#Background Information
An Electronic Money Institution (EMI) is defined in the Third Schedule of the Financial Institutions Act as “a financial institution that has been licensed under the provisions of the Act and authorised to issue electronic money, or that holds an equivalent authorisation in another jurisdiction under the Electronic Money Directive permitting the issuance of electronic money”.
The Act defines electronic money as “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued upon receipt of funds for payment transactions... and which is accepted by a natural or legal person other than the financial institutions that issued the electronic money.”
#Authorized Activities
Subject to prior authorization from the Malta Financial Services Authority (MSFA), EMIs are permitted to do any of the following in addition to issuing electronic money:
- the provision of certain payment services;
- the granting of credit related to certain payment services. Provided that any such credit shall not be granted from the funds received in exchange of electronic money and held in accordance with the prescribed safeguarding requirements;
- the provision of operational services and closely related ancillary services in respect of the issuing of electronic money or to the provision of payment services referred to in point (1) above;
- the operation of payment systems;
- business activities other than the issuance of electronic money, having regard to the applicable law regulating such activities.
Because payment services are governed by the same Act, there is no need to duplicate compliance processes or pay associated fees and costs.
The following characteristics must be present in order to be classified as an Electronic Money Institution (EMI) as opposed to a Payment Services Provider (PSP), even though the distinction between the two is not always obvious:
- the prepaid feature of electronic money;
- the ability to freely transfer electronic money to third parties.
#Key Elements of EMIs
- A minimum of €350,000 in initial cash is needed. The authorized EMI must make sure that its own finances don't drop below this initial capital sum;
- At least two people are required to efficiently oversee the operations of the EMI in Malta, and the MFSA believes that these individuals are sufficiently reputable and experienced to carry out these responsibilities;
- EMI Malta is permitted to issue debit cards (like chip devices) but not credit cards because these institutions are not allowed to engage in lending or other bank-related activities.
- EMIs based in Malta are permitted to outsource services, subject to the MFSA's evaluation on their own merits.
- All members of the applicant's board of directors, senior managers, and shareholders are subject to a rigorous due diligence exercise wherein their individual fitness and properness is assessed.
#The following are MFSA expenses for financial institutions, including EMIs:
- A financial institution seeking a license must pay a one-time application and processing fee of €3,500.
- A minimum of €2,500 is required for the annual monitoring charge, which is calculated as a percentage of the total items on the balance sheet.
NOTE: License fees are due on the date of license issuance, pro rata through December 31. After that, they are due on January 1 of each year. License payments are non-refundable and are due every six months.
#Licensing
The MFSA must receive applications on the proper forms. Analyzing the company plan, including financial projections, and doing due diligence on directors, senior managers, and shareholders are the two main steps in the application process.
After obtaining the relevant Malta license, EMI would be able to use it to passport the license into another EU Member State country or countries by following certain basic notification procedures. This would allow EMI to offer its services in the relevant Member State or States and/or EEA States, either by opening a branch or remotely, under the freedom to provide services.
Throughout the application process, the establishment of the proper firm or companies needed to carry out the operation or operations in Malta, and the post-licensing phase, EQUILEX offers a thorough consulting and support service.
If you require legal assistance with obtaining a license in Malta, feel free to reach out to us at contact@equilex.co or via WhatsApp: +44 73 5038 7544. Our team will be happy to assist you.