Electronic Money Institutions: Licensing & Passporting Rights in Cyprus

Cyprus has established itself as a reputable European Union (EU) jurisdiction, making it an attractive location for Electronic Money Institutions (EMIs). Through passporting rights, EMI license holders in Cyprus can operate across the entire European Economic Area (EEA) without the need for additional licenses or physical branches in other EEA countries. This article outlines the licensing requirements and the benefits of EMI passporting in Cyprus.

Payment services

Before establishing an EMI in Cyprus, the scope of services the institution will provide must be determined. In addition to issuing electronic money, an EMI is permitted to engage in various activities, including offering payment services as outlined in Directive 2007/64/EC. Specifically, EMIs are authorised to provide the following services listed in Annex I of the Directive:

1. Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account.
2. Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.
3. 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:

1. execution of direct debits, including one-off direct debits;
2. execution of payment transactions through a payment card or a similar device;
3. execution of credit transfers, including standing orders.

4. Execution of payment transactions where the funds are covered by a credit line for a payment service user:

1. execution of direct debits, including one-off direct debits;
2. execution of payment transactions through a payment card or a similar device;
3. execution of credit transfers, including standing orders.

5. Issuing of payment instruments and/or acquiring of payment transactions.
6. Money remittance.
7. Payment initiation services.
8. Account information services.

Main requirements for obtaining a Cyprus EMI license

To obtain authorisation for a Cyprus EMI, applicants must meet specific requirements, which include:

• Applicants must be incorporated and headquartered in Cyprus
• The applicant is required to submit a detailed program of operations. This should include the proposed launch date, a description of the services (e.g. issuance of electronic money or payment services), and details of technical and operational infrastructure.
• EMIs must have a dedicated bank account for electronic money transactions. If credit services are offered, these must be secondary to core EMI activities and clearly defined.
• Applicants must provide details on access to payment systems and integration processes.
• A business plan must be submitted, including a three-year financial forecast. EMIs must maintain initial capital of at least €350,000.
• Applicants must present their governance structure and internal controls, ensuring compliance with anti-money laundering (AML) regulations.
• If outsourcing activities or using agents/branches, these must be defined and approved.
• Detailed information on directors, managers, and auditors must be provided, including qualifications and personal documentation
• Articles of association and official head office address must be submitted.

Timeframe

The Central Bank of Cyprus (CBC) reviews EMI applications and typically issues a decision within three months, provided all required documentation is complete.

Passporting Rights Across the EEA

A significant benefit of obtaining an EMI license in Cyprus is the access to passporting rights. This allows EMI holders to offer services across all EEA jurisdictions without the need for additional licenses or establishing branches in other countries. Once licensed in Cyprus, an EMI can provide cross-border services to any EU member state, making Cyprus a strategic entry point for businesses looking to expand throughout Europe.

Our Services

At LLPO Law Firm, we provide comprehensive support throughout the EMI licensing process. Our services include assistance with preparing and submitting the application package to the CBC, advising on optimal company structuring (staffing, organisational structure, and cost management), and managing additional requirements during the application review process until a decision is reached. Furthermore, we can act as a Compliance Officer for regulatory matters, conduct internal audit reviews, and handle tax filings. We also offer executive and non-executive director services to ensure the EMI remains in full compliance and operates smoothly.