Electronic money institutions are regulated by the Banking Act, 1994, (“the Act”).
E-money institutions are defined as any person - other than a bank - which issues means of payment in the form of electronic money.
Electronic money is the monetary value as represented by a claim on the issuer issuing such money which is:
· stored on an electronic device; and
· issued on receipt of funds of an amount not less in value than the monetary value issued; and
· accepted as means of payment by undertakings other than the issuer.
An applicant for an e-money institution license will be granted a licence only if:
¨ its own funds amount to not less than the value of 1,000,000 Euro;
¨ there are at least two individuals who will effectively direct the business of the credit institution in Malta;
¨ all qualifying shareholders, controllers and all persons who will effectively direct the business of the credit institution are fit, proper, and suitable persons to ensure its prudent management;
¨ the MFSA is satisfied that there are no close links between that company and another person(s) which through any law, regulation, administrative provision or in any manner prevent the MFSA from exercising effective supervision of that company under the provisions of the Banking Act.
An applicant needs to submit various documents to the MFSA such as the memorandum and articles of association of the company, the audited financial statements for the prior three years (if any) and the identity of the directors, controllers, managers and qualifying shareholders. The applicant also needs to submit a comprehensive business plan including the structure, organisation and management systems of the prospective institution. Notwithstanding the above list, the Authority may require the applicant to submit additional information as it may deem appropriate to determine an application for a licence or to determine whether to restrict or revoke a licence.
E-money institutions licensed in EEA states enjoy passport rights to open branches in Malta. A branch is defined by the Act as ‘premises of a credit institution, other than its head office, from which business is undertaken’. E-money institutions licensed in non-EEA state may only open a subsidiary or a branch in Malta if a license is granted by the MFSA. The MFSA normally gives its consent to the opening of branch of an overseas credit institution if it is satisfied of the level of supervision carried out by the regulatory authorities of the head office of the institution.
Maltese e-money institutions enjoy passport rights to open branches in EEA states. Maltese e-money institutions desiring to open up a subsidiary or a branch in a non-EEA state need the consent of the MFSA. The MFSA normally gives its consent if it is satisfied that the host state is a reputable regulator and that it can exchange information on a timely basis. The MFSA will also need to ensure that its own degree of supervision will not be hampered by the host state.
As a general rule, the business activities of an electronic money institution are to be restricted to the issuing of electronic money. However, an e-money institution may also apply for the consent of the MFSA in order to:
· provide closely-related financial and non-financial services such as the administering of electronic money by the performance of operational and other ancillary functions related to its issuance, and the issuing and administering of other means of payment but excluding the granting of any form of credit; and
· the storing of data on the electronic device on behalf of other persons or public institutions.
The MFSA may waive the application of any or all of the provisions of the Banking Act, but in this case, the e-money institution will lose the right to benefits of pass-porting rights. Waiver can be obtained in situations where –
· the total business activities of the institution generate a total amount of financial liabilities related to outstanding electronic money that does not exceed the amount of 6,000,000 Euro;
· the electronic money issued by the institution is accepted as a means of payment only by any subsidiaries of the institution which perform operational or other ancillary functions related to electronic money issued or distributed by the institution, any parent company of the institution or any other subsidiaries of that parent company;
· electronic money issued by the institution is accepted as payment only by a limited number of undertakings, which can be distinguished by:
- their location in the same premises or other limited local area; or
- their close financial or business relationship with the issuing institution, such as common marketing or distribution scheme.
