Own funds requirements updated for Malta Payment & eMoney Institutions

Own funds requirements

Mr. Nicholas Warren co-authored with Alistair Cuschieri - Assistant Manager | 10 Nov 2017

Fintech

Malta Payment Institutions and E-Money Institutions

On the 7th of November 2017, the Malta Financial Services Authority (the ‘‘MFSA’’ or ‘‘Authority’’) issued a circular addressed to Malta Payment Institutions and E-Money Institutions in relation to the ongoing own funds requirements.

Own funds requirements

Malta Payment Institutions

Financial institutions undertaking payment services in terms of the Second Schedule to the Financial Institutions Act 1994 (the ‘‘Act’’), are required to hold, at all times, own funds calculated in accordance with one of the three methods A, B and C as described in paragraph 24 of the Financial Institutions Rule on the ‘Supervisory regulatory requirements of institutions authorised under the Act – FIR/02. Furthermore, in the same paragraph there is a statement confirming that it is up to the Authority to decide which method should be used. In this regard, the Authority has determined that all Malta Payment Institutions shall calculate their ongoing own funds requirements in accordance with Method B.

Malta E-Money Institutions

Malta E-Money Institutions, which are authorised to issue electronic money, the own funds requirements shall be calculated in accordance with Method D as described further in paragraph 21 of the Financial Institutions Rule on the ‘Supervisory regulatory requirements of institutions authorised under the Act – FIR/03. This method stipulates that the own funds shall amount to at least 2% of the average outstanding electronic money.

In the event that a Malta E-Money Institution undertakes payment services not related to the issuance of electronic money, the own funds requirements for this activity shall be calculated in accordance with one of the three methods A, B and C as may be directed by the Authority and as laid down in paragraph 24 of the Financial Institutions Rule on the ‘Supervisory regulatory requirements of institutions authorised under the Act’ – FIR/02.

In this context, the Authority has determined that all Malta E-Money Institutions which also undertake payment services not related to the issuance of electronic money, shall calculate their own funds requirements for this activity in accordance with Method B. Therefore, such E-Money Institutions are required to hold, at all times, own funds that are at least equal to the sum of the amounts of Method D and Method B.

Own funds requirements calculation template

Malta Payment and E-Money Institutions should finally compare the amounts derived from the above-mentioned methods, to the initial capital requirement established in the licence letter. The higher amount between that calculated and the one stipulated in the letter should be the ongoing own funds requirements that apply.

Accordingly, Malta Payment and E-Money Institutions are required to provide the Authority with the own funds requirements calculation as at 31st December 2017 by completing a template which can be accessed through the following link. The template is to be submitted to the Authority by not later than 15th February 2018.

Going forward

As from the first quarter of 2018, the Authority requires Malta Payment and E-Money Institutions to complete this template and submit it to the Authority on a quarterly basis together with the filing of the quarterly statutory returns.



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Dr Maria Chetcuti Cauchi

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Mr Nicholas Warren

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+356 22056415

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