Setting up an E-money Institution in Malta

Posted on: 01 Mar 2016

Category: News

With the implementation of Directive 2007/64/EC on payment services in the internal market and Directive 2009/110/EC relating to the taking up, pursuit and prudential supervision of the business of electronic money institutions, Malta is today perfectly poised as a hub for the offering of  e-money and payment services.

The setting up of Electronic Money Institutions in Malta is regulated by the Financial Institutions Act and Financial Institutions Rules.   The Financial Institutions Rules together and the Financial Institutions Act reflect the requirements imposed the Electronic Money Institutions Directive. These Rules deal specifically with the taking up, pursuit of and prudential supervision of the business of financial institutions authorised to Issue Electronic Money.

Application for a License must be made to the Malta Financial Services Authority (MFSA) and must be comprised of a business plan, proposed operational policies, draft agreements with service providers and clients as well as due diligence on directors, senior management and shareholders. The Authority also requires a number of conditions be fulfilled such as an initial capital requirement of €350,000 (with a buffer of roughly 25% typically requested by the authority over the minimum requirement),  at least two individuals who will effectively direct the business of the EMI in Malta, a compliance officer and an MLRO, who must each prove to the authority that they are persons of sufficiently good repute, are fit and proper and have sufficient experience to perform the duties allocated to them.

The application and processing one-time fee payable upon submission of an application by a financial institution applying for a licence  to the MFSA is €3,500 whilst a variable supervision fee is payable annually which is equivalent to 0.0002% of the total assets in the balance sheet as reporting under the banking directive, or €2,500, whichever is the highest.

In addition to issuing electronic money, Electronic Money Institutions are entitled, subject to the prior authorisation of the MFSA, to engage an number of further activities including the provision of payment services, the granting of credit related to certain payment services, the provision of operational and ancillary services in respect of the issuing of electronic money, the operation of payment systems and other business activities.

At Fenech Farrugia Fiott Legal we pride ourselves to have assisted multiple clients acquire their electronic money authorisation from the MFSA and provide ongoing legal and compliance support.  For further information, feel free to contact Dr. Christian Farrugia on [email protected] or Dr Claudio Caruana on [email protected]