CBOI Warns Payment Companies About Their Governance Problems

After finding “significant deficiencies” in the governance, risk management, and control frameworks of some payment and e-money firms, Ireland’s central bank sent a warning shot across their bows.

Late in 2021, the central bank sent a “Dear CEO” letter to the sector. The letter was meant to make it clear what the bank’s oversight expectations were for the companies.

A little over a year later, the bank sent another letter signed by the director of credit institutions supervision, Mary-Elizabeth McMunn. This letter clarifies that the bank still needs help with many payment and e-money providers.

“In general, the sector has been closely watched for another year during the last 12 months. The level of intensity, which is more than we would expect for this sector, is because some Payment and E-Money firms need help with their governance, risk management, and control frameworks, “fill in McMunn.

In the letter: “We keep seeing examples of companies whose strategic goals are bigger than their frameworks and abilities. Firms don’t consider all the financial and non-financial risks they face, including new and emerging risks. This is especially true in a world that is changing quickly.”

The central bank reports on five key areas: safety, governance, risk management, behavior, and culture, business model, strategy, financial resilience, operational resilience and outsourcing, and AML/CFT.

Concerning security, the bank says that one out of every four payment and e-money companies has self-reported problems. This year, it will compel companies that must secure users’ cash to undergo a specialized examination. They are following the PSR/EMR requirements for safeguarding funds. This needs to be turned in by July’s end.

The bank recommends aligning risk management frameworks with corporate plans and educating top executives about technology risks.

The letter concludes by telling companies: