Financial Crime World

Ireland’s Thriving Fintech Sector: A Haven for Payment Services Providers Amidst Growing Financial Crime Trends

Ireland’s financial tech sector has become a major player in the world of Payment Services Providers (PSPs), attracting both indigenous and international companies. This article explores the strategic advantages and robust regulatory framework that make Ireland an appealing jurisdiction for Payment Institutions (PIs) and E-Money Institutions (EMIs).

Ireland’s Fintech Sector: A Rapidly Growing Presence

According to Central Bank data:

  1. In 2017, there were just 14 approved PSPs in Ireland.
  2. By May 2024, the number had increased five-fold, with 70 firms now licensed.
  3. This growth includes 28 EMIs, 25 PIs, six Account Information Service Providers (AISPs), and 11 Virtual Asset Service Providers (VASPs).

This expansion occurs against a background of increasing payment transaction values, with the European Central Bank reporting a staggering €83,768.4 million in non-monetary financial institutions’ sent payments in Ireland for 2022 - a nearly 300% increase from the previous year.

Why Ireland is an Attractive Jurisdiction for PIs and EMIs

Ireland’s appeal as a jurisdiction for PIs and EMIs stems from several strategic advantages:

  1. Access to the EU Single Market: Following Brexit, many businesses have relocated operations to Irish branch offices or availed of cross-border services to maintain access to the EU Single Market.
  2. Favorable Tax Policies: Ireland’s attractive tax policies add to its allure, making it an attractive destination for businesses looking to establish a presence in Europe.
  3. Double Tax Agreements: An extensive network of double tax agreements further strengthens Ireland’s position as a preferred jurisdiction for many companies.

The Importance of Financial Crime Prevention

The Central Bank of Ireland’s Regulatory & Supervisory Outlook report, published in May 2023, emphasizes the importance of financial crime prevention in safeguarding the stability and integrity of the financial sector.

Key European Guidelines and Ireland’s Regulatory Environment

Ireland’s regulatory environment closely aligns with key European guidelines, especially the European Banking Authority (EBA) Guidelines on Outsourcing Arrangements. This commitment to international standards highlights the role that financial crime plays in protecting the financial systems.

Staggering Safeguarded Funds and the Need for Robust AML/CFT Framework

With an estimated €8bn in safeguarded funds reported in Ireland in December 2023, the need for a robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) framework has become increasingly crucial.

Priority Areas for Strengthening Risk Management Practices and Increasing Transparency

As the payments sector continues to evolve, the role of AML/CFT measures in effectively combating financial crime remains central. The priorities for strengthening risk management practices, ensuring effective safeguards, and increasing transparency outlined in the report underscore the importance of a robust AML/CFT framework.

As financial crime schemes become more intricate, and the financial system witnesses the growing prevalence of other forms of financial crime, such as online fraud, effective prevention measures become essential.