Court confirms €320,000 Central Bank fine against US fintech firm BlueSnap

High Court reporters

The President of the High Court has confirmed a €324,240 fine on the Irish arm of US fintech company BlueSnap, after the Central Bank of Ireland found that it failed to meet safeguarding requirements.

The application for confirmation of the fine was made to Mr Justice David Barniville on Wednesday by Claire Hogan BL, for the Central Bank.

The bank found that BlueSnap Payment Services Ireland Ltd, a subsidiary of US parent company BlueSnap Inc, breached requirements of the 2018 European Union (Payment Services) Regulations between January 2021 and December 2022.

BlueSnap allows its customers to accept payments for products and services across various jurisdictions and in different currencies.

The Central Bank, in a settlement notice issued following its enforcement action against BlueSnap, said that safeguarding funds “is a key regulatory protection” for people who avail of services such as those provided by BlueSnap.

Under European law, service providers must ensure customer funds are held in designated safeguarding accounts for “the sole purpose of holding user funds”, and must not be mixed with the firm’s own funds or funds of any person other than the customer.

In April 2021, BlueSnap informed the Central Bank that its customer funds had not been deposited in a designated safeguarding account, but instead deposited in accounts in the UK in the name of another BlueSnap group entity.

In February 2022, BlueSnap informed the Central Bank of further safeguarding failings, including that it had allowed customer funds from other entities in the BlueSnap group to be processed through its Irish safeguarding accounts.

A subsequent investigation by the Central Bank found that BlueSnap delayed in informing the bank once it became aware that it was not following the safeguarding procedures that it had set out in its application to the bank for authorisation as a payment institution.

By way of sanction, the Central Bank reprimanded the firm, and fined it €463,200. A 30 per cent discount was applied to the fine on foot of a settlement agreement.

Mr Justice Barniville confirmed the fine, finding that the penalty was not “manifestly disproportionate”.

The Central Bank obtained a similar order from the High Court earlier this week, confirming its €393,512 fine against Waystone Fund Management (IE) Ltd.