The Central Bank of Cyprus acts as the regulator for all matters related to electronic money in Cyprus.
Who can issue electronic money?
- Banks.
- Cooperative credit institutions.
- Electronic money institutions.
EMI, once established and properly licensed, can offer its services in all EU member states on a cross-border basis without any additional permits.
- A Cypriot EMI work permit is issued exclusively to a legal entity registered in Cyprus.
- EMI must be managed and controlled in Cyprus.
- A business plan that includes a projected budget for the first three fiscal years is required in the application for the applicant to ensure that they are able to use resources and develop adequate systems and procedures for the smooth operation of the EMI.
- At the time of authorization, an initial capital of at least 350,000 euros is required, as well as confirmation of the availability of funds for three years of work.
- EMI is required to maintain a minimum equity level of 2% of the average value of electronic money in circulation, while equity cannot fall (at any time) below the initial capital level.
- A description of the outsourcing mechanisms, the use of agents (if any) and the EMI’s intention to provide its services in another EU Member State through a branch should be indicated in the application.
- If the agents are nevertheless hired within the EMI structure, then it is necessary to ensure that the agents meet the criteria and requirements that must be entered in the public register maintained by the CBC.
- The organizational structure of the EMI must be public.
- Detailed information on systems and procedures is reflected in the Internal Operations Manual, including the creation of sound policies and procedures that reflect the operations of the accounting and payments, risk management, compliance, and anti-money laundering departments.
- It is extremely important to establish adequate internal controls and mechanisms for the safe storage of customer funds.
EMI authorization is terminated if:
- It has not been used within 12 months of its issuance, or has been partially discontinued for activities for which it has not been used.
- It is expressly waived by EMI, or EMI has not issued e-money or provided payment services for a period exceeding 6 months.
- Finally, CBC has the right to revoke any permission granted under certain circumstances. The withdrawal must be duly substantiated, notified to EMI and made public.
The above is for informative purposes only. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.