Malta Payment Service Provider/Money Transfer related License

Introduction

The Financial Institutions Act, Directive 2007/64/EC of the Council and the European Parliament, provides the legal framework for the provision of the Payment Service Services in Malta. <

Permitted Activities

The Second Schedule of the Financial Institutions Act lays down the activities payment institutions may engage in;

• Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account.
• Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.
• Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider.
  • Execution of direct debits, including one-off direct debits.
  • execution of payment transactions through a payment card or a similar device;
  • execution of credit transfers, including standing orders.
• Execution of payment transactions where the funds are covered by a credit line for a payment service user:
  • Execution of direct debits, including one-off direct debits.
  • Execution of payment transactions through a payment card or a similar device.
  • Execution of credit transfers, including standing orders.
• Issuing and/or acquiring of payment instruments.
• Money remittance.
• Execution of payment transactions where the consent of the payer to a payment transaction is transmitted by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting solely as an intermediary on behalf of the payment service user and the supplier of the goods and services.
• The provision of operational and closely related ancillary services such as ensuring execution of payment transactions, foreign exchange services strictly in relation to payment services, safekeeping activities, and storage and processing of data;
• The operation of payment systems;
• Without prejudice to the provisions of article 5(6) of the Financial Act, business activities other than the provision of payment services;
• When payment institutions engage in the provision of payment services, they may only hold payment accounts used exclusively for transactions; any funds received by payment institutions from payment service users with a view to the provision of payment services shall not constitute a deposit or other repayable funds within the meaning of article 2 of the Banking Act, or electronic money within the meaning of article 2 of the Banking Act;
• Payment institutions may grant credit related to payment services referred to in paragraph 2)(d), (e) or (g) of this Schedule only if the following requirements are met:
  • The credit is ancillary and granted exclusively in connection with the execution of a transaction; and
  • Notwithstanding national rules on providing credit by credit cards, the credit granted in connection with a payment and executed with the act shall be repaid within a short period which shall in no case exceed twelve months; and
  • Such credit is not granted from the funds received or held for the purpose of executing a payment transaction; and
  • The own funds of the payment institution are at all times, to the satisfaction of the supervisory authority, appropriate in view of the overall amount of credit granted.

Legal Requirements

The licensee will need The licensee will need at least three (3) directors with at least one (1) Maltese resident director.

sr No	Element	Requirement(s)
1	Entity Requirements)	The entity making the application is a Malta company under the Companies Act (CAP. 386) Company includes: a) A company, b) Limited partnerships, c) Unit trust or d) International holding companies.
2	Director’s Requirements
3	Shareholder requirements	• The Payment Service Provider/Money Transfer Provider, will need at least 2 (two) shareholders. • Corporate shareholding is allowed and 100% foreign ownership is permitted.
4	Compliance Officer	The Licensee must establish and maintain an appropriate and effective compliance function within the firm which operates independently of all operational and business line functions and senior or supervisory management.
5	Money Laundering Reporting Officer	The Licensee must establish and maintain an appropriate and effective Money Laundering Reporting function within the firm which operates independently of all operational and business line functions and senior or supervisory management.
6	Risk Officer	The Licensee must establish and maintain an appropriate and effective Risk management function within the firm which operates independently of all operational and business line functions and senior or supervisory management.
7	Local Office	The applicant must have premises acceptable to the MFSA. The premises should be able to facilitate confidential interaction between the applicant and its clients, and provide for safe and confidential storage of documents.
8	Passport rights	An electronic money institution authorized by the MFSA may exercise its European right to issue electronic money in another Member State or EEA State either through the establishment of a branch or under the freedom to provide services if it satisfies the applicable provisions
9	Auditor	The Licensee shall establish an internal audit / audit committee in order to undertake the internal audit function of the company and which shall be independent for the management of the company or outsource.
10	Insurance	The applicant must have indemnity insurance coverage or a fidelity bond acceptable to the MFSA.
11	Minimum Capital Requirements	The Applicant must have the prescribed minimum paid-up capital and is able to meet the prescribed minimum net liquid capital requirement in cash or readily marketable securities. The prescribed minimum paid-up capital is; a) Where the institution provides only the payment services listed in Article 2(f) of the Second Schedule to the Act, its capital shall at no times be less than €20,000; (Approximately USD 22,000) b) Where the institution provides the payment services listed in Article 2(g) of the Second Schedule, its capital shall at no time be less than €50,000; (Approximately USD 55,000). c) Where the institution provides any of the payment services listed in Article 2(a)-(e) of the Second Schedule, its capital shall at no time be less than €125,000. (Approximately USD 137,500).

Ongoing requirements

• A Payment Service Provider/Money Transfer related License is issued for a period of 5 years. On expiration of such term, the Malta Financial Services Authority may renew such licence for further 5 year periods, subject to continued compliance by the Licensee and upon payment of the renewal fee.
• Filing of Audited Accounts: The financial statements must be approved within 10 months from the accounting year end and must be filed with the Registrar of Companies within 10 months plus 42 days from the accounting year end. However if the 1st accounting period is longer than 12 months, then the approval and submission date need to be decreased by the number of days that the accounting period is longer than 12 months .If these deadlines are not adhered to, penalties of €25 plus €0.50c per day will apply accordingly
• The Licensee must maintain appropriate policies of insurance for the purpose of indemnifying such licensee against any liability that may be incurred as a result of any act or omission by the licensee or any of its officers or employees in the conduct of the licensee’s securities business.