1. Pre-Legislative scrutiny begins on Access to Cash Bill
On 27 February 2024, the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach ("Joint Committee") began the pre-legislative scrutiny of the General Scheme of the Access to Cash Bill ("Bill").
The Joint Committee Cathairleach Deputy John McGuinness stated that the Retail Banking Review had found that there was no framework in place to ensure reasonable access to cash in the future. The Bill aims to ensure reasonable access to cash and that future infrastructure will be "managed in a fair, orderly, transparent and equitable manner".
On the first day of the pre-legislative scrutiny, the Chief Executive of the Banking and Payments Federation Ireland, Brian Hayes, was invited to speak. In his opening statement to the Joint Committee, Mr Hayes stressed the importance of cash in society, particularly for small businesses and vulnerable members of society. He noted that while the banking industry supported the aim of ensuring reasonable access to cash, it also had some concerns with the proposed framework.
The main concern voiced related to competition. Mr Hayes explained that pursuant to the General Scheme, the three retail banks will have sole responsibility to ensure the prescribed level of ATM and cash access points are maintained. Should another provider withdraw an ATM or access point, it will be the responsibility of retail banks to replace the service even if it is not commercially viable. This risks a competitive disadvantage and may also represent a "barrier to entry for new retail banks". To address this, he made a number of recommendations:
- expand the scope of "designated entities" beyond retail banks to ensure the cost of reasonable access to cash is a "shared industry responsibility";
- the geographical radius should be increased to 15km from 10km to align with An Post's geographical commitments, and avoid unquantifiable costs on retail banks who would be required to replace a "bricks and mortar counter service" if another provider withdrew;
- to ensure the revision process is independent, the Central Bank of Ireland ("Central Bank"), not the Minister for Finance, should be responsible for varying the access to cash criteria;
- the review period should be amended from 12 months post-Census to a mid-Census timeframe or every 30 months. The trigger for review based on reduction in demand for cash should be a 10% reduction from the set December 2022 baseline, rather than a 15% drop year on year. An exceptional event and the banking industry itself should also be able to invoke a review;
- the definition of the access to cash points should include retail branch locations, branch ATM’s, An Post locations, Independent ATMs, Credit Unions, and also cashback services. PSD3 proposes enabling retailers to offer cashback without a purchase, and thus retailers could support this facility; and
- the Central Bank should issue a consultation paper enabling engagement from the industry on how local deficiencies are assessed and addressed, and the implementation timeline to ensure transparent procedures are developed which can be reviewed regularly.
We will continue to monitor the progress of the Bill's pre-legislative scrutiny and update clients accordingly.
2. Credit Union (Amendment) Act 2023 is commenced
On 21 February 2024, the Minister for Finance, Michael McGrath, signed an order, S.I. No 57 of 2024, bringing the Credit Union (Amendment) Act 2023 ("Act") into effect. There will be a phased commencement of the Act, with Phase 1 coming into effect on 22 February 2024, and Phase 2 coming into effect on 8 April 2024.
The Act includes substantial reforms, with extensive positive implications including:
- options for credit unions to collaborate, share resources and generate economies of scale;
- ability for credit unions to compete more effectively in the mortgage and SME lending market;
- the option to refer members to other credit unions with a larger product offering;
- enable the formation of corporate credit unions;
- increase flexibility around the common bond; and
- empower credit union boards to better manage their own Governance, and permit each board to focus and concentrate on strategy and development.
Ministerial Response
Minister McGrath commented that the credit union sector is "a vital cornerstone of Irish society" and that the Act represents a significant opportunity for growth and development. Minister for Financial Services, Credit Unions and Insurance, Jennifer Carroll MacNeill highlighted that the Act helps to "solidify the position of credit unions in the financial services architecture of this State".
3. Commission Delegated Regulations under MiCA and DORA
Commission adopts Delegated Regulations on classification of ARTs and EMTs, product intervention powers, supervisory fines and fees under MiCA
On 22 February 2024, the European Commission adopted 4 Delegated Regulations supplementing the Markets in Crypto Assets Regulation ("MiCA"). These include:
- Commission Delegated Regulation specifying the fees charged by the EBA to issuers of significant asset-referenced tokens ("ARTs") and issuers of significant e-money tokens ("EMTs");
- Commission Delegated Regulation specifying the procedural rules for the exercise of the power to impose fines of periodic penalty payments by the European Banking Authority ("EBA") on issuers of significant ARTs and issuers of significant EMTs;
- Commission Delegated Regulation specifying certain criteria for classifying ARTs and EMTs as significant; and
- Commission Delegated Regulation specifying the criteria and factors to be taken into account by the European Securities and Markets Authority, the EBA and competent authorities in relation to their intervention powers.
Next Steps
The Delegated Regulations will now be considered by the European Parliament and the Council of the European Union, and published in the Official Journal of the European Union if neither institution objects.
Commission adopts Delegated Regulations on critical ICT third-party service providers and oversight fees under DORA
On 22 February 2024, the European Commission adopted 2 Delegated Regulations which supplement the Digital Operational Resilience Act ("DORA") on critical ICT third party service providers and oversight fees, which reflect mandates under Article 31(6) and Article 43(2) of DORA respectively.
- Commission Delegated Regulation specifying the criteria for the designation of ICT third-party service providers as critical for financial entities; and
- Commission Delegated Regulation determining the amount of the oversight fees to be charged by the lead overseer to critical ICT third-party service providers and the way in which those fees are to be paid.
Next Steps
The Delegated Regulations will now be considered by the European Parliament and the Council of the European Union, and published in the Official Journal of the European Union if neither institution objects.
4. Council and Parliament agree on Frankfurt as the base for Anti-Money Laundering Authority
On 23 February 2023, the Council of the European Union ("Council") announced that an agreement had been reached on Frankfurt as the location of the new Anti-Money Laundering Authority ("AMLA").
The European Commission will be responsible for establishing the AMLA and its initial operations. The location will be included in the proposed AMLA Regulation and formally adopted as part of the text. Once the AMLA regulation is adopted, it will apply from July 2025.
The AMLA Regulation is part of a wider package to reform the EU's framework on combatting money-laundering and terrorist financing. The provisional agreement on the entire package needs to be formally adopted by both the Council and the Parliament. The Parliament is expected to vote on its final approval between 22-25 April 2024.
Irish Response
Minister for Finance, Michael McGrath, welcomed the selection of Frankfurt as the location for AMLA, and stated that Ireland would work with Germany and other Member States to ensure the success of AMLA. Minister for Financial Services, Credit Unions and Insurance, Jennifer Carroll MacNeill, also noted the importance of AMLA in disrupting the proceeds of crime in Europe.
5. Council of the EU adopts regulation on instant payments
On 26 February 2024, the Council of the European Union ("Council") announced that it had adopted the proposed Regulation, amending the Single Euro Payments Area Regulation, the Cross-Border Payments Regulation, the Settlement Finality Directive and PSD2 as regards instant credit transfers in euro ("Regulation"). The Council also published the adopted text of the Regulation.
The European Parliament adopted its position at first reading on 7 February 2024.
For more information on Regulation, please see FIG Top 5 at 5 dated 8 February 2024.
Next Steps
The proposed Regulation has now been adopted, and will enter into force 20 days after it is published in the Official Journal of the European Union. The transition period will be shorter for Member States whose currency is the euro, and more time will be given to Member States in the non-euro area.