseach regarding pre-legislative scrutiny. Officials will engage with the Office of the Parliamentary Counsel to the Government to begin drafting the legislation on the basis of the General Scheme published today. General Scheme - Central Bank (Individual Accountability Framework) Bill Regulatory Impact Assessment - Central Bank (Individual Accountability Framework) Bill Statement - Central Bank (Individual Accountability Framework) Bill 2021Coinciding with Minister Donohue's announcement, the Central Bank of Ireland released a statement today (27 July 2021) saying:
"The Central Bank of Ireland welcomes today’s publication of the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 by the Department of Finance. The Central Bank has been actively engaged with the Department of Finance on these proposals and will continue to work with the Department of Finance throughout subsequent stages as the legislation progresses through the Oireachtas to enactment. Experience has shown that in order for a regulatory framework to work well, it should stimulate strong and effective governance within firms. To achieve this:
The following four key components of the Individual Accountability Framework (IAF), proposed in the Central Bank’s Behaviour and Culture Report into Irish Retail Banks, set out to achieve these behavioural, cultural and regulatory objectives:
The various separate aspects of the IAF complement each other to achieve the ultimate goals of better outcomes for consumers and a more sustainable financial system by driving higher standards of behaviour for individuals in financial services firms. The IAF is ultimately about incentivising positive behaviours and promoting an improved culture within firms while strengthening the Central Bank’s enforcement toolkit, particularly with respect to individuals, to allow the Central Bank to more effectively hold to account those that fall below the expected standards. Once the Bill has been enacted the Central Bank intends to publicly consult on the implementation of the IAF."
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I am sure there will be opposing views, but delighted for fintech and innovative finserv in both the UK and Ireland being thrown a commonsense method to continue the transfer of personal data between the UK and Ireland with the European Commission giving the green light to data transfers between EU countries and the UK. This happened yesterday via the European Commission adopting two adequacy decisions for the United Kingdom, one under the General Data Protection Regulation and the other under the Law Enforcement Directive. I posted on the previous draft versions a while ago on Linkedin. In summary, this means that personal data can now flow freely between Ireland and the UK, with the Commission guaranteeing citizens that their data in the UK has “essentially the equivalent level of protection to that guaranteed under EU law”. As seems with everything involving dealings between the UK and Europe, the resolution was found at minutes to midnight (so to speak) with the interim bridging mechanism which permitted personal data to be transferred from the EU to the UK following the end of the Brexit transition period, expiring on 30 June 2021. Essentially the Commission has assured citizens that GDPR will be fully respected in the UK. What does this mean for standard contractual clauses (SCCs)? The new adequacy decisions mean that personal data can continue to be transferred from the EU to the UK without additional steps such as the SCCs being put in place. “The UK has left the EU but today its legal regime of protecting personal data is as it was. Because of this, we are adopting these adequacy decisions today. At the same time, we have listened very carefully to the concerns expressed by the Parliament, the Members States and the European Data Protection Board, in particular on the possibility of future divergence from our standards in the UK's privacy framework. We are talking here about a fundamental right of EU citizens that we have a duty to protect. This is why we have significant safeguards and if anything changes on the UK side, we will intervene”. Věra Jourová, EC Vice-President for Values and Transparency, Key elements of the adequacy decisions
The adequacy decisions also facilitate the correct implementation of the EU-UK Trade and Cooperation Agreement, which foresees the exchange of personal information, for example for cooperation on judicial matters. Both adequacy decisions include strong safeguards in case of future divergence such as a ‘sunset clause', which limits the duration of adequacy to four years. “After months of careful assessments, today we can give EU citizens certainty that their personal data will be protected when it is transferred to the UK. This is an essential component of our new relationship with the UK. It is important for smooth trade and the effective fight against crime. The Commission will be closely monitoring how the UK system evolves in the future and we have reinforced our decisions to allow for this and for an intervention if needed. The EU has the highest standards when it comes to personal data protection and these must not be compromised when personal data is transferred abroad.” Didier Reynders, Commissioner for Justice Background
On 19 February, the Commission published two draft adequacy decisions and launched the procedure for their adoption. Over the past months, the Commission has carefully assessed the UK's law and practice on personal data protection, including the rules on access to data by public authorities in the UK. The Commission has been in close contact with the European Data Protection Board, which gave its opinion on 13 April, the European Parliament and the Member States. Following this in-depth process, the European Commission requested the green light on the adequacy decisions from Member States' representatives in the so-called comitology procedure. The adoption of the decisions today, following the agreement from Member States' representatives, is the last step in the procedure. The two adequacy decisions enter into force today (ie 28 June 2021). The EU-UK Trade and Cooperation Agreement (TCA) includes a commitment by the EU and UK to uphold high levels of data protection standards. The TCA also provides that any transfer of data to be carried out in the context of its implementation has to comply with the data protection requirements of the transferring party (for the EU, the requirements of the GDPR and the Law Enforcement Directive). The adoption of the two unilateral and autonomous adequacy decisions is an important element to ensure the proper application and functioning of the TCA. The TCA provides for a conditional interim regime under which data can flow freely from the EU to the UK. This interim period expires on 30 June 2021. Read more here
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How much does an #antimoneylaundering governance investigation cost a #fintech?
Previously noted that Australian EML doesn't expect a #moneylaundering compliance investigation (no allegation of money laundering) into one of its recently acquired Irish acquisitions (PFS Card Services Ireland Limited acquired in a deal worth up to €216.9m) to exceed AUD 2million / €1.27mn this Australian financial year which ends 30 June. However it cannot forecast the cost going into the next nor subsequent years. See https://lnkd.in/eg2cm82 (see previous blogs here). Well, it looks likely the costs may go higher if a class action by Shine Lawyers begins to bite, with the Aussie law firm looking for investors who bought shares between December 19, 2020, and May 17, 2021, to join its class action. The law firm says: * “EML did not request a trading halt for almost four days after learning of these concerns and then took another 48 hours to inform the market,” says Australian law firm * “When shareholders invest their money into a company, they do so with the belief that that company will comply with its continuous disclosure obligations. * “Our claim will allege that EML failed in its obligations, significantly impacting share prices for thousands of investors.” Read more by Sean Pollock at https://lnkd.in/efTj2dU Linkedin Post - https://www.linkedin.com/posts/peteroakes_antimoneylaundering-fintech-moneylaundering-activity-6809752916379922432-wNal
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Proposed 5 year strategy issued by Payment Systems Regulator.
The PSR's strategy sets out an approach that aims to make sure payments and payment systems work well for everybody and that there is fair competition and access to payments for all. The approach is to protect and embrace what’s working well, change what’s not, and lay the foundations for new products, ways to pay and new payment systems so that they develop with the needs of real people and businesses in mind. Key elements of the PSR Strategy The strategy sets out the PSR’s perspective on payment systems and the markets they support. It considers what is going well, where there is scope for improvement, and the risks and issues that need to be tackled.
What this looks like in practice In the strategy the PSR also sets out a number of actions it will take to deliver these priorities. Some of the key actions it is proposing include:
What happens next This document is a proposed strategy . The PSR is now seeking feedback from everyone with an interest in payment systems and how they work. The deadline for responding is 10 September 2021. This will help the PSR finalise its approach and ensure it is focused on the right outcomes, and - ultimately - have a strategy that is balanced and credible in the eyes of those its regulates and protects. As well as gathering written feedback the PSR is arranging a series of engagement events to listen and understand the views of its stakeholders. More information about these events can be found on its website. If you have any questions, please get in touch via psrstrategy@psr.org.uk Links:
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EML Payments Money Laundering Governance Investigation to cost less than $2mn this financial year10/6/2021 In my previous post on EML Payments (EML) (see here) we noted that EML had advised that its Irish regulated subsidiary, PFS Card Services (Ireland) Limited ('PCSIL'), had received correspondence from the Central Bank of Ireland ('CBI'), including a letter received on Friday 14 May 2021 (Australian time) raising significant regulatory concerns ('Correspondence'). The CBI's concerns relate to PCSIL's Anti-Money Laundering / Counter Terrorism Financing ('AML/CTF'), risk and control frameworks and governance. The Correspondence states that the CBI is minded to issue directions to PCSIL pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013.
A few days ago, EML provided the Australian Stock Exchange with a trading update. The trading update also included its Quarter 3 FY2021 update in which EML confirmed: "Current Status:
Communication:
Business Impact:
Some observations:
Further reading - EML Payments Q3 FY21 Trading Update June 2021 (dated 7 June 2021)
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Received a letter from the Central Bank of Ireland's Anti-Money Laundering Division headed "AML Risk Evaluation Questionnaire (‘REQ’) Notification to [Name of Regulated Firm] (or ‘the firm’) to submit an REQ on an Annual Basis." last month with a return date this month? If so you are not alone.
The letter reminds that credit and financial institutions are required to have anti-money laundering (AML) and countering financing of terrorism (CFT) preventive measures to ensure compliance with the Criminal Justice (Money and Terrorist Financing) Acts 2010 to 2021, a well as reminding of the obligation to comply with EU Council Regulations setting out financial sanctions (‘FS’) measures. The CBI has established the REQ to seek information regarding individual firms’ exposure to Money Laundering / Terrorist Financing risks and also the AML/CFT compliance framework. Firms are being informed to submit the REQ in the specified format via the CBI's Online Reporting System on an ANNUAL BASIS within the time period specified on ONR. The CBI has informed firms that "for 2021, this deadline for the submission of the REQ return is 18 June 2021". Not only is the form detailed, and there are a few potential ways of interpreting some of the questions, or at least their interaction with other questions, but importantly for Boards of Directors note: i) Statement of Compliance: "... the REQ includes a statement to be signed by the firm confirming compliance with the firm’s AML/CFT/FS obligations. This statement if [sic] compliance should be signed and dated by a person who is duly authorised to do so by the Board (or equivalent). Ideally this person will have responsibility for AML/CFT/FS within the firm." NB this person doesn't need to be in a PCF role, but the CBI expect them to be of sufficient seniority within the firm to provide the confirmation sought. ii) Record Retention: "A record of the person who signed the statement of compliance must be formally noted in the Board minutes (or equivalent) when it is brought forward for consideration. The original signed and dated hard copy of the statement of compliance and the accompanying REQ is required to be kept on file and made available for review by the Central Bank on request." Need assistance with your risk assessment? Get in contact with us at the details here. Further reading: Risk Evaluation Questionnaire ('REQ') Return Building upon the obligations of credit and financial institutions under the CJA 2010, the Central Bank has developed a REQ in order to seek information regarding individual firms' exposure to ML / TF risks and also their AML / CFT compliance framework. Firms selected by the Central Bank to submit an REQ are required to submit the REQ in the specified format, through the Central Bank's Online Reporting System ('ONR'), within the time period specified on ONR. The minimum frequency that a firm will be required to submit an REQ is predicated on the level of ML/TF risk presented by the firm, either by virtue of its business model and/or the sector into which it falls (for further information on the frequency of submission please see the Table: AML/CFT Minimum Supervisory Engagement Model on the Central Bank AML / CFT Supervision Tab).
Linkedin Post: https://www.linkedin.com/posts/peteroakes_antimoney-aml-cft-activity-6808437129467756546-vRba
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Ireland's Finance Minister, Paschal Donohue, Speech on blockchain, crypto, fintech & innovation24/5/2021 A few short interesting extracts from a speech by Minister of Finance Paschal Donohoe to Blockchain Ireland audience yesterday (24 May 2021), covering fintech, payments, blockchain and crypto. Download the speech in PDF here
Full speech: Speech to Blockchain Ireland Week 2021 (Department of Finance)Published on 24 May 2021 Last updated on 24 May 2021 From Department of Finance Published on 24 May 2021 Last updated on 24 May 2021 Check Against Delivery Good morning everyone. I am delighted to be speaking to you today, albeit virtually, as part of Blockchain Ireland Week. First of all, I would like to acknowledge the commitment of Dave Feenan to blockchain; accepting the role as the new Chair of Blockchain Ireland, a challenge that few could have met. I would also like to acknowledge the tenacity and perseverance of Lory Kehoe, being one of the original founders of Blockchain Ireland, over 5 years ago. Thank you also Toomas Ilves for sharing your experience in the digitalisation of your country, and your expert understanding of blockchain technology. An inspiration for us all here, as this week we explore how we can create our present, and our future, working with this technology. It is hard to believe it is two years ago since I had the opportunity to meet many of you personally at the Iveagh Garden hotel. A lot has changed since, even the price of Bitcoin. Or should I say Dogecoin? Advances in the sector Blockchain Ireland Week is taking place at a crucial moment. The last year has been extremely difficult for everyone and the impact of Covid19 on our economy and society has been immense. Now, as our country begins to re-open and we continue to accelerate the vaccination programme, there is a sense of collective relief; we can allow ourselves to look forward more positively. Necessity is the mother of invention. You could say, necessity is the mother if innovation. And this is the moment to dare conceive new business models, engage with disruptive technologies and challenge ourselves to change and adapt. Because we need to change: as citizens, as customers, as businesses. We have all felt the need to adapt to the extreme circumstances of the pandemic. And we must continue to adjust; not to survive, but to thrive. The series of events that you, Blockchain Ireland, have scheduled for this week, offer an ample opportunity to learn more and explore how blockchain technology can improve our business, and our lives. Not only in Ireland, but within the EU, and globally. I wished I had the time to attend most of the events lined up for this week: the breadth and depth of topics being discussed is a testament to the leadership of Blockchain Ireland. International speakers from Africa, Asia, Australia, Europe and the United States will share their respective views and experiences. An extended thanks to all those speakers for bringing their expertise to our shores. From within Ireland, it’s fantastic to see how this technology is being used in initiatives such as: – Provenance in craft-beer, food and agricultural products – Making investing in bloodstock more affordable and transparent; – Providing integrity and trust to health data; – Exploring education and training choices. Right now, I would like to share with you two thoughts that struck me as I read about Blockchain Ireland week. The Benefits of Blockchain First, the discussion is no longer about “What is Blockchain?”, “Blockchain vs Crypto” or “Risks and benefits of Blockchain”. To me, this is a very encouraging sign. It demonstrates that the technology is maturing. We are increasingly seeing more instances of how the technology can benefit the economy and society; more enterprises are funding pilots; more private sector consortia are being created; we also see mainstream adoption starting to take off. The technology’s broad market applicability and the relevance to specific sectors is becoming clearer. It also demonstrates that in Ireland we are keeping abreast with changes in the technology. We have moved from 50 companies in Ireland working with blockchain back in May 2019 (when I last spoke to you), to almost 100 today: a sure sign that the Blockchain sector in Ireland is becoming more embedded in our ecosystem. My question for you all is: is that enough though? Could we do more? Could we do better? If so, what do we need to do? One of Ireland’s strengths is our ability to innovate and adapt to emerging trends across finance and technology and I have spoken before about the importance of nurturing Ireland’s knowledge economy. As a Government, we have tried to ensure that Ireland is prepared to take the advantages of technological opportunities though a number of interconnected initiatives. These objectives underpinned the Government’s Future Jobs Ireland strategy. Our vision, as set out in the Ireland for Finance Strategy to 2025, is for Ireland to remain internationally competitive and a top-tier location of choice for specialist IFS. We have a track record in this country for building globally recognised payment companies and innovative financial services businesses. As you will discuss this week, blockchain can transform the way in which many financial services sectors currently operate and deliver services to customers. The digital asset sector is becoming an increasingly competitive environment, while creating challenges for existing legal and supervisory frameworks, trying to match market and client requirements. We are actively monitoring developments in the technology and regulations globally, so that any potential policy changes will be crafted from a balanced, measured and carefully laid out review of risks and opportunities, both to consumers and to the economy. However, the pace of development is fast and the consequences of change might be difficult to comprehend early on. Thus, whether it is through the provision of digital assets or innovative ways of providing micro-insurance, I encourage you all to raise any concerns that would impede Ireland’s ability to remain competitive and a destination of choice for financial services. It is also encouraging to see how applications of the technology are being explored across the spectrum of our society. FutureNeuro, the Science Foundation Ireland Research Centre for Chronic and Rarer Neurological Diseases, is using blockchain to match sick patients to clinical trials based on their clinical and genomic data. It received €3.9 million in funding from the recent Disruptive Technology Innovation Fund award under Project Ireland 2040. Blockchain is also enabling innovative approaches to educational credentialing in the Irish banking sector. Earlier this year I was delighted to mark the launch of the EdQ Platform, a collaboration of the Institute of Banking alongside Bank of Ireland, AIB, Ulster Bank and Deloitte. This unique blockchain-based education credentialing platform for financial services is the first of its kind Ireland – and perhaps the world. Finally, there are 12 educational institutions across Ireland that are supporting and researching blockchain, whether that is in the form of ongoing research, study programmes or partnerships with other companies. Another heartening sign that Ireland is collectively working towards strengthening its knowledge economy credentials, anchoring on blockchain technology. To summarise, it is very inspiring to see evidence in the Irish blockchain sector that we are moving at pace with the maturity stages of the technology. As Minister for Finance, I would add that I am very reassured to see my Department has closely followed the pace and continues to be an integral participant of the Irish Blockchain Ecosystem. Trust in a Global Pandemic My second thought, is inspired by the central theme of this week’s event, “Blockchain: Foundation of Trust”. The pandemic has certainly accelerated the move to transacting and living in a digital world: what might have taken 10 years has been achieved in 10 months. We have all adapted to a large part of our lives being carried out online. However, necessity to do so may have trumped “trust”. Perhaps the most visible example of this was people being forced to drop the use of cash and become proficient in digital payments. The necessity to transact a payment online forced many to implicitly “trust” in the process, without considering who the company offering such services is or what consumer protection safeguards are in place if something goes wrong. And this was the case for everyone, irrespective of age or digital proficiency. As people became more comfortable with making financial transactions online, the 24/7 availability and convenient access made the purchasing of cryptocurrencies more accessible to the public than ever. As Minister for Finance, I’m conscious that investing in cryptocurrencies continues to involve risks and that there must be adequate regulation to protect consumers in this regard. Equally, I recognise that the blockchain technology that underpins these currencies is being a catalyst for innovation in the financial services sector, particularly payments and capital markets. Not only has the pandemic upended many of our constructs of a “normal” society, it has also challenged our trust in everything around us. Fake news should not be the new normal. Online scams should not be the new normal. Unverifiable scientific data should not be the new normal. As Finance Minister, and as President of the Eurogroup, I take the issue of trust in our banking and payment system very seriously. This is why we are closely monitoring developments into the review of a potential Digital Euro and follow the ECB’s ongoing research into Central Bank Digital Currencies. At the same time, my Department is working with the EU Commission and the Presidency to bring forth a general agreement on the draft proposal for regulation for a Market in Crypto Assets. Discussions are progressing at pace, particularly considering the technicality and complexity of the proposal. Why is this important? Because I believe that clarity of the legal and regulatory perimeter applicable to cryptoassets will bring trust for consumers and companies to deliver and use such products and services, which in turn will generate trust in our governing institutions. Conclusion As Minister for Finance, I welcome you all to Blockchain Ireland Week and I really look forward to exploring the key outcomes of this week’s discussions. I am sure it is going to be a terrific week of events. ENDS Source: https://www.gov.ie/en/speech/50cac-speech-to-blockchain-ireland-week-2021/ |