Emoney and Payment Institution licence in Cyprus
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Maintenance of Register of electronic money institutions by the CBC

The CBC, acting in accordance with the provisions of the Law, maintains public registers which include:

The names of the electronic money institutions to which it has granted authorization to offer electronic money services, the names of the electronic money institutions which have been authorized in other EU member states and which have exercised the right of establishment or the right of freedom to provide cross-border services in the Republic of Cyprus.

The CBC is responsible for the supervision and compliance with the provisions of the Law of all electronic money institutions which have been authorized by it.

In addition, the CBC is responsible for the supervision of certain operational functions of banks and electronic money institutions which have been authorized in other EU member states and offer electronic money services in the Republic of Cyprus under the freedom of establishment or through an agent.

Cross-border (passport) involvement of
e-money agents

The cross-border involvement of e-money agents of an e-money institution based in another state of the European Economic Area requires that a notification proceeding be conducted (so- called ‘European passport’).

Since the relevant provisions of the Payment Services Supervisory Act are based on the new e-money directive, this also applies, in principle (ie, subject to a different implementation of the directive or a different administrative practice in particular cases), to the reverse case: namely where an e-money institution based in another EEA state employs the services of an e-money agent working in Cyprus.

New e-money license also covers payment
services

The license to conduct e-money business under the Payment Services Supervisory Act also covers the provision of payment services within the meaning of the Payment Services Supervisory Act (eg, money transfer business or payment card business).

In view of the practice of the authority in connection with the issue of licenses to payment institutions (ie, companies which exclusively provide payment services within the meaning of the Payment Services Supervisory Act), it is anticipated that the authority will not issue general licenses for the provision of any payment services whatsoever to e-money institutions, but that the license will be restricted to payment services specifically applied for and made plausible within the scope of the e-money institution’s proposed business model.

Reduced initial capital

The minimum amount for initial capital of e-money institutions has been reduced from €1 million to €350,000. In contrast, the ongoing capital requirements of 2% of the average e-money circulation correspond, in principle, to the hitherto applicable ongoing capital requirements.

If the e-money institution also provides payment services not associated with the issue of e-money, the applicable provisions for the calculation of equity capital for payment institutions apply cumulatively.

Comment

The new e-money regulatory law covers for the first time e-money intermediaries involved in the distribution or redemption of e-money.

While under the previous law the pure distribution of e- money was not regarded as relevant to regulatory law, the distribution now involves the status of an e-money agent. This means, in particular, that the relevant intermediary – for example, the kiosk operator selling or charging pre-paid cards – is directly subject to the Money-Laundering Act.

For e-money institutions, the new e-money regulatory law involves significant relief (eg, the reduction of the initial capital or the repeal of the existing liquidity requirements). However, e- money institutions will in future have to secure customer moneys received in accordance with the strict provisions of the Payment Services Supervisory Act.