Electronic Money Institutions enable the issuance of electronic money and offering innovative payment solutions. In Cyprus, EMIs are regulated entities that provide services such as issuing funds, payment transactions, online wallet management and electronic bank transfers.
The applicable Law and compliance criteria:
The governing authority of the EMIs in the Republic of Cyprus is the Central Bank of Cyprus (the ‘‘CBC’’). An authorisation must be granted by CBC pursuant to the right of establishment and the freedom to provide services, in accordance with the provisions set out in the Electronic Money Laws of 2012 and 2018 ( the ‘‘ Law’’), which transposed into national law the following directives of the European Parliament and of the Council: a) 2009/110/EC of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions; and b) (EU) 2015/2366 of 25 November 2015 on payment services in the internal market (also known as PSD2).
In order to grant the authorisation needed, as an EMI, an application must be submitted to the CBC and all the information/documents referred to in section 5 (3) to (8) of the of The Provision and Use of Payment Services and Access to Payment Systems Laws of 2018 to 2023 shall be enclosed together with the relevant application such as the following: (1) a programme of operations, setting out in particular the type of payment services envisaged, (2) a business plan including a forecast budget calculation for the first three financial years, (3) a description of the applicant’s governance arrangements and internal control mechanisms, including administrative, risk management and accounting procedures etc. Also, together with the application the receipt of payment of the respective application fee shall be provided. In addition, shall be enclosed a description of the internal control mechanisms which the EMI will established in order to comply with the obligations of the money laundering and terrorist financing regulations in accordance with the Prevention and Suppression of Money Laundering Activities Law and Regulation (EU) (the “AML”).
Advantages of Electronic Money Institutions:
In the evolving world of fintech the establishment of an EMI in Cyprus offers a chance for companies aiming in other kind of payments and fintech solutions. An EMI can provide all payment services that a payment institution is able to provide under the licensing of CBC, in addition to the issuance of electronic money. An EMI simultaneously can offer a top-level costumer protection, including the compliance with the consumer protection and data protection laws, AML, know-your-customer (KYC) regulations and operation security.
Depending on the services that an EMI will aim to provide and its business model, we can assist you with its formation.
Author: Melissa Chatzikyriakou
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