Irish Crypto Firms Squeezed by Bank Account Closures, Regulatory Delays

A delay in transposing the EU's 5AMLD into local law has given crypto companies no recourse after Irish banks closed their accounts.

AccessTimeIconMay 6, 2020 at 2:27 p.m. UTC
Updated Sep 14, 2021 at 8:37 a.m. UTC
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An Irish crypto company said its business suffered after one of the country's largest banks shut down its account.

Bryan Tierney, founder of bitcoin ATM operator Boinnex, told CoinDesk Allied Irish Banks (AIB) notified the firm last August it was closing its account – initially without any official reason. It was only when Tierney put the account into an arranged overdraft – which precluded the bank from closing the account – that AIB sent an explanation in writing.

Dated Oct. 10, AIB's letter said the account was being closed because "the market for Cryptocurrencies in ROI [Republic of Ireland] remains unregulated" and remains unrecognized as money or legal tender by the Central Bank of Ireland (CBI).

While the European Union's fifth Anti-Money Laundering Directive (5AMLD) – which requires crypto companies to register with local regulators and hold information on clients' source of funds – would "impose new requirements" on crypto businesses, according to the letter, it hadn't been implemented at the time. "This type of business activity [emphasis theirs] is outside of our risk appetite at this time," AIB concluded.

Although Ireland was set to transpose 5AMLD over into local law along with the rest of Europe in January, this still hasn't taken place. A tie among three of the main political parties in a general election earlier this year has left the country without a government majority. With the coronavirus now a national priority, it's unlikely 5AMLD will be transposed until much later this year.

For Irish cryptocurrency companies like Boinnex, the delay in 5AMLD means they are left without access to mainstream financial services. A legislative draft has been publicized, but until it's enacted businesses will remain stuck in a kind of regulatory limbo.

Boinnex spent thousands of euros making sure they were compliant with the 5AMLD requirements, according to Tierney. Although the team is only three people full-time, they still had to bring on a part-time compliance officer to assist those efforts.

Boinnex had been forced to close for six weeks after AIB closed its account. While he had hoped to find a local banking partner, Tierney said he came to the conclusion that "you can't bank if you're a cryptocurrency company in Ireland at the moment."

In the end, the firm reluctantly went to a specialist bank in Lithuania, called Mistertango, and set up a relationship there. Soon, though, Lithuanian regulators fined the bank €250,000 for "systemic" violations to AML and counter-terrorist financing laws, which led Mistertango to close its doors.

“I was quite reluctant to use Mistertango, basically because I’d heard bad things in terms of their reputation. At the time it was the only show [crypto-friendly bank] in town so we ended up paying a couple of thousand and then within a couple of months it was closed.”

Boinnex said it now has a reliable banking partner for the crypto business, as well as a Bank of Ireland (BOI) account allowing the payment of salaries and anything else that doesn't touch the crypto part of the business. "I know three other companies that had Bank of Ireland accounts that were closed," Tierney said, "we wouldn't take that chance."

In a statement to CoinDesk, an AIB spokesperson said the bank didn't have a policy against crypto companies. They added that they required all clients to follow local AML and know-your-customer requirements. "We cannot open accounts for customers who are unable to comply with these regulations," they said.

This isn't an isolated incident; other Irish crypto businesses have faced similar issues.

Fellow exchange BitIreland said it also had an AIB account closed back in 2018. A spokesperson said the firm was now forced to pay "insane monthly amounts" to use a payments account from an offshore bank, and is now planning on selling the business.

Crypto exchange Bitcove told CoinDesk it has held accounts with all the major Irish banks, including AIB and BOI, but they had all been closed down. "We were actually awarded a start-up business award by Bank of Ireland, only to have our account closed a few short months later," a spokesperson said. "The Irish banks were never interested in our AML policies, even when we tried to show them how our operations were fully compliant."

One business owner, who asked he and his business remain unnamed, said they had considered setting themselves up in Ireland but had gone elsewhere because he found banks weren't willing to work with crypto firms. "We looked a couple of years ago and went elsewhere as all the vibes in the market were that it was too difficult," he said.

Tierney is still annoyed by AIB's decision to close the Boinnex account because it caused disruption to his business. What makes it worse, he said, is the Irish government has been trying to promote the country as an ideal destination for crypto businesses but has done little to work with existing industry players.

In an interview with the Irish Times last year, Irish Finance Minister Pascal Donoughue said the government “fully supports the development and adoption of new technologies like blockchain, as a way to encourage digitalization and foster innovation.”

At the time, Lory Kehoe, managing director of ConsenSys Ireland, accused the government of failing to take the new technology seriously. "Lip service is being paid to blockchain by ministers who are failing to fully grasp that we have a massive opportunity here and so need to go beyond doing things like just holding hackathons to taking concrete steps,” he said.


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