Electronic Money Institution (EMI)

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CSB Group provides clients with professional assistance with the Licensing of Electronic Money Institutions (EMI). As leaders in Electronic Money Institution Licensing, we provide comprehensive consultancy and support service throughout the entire application procedure, establishment of the appropriate company/ies required to conduct the operation/s in Malta and post-licensing support.

Electronic Money Institutions in Malta – Permitted Activities

An Electronic Money Institution (“EMI”) is defined as “a financial institution that has been licensed in accordance with the Malta Financial Institutions Act (“Act”) and authorised to issue electronic money or that holds an equivalent authorisation in another country in terms of the Electronic Money Directive to issue electronic money”.

EMIs have the authority, with prior approval from the MFSA, to partake in the following activities alongside issuing electronic funds:

  • 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 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;
  • business activities other than the issuance of electronic money, having regard to the applicable law regulating such activities;
  • EMIs based in Malta are allowed to outsource services subject to the MFSA’s evaluation on their own merits.

Minimum Initial Capital

In terms of the Act, EMIs are expected to satisfy a minimum initial capital requirement of €350,000. This enables EMIs to enter into the market more affluently when compared to the previous restrictive regime which required an initial capital of €1,000,000.

Main Requirements of EMI Licence in Malta

  • The minimum initial capital requirement is €350,000. The licensed EMI is obliged to ensure that its own funds do not fall below this amount of initial capital.
  • It is necessary to have at least two individuals who will effectively direct the business of the EMI in Malta. Such persons must be of a sufficiently good repute and must have sufficient experience to perform such duties.
  • Members of the Board of directors, senior managers and shareholders of the applicant are subject to a rigorous due diligence exercise and fit and proper test.

In Malta, Electronic Money Institutions (EMIs) must meet stringent regulatory standards set by the Malta Financial Services Authority (MFSA). Requirements also include obtaining an MFSA licence, adhering to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, maintaining adequate capital reserves, implementing robust risk management procedures, and ensuring sound governance structures. Regular reporting to the MFSA and periodic audits are also mandatory. These measures uphold the integrity of Malta's financial system and encourage innovation in electronic payment services.

Passporting of Licence

Once the relative Malta EMI license is obtained, the EMI would benefit from the right to passport such Electronic Money Institution license into other EU Member State country/ies by following some basic procedures of notification thereby enabling the EMI to provide its services within the relevant Member State/s and/or EEA State/s either through the establishment of a branch or remotely, under the freedom to provide services.

How much does an EMI Licence cost?

An Electronic Money Institution Licence can be obtained by submitting to the MFSA a one-time fee of €3,500 towards the application and its processing.

An annual supervision fee dependent on a case-by-case scenario of no less than €2,500 will also be required.

The above figures are relative only to the fixed minimum fees. That being said, the annual supervision fee may differ from case to case depending on certain criteria.

To find out more about the process of acquiring an EMI Licence, please reach out to Dr Franklin Cachia at [email protected] and he will gladly assist you further.

What are the steps involved in applying for an EMI license?

Applying for an Electronic Money Institution (EMI) license involves several key steps. Prospective applicants must understand regulatory requirements, prepare a comprehensive application package, and submit it to the MFSA.

questionThe package typically includes business plans, financial projections, risk management strategies, and anti-money laundering procedures, amongst other specific documents relevant to the business model in quesiton. The regulatory authority then conducts a thorough review, assessing financial stability, governance, compliance, and personnel suitability. Applicants may need to provide additional information and address queries. Upon meeting all requirements, the EMI license is granted, allowing legal operation as an electronic money issuer.

Documents required to apply for an EMI License in Malta

To apply for an Electronic Money Institution (EMI) license in Malta, applicants must submit essential documents to the Malta Financial Services Authority (MFSA). These include a detailed business plan, financial statements, evidence of sufficient initial capital, information on corporate governance, comprehensive risk management policies, and proof of robust IT infrastructure.

These documents demonstrate the institution's compliance with regulatory standards, ensuring financial stability, security, and adherence to anti-money laundering (AML) regulations.

What is Electronic Money?

Electronic money, often referred to as e-money, is a digital alternative to traditional cash transactions. It encompasses electronically stored monetary value, typically issued by a financial institution or technology company, and can be used for various financial activities, including online purchases, bill payments, and peer-to-peer transfers. 

Unlike physical currency, electronic money exists solely in electronic form and is stored either on a prepaid card, in a digital wallet, or within a mobile payment app. It offers convenience, security, and efficiency in financial transactions, allowing users to make payments swiftly and securely without the need for physical cash.

Electronic money transactions are facilitated through electronic funds transfer systems, enabling seamless exchange of funds between parties. This digital currency has gained popularity globally, revolutionising the way people conduct financial transactions in an increasingly digital world.

Advantages of Obtaining a Malta EMI License

Obtaining a Malta Electronic Money Institution (EMI) license provides several advantages. With a robust regulatory environment and EU market access, companies gain credibility and expand their services across member states. Malta's favourable tax regime and supportive regulatory framework streamline operations and foster innovation. This creates opportunities for growth and competitive advantage in the digital financial services sector.

EMI Frequently Asked Questions

Does the EMI license permit the holding of client funds in segregated accounts?

Yes, an EMI license typically permits the holding of client funds in segregated accounts.

Is annual auditing mandatory for all EMI license holders?

Yes, annual auditing is typically mandatory for all EMI license holders.

What specific operational risks must be addressed in the EMI licensing application?

These typically include cybersecurity threats, fraud prevention measures, operational resilience, and contingency planning.

What role does innovation play in the regulatory approach to EMI licensing?

Innovation plays a significant role, fostering the development of new technologies and services while ensuring compliance with evolving regulatory standards and consumer protection measures.

How does Malta ensure the security and reliability of EMIs operating within its jurisdiction?

Malta ensures the security and reliability of EMIs operating within its jurisdiction through robust regulatory oversight, stringent compliance requirements, and regular monitoring by the Malta Financial Services Authority (MFSA).

How can CSB Group help you?

Malta’s comprehensive legal and regulatory framework has attracted a large number of financial services operators to its shores. CSB Group’s specialised and experienced team of professionals offers bespoke advisory and support to reputable operators in the financial services industry, assisting with legal, licensing and regulatory requirements in order to establish operations in Malta. These range from Funds/Collective Investment Schemes to Investment Services in Malta, covering Insurance Distributors and Banking and Financial Institutions.

For more information, email [email protected] and start your journey with a tailor-made solution today.

Key Contacts

Franklin Cachia

Director - Tax & Regulated Industries

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Kyle Scerri

Manager - Gaming & Fintech

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