The Central Bank has found a lack of understanding and compliance with Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) obligations among the vast majority of firms seeking permission to provide services around virtual assets such as cryptocurrencies here.
The regulator has also identified significant control weakness among many of these so-called Virtual Asset Service Providers (VASP) businesses.
"The lack of compliance, coupled with control weaknesses, resulted in a significant number of the applicant firms not being able to demonstrate to the Central Bank that they could meet their AML/CFT obligations," the bank said in a statement.
Since last year, VASPs must comply with anti-money laundering and terrorism financing rules under criminal justice laws here.
In order to provide such services in Ireland, VASPs have to seek and be granted registration by the regulator.
Those applications are currently being processed by the Central Bank and today it published a bulletin based on the feedback it has provided to 90% of the applicants to date.
"All firms regulated and supervised by the Central Bank for AML/CFT purposes must be able to demonstrate a robust AML/CFT control framework that complies with the relevant obligations," said Director of Enforcement & Anti-Money Laundering, Seána Cunningham.
"The Central Bank will only register a firm when it is satisfied that the firm can meet its AML/CFT obligations on an ongoing basis."
"All current and potential VASP applicants should review the content of the bulletin and take actions to rectify weaknesses, as relevant."
"Firms undertaking VASP activities are also reminded that a failure to register may result in significant criminal and/or administrative sanctions."
The bulletin outlines how VASPs must have the required risk culture, as well as risk and control frameworks in place to minimise the risk of the use of their products or services by criminals.
It says firms operating services in new and innovative areas must ensure their businesses will not be used to launder the proceeds of crime or to finance terrorism.
The document also highlight how registered VASPs will be subject to a supervisory levy which will be driven by the level of resources applied to their supervision.
"In this regard VASPs present an inherent high…risk and will be subject to an intrusive supervisory engagement model that is commensurate with that risk," it states.
However, the Central Bank's mandate around VASPs only covers AML/CFT and not consumer protection.
In March, the bank issued a notice warning consumers of the risks of buying or investing in virtual assets and cryptocurrencies.
