S.I. No. 183/2011 - European Communities (Electronic Money) Regulations 2011

PART 1 PRELIMINARY PROVISIONS

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PART 2 REQUIREMENTS FOR THE TAKING UP, PURSUIT AND PRUDENTIAL SUPERVISION OF BUSINESS OF ELECTRONIC MONEY INSTITUTIONS

Chapter 1 Right to issue electronic money

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Chapter 2 Authorisation and registration of electronic money institutions

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Chapter 3 Conditions of authorisation

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Chapter 4 Withdrawal of authorisation

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Chapter 5 Additional activities

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Chapter 6 Safeguarding requirements

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Chapter 7 Registration of small electronic money institutions

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Chapter 8 Restrictions on acquiring and disposing of qualifying holdings in electronic money institutions

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PART 3 ISSUANCE AND REDEEMABILITY OF ELECTRONIC MONEY

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PART 4 POWERS AND DUTIES OF THE BANK

Chapter 1 Supervisory powers and duties

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Chapter 2 Powers of authorised officers

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Chapter 3 Out-of-Court complaint and redress procedures

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Chapter 4 Appeals

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PART 5 OFFENCES

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PART 6 TRANSITIONAL

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PART 7 AMENDMENT AND REVOCATION OF OTHER LEGISLATION

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SCHEDULE AMENDMENT OF OTHER LEGISLATION

PART 1 AMENDMENT OF CENTRAL BANK ACT 1942

PART 2 AMENDMENT OF EUROPEAN COMMUNITIES (LICENSING AND SUPERVISION OF CREDIT INSTITUTIONS) REGULATIONS 1992

PART 3 AMENDMENT OF PAYMENT SERVICES REGULATIONS

S.I. No. 183 of 2011

EUROPEAN COMMUNITIES (ELECTRONIC MONEY) REGULATIONS 2011

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 26th April, 2011.

I, MICHAEL NOONAN T.D., Minister for Finance, in exercise of the powers conferred on me by section 3 (as amended by section 2 of the European Communities Act 2007 (No. 18 of 2007)) of the European Communities Act 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009¹ , hereby make the following Regulations:

PART 1 PRELIMINARY PROVISIONS

Citation

Commencement

Interpretation

“agent” means a person who provides payment services on behalf of an electronic money institution;

“average outstanding electronic money” means the average total amount of financial liabilities related to electronic money in issue at the end of each calendar day over the preceding 6 calendar months, calculated on the first calendar day of each calendar month and applied for that calendar month;

“the Bank” means the Central Bank of Ireland;

“competent authority”, in relation to any other Member State, means the body or bodies charged by law in the Member State with the supervision of electronic money institutions;

“consumer” means a natural person who, in electronic money contracts covered by the Electronic Money Directive, is acting for purposes other than his or her trade, business or profession;

“court” means the High Court;

“distributor” means a person—

• (a) acting on behalf of an electronic money institution, and

• (b) engaged by the institution to distribute and redeem electronic money;

“electronic money” means electronically (including magnetically) stored monetary value as represented by a claim on the electronic money issuer which—

• (a) is issued on receipt of funds for the purpose of making payment transactions,

• (b) is accepted by a person other than the electronic money issuer, and

• (c) is not excluded by Regulation 5;

“Electronic Money Directive” means Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC;

“electronic money holder” means an electronic money holder referred to in the Electronic Money Directive;

“Member State” means a Member State of the European Communities and includes a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992² (as adjusted by the Protocol signed at Brussels on 17 March 1993³ ), as amended from time to time;

“money-laundering” means—

• (a) the conversion or transfer of property, knowing that the property is derived from criminal activity or from an act of participation in criminal activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of the activity to evade the legal consequences of his or her action,

• (b) the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that the property is derived from criminal activity or from an act of participation in criminal activity,

• (c) the acquisition, possession or use of property, knowing, at the time of receipt, that the property was derived from criminal activity or from an act of participation in criminal activity, or

• (d) participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions referred to in paragraphs (a), (b) or (c),

even if the activities that generated the property were carried out outside the State;

“payment account” means an account held in the name of one or more payment service users that is used for the execution of payment transactions where the holder of the account is entitled to place, transfer or withdraw funds without any restrictions;

“payment service” means each business activity listed in Schedule 1 to the Payment Services Regulations;

“Payment Services Directive” means Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007⁴ on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC;

“Payment Services Regulations” means the European Communities (Payment Services) Regulations 2009 ( S.I. No. 383 of 2009 );

“the Register” has the meaning assigned to it by Regulation 7(1);

“registered” means entered in the Register;

“terrorist financing” means the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they should be used, in full or in part, in order to carry out any of the offences mentioned or referred to in Articles 1 to 4 of the Council Framework Decision 2002/475/JHA of 13 June 2002⁵ on combating terrorism;

“UCITS” means units in an undertaking for collective investment in transferable securities.

• (2) In these Regulations (other than the definition in paragraph (1)) a reference to a payment service is a payment service to which these Regulations apply.

• (3) Unless the contrary intention appears, a word or expression used in these Regulations and also in the Electronic Money Directive has in these Regulations the same meaning as it has in that Directive.

Bank to be competent authority

• (2) Paragraph (1) does not imply that the Bank is required to supervise any business activity of an electronic money issuer other than those related to electronic money and the activities which fall within Regulation 28(1)(a) to (c).

Electronic monetary value to which these Regulations do not apply

• (a) monetary value stored on instruments that can be used to acquire goods or services only—

• (i) in the premises used by the electronic money issuer, or

• (ii) under a commercial agreement with the electronic money issuer within a limited network of service providers or for a limited range of goods or services,

or

• (b) monetary value that is used to make payment transactions executed by means of any telecommunication, digital or information technology device, where the goods or services purchased are delivered to and are to be used through a telecommunication, digital or information technology device, on the condition that the telecommunication, digital or information technology operator does not act only as an intermediary between the electronic money user and the supplier of goods and services.

PART 2 REQUIREMENTS FOR THE TAKING UP, PURSUIT AND PRUDENTIAL SUPERVISION OF BUSINESS OF ELECTRONIC MONEY INSTITUTIONS

Chapter 1 Right to issue electronic money

Persons that may issue electronic money

• (a) a credit institution within the meaning of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006⁶ relating to the taking up and pursuit of the business of credit institutions (including a branch, within the meaning of point 3 of Article 4 of that Directive, located in a Member State of a credit institution having its head office in or, in accordance with Article 38 of that Directive, elsewhere than in a Member State),

• (b) an electronic money institution as defined in Article 2 of the Electronic Money Directive,

• (c) An Post in its capacity as an issuer of electronic money, or the postal authority of another Member State in its capacity as an issuer of electronic money,

• (d) the Bank, the European Central Bank or the central bank of another Member State, that is not acting in its capacity as a monetary authority, or other public authority,

• (e) a Member State, or a regional or local authority of a Member State, that is acting in its capacity as a public authority,

• (f) a credit union (within the meaning of the Credit Union Act 1997 (No. 15 of 1997)),

• (g) a person that has been registered after qualifying as a small electronic money institution under Regulation 33,

• (h) a person for the time being permitted under Part 6 to issue electronic money, or

• (i) an electronic money institution authorised as such in another Member State pursuant to a law giving effect to the Electronic Money Directive.

• (2) An electronic money institution referred to in paragraph (1)(i) shall not, in the State, issue electronic money or provide a payment service unless the Bank has been given notice in accordance with Regulation 26.

• (3) An electronic money institution authorised under Chapter 2 to issue electronic money shall not, in the State or in another Member State, issue electronic money that is not covered by its authorisation.

• (4) An electronic money institution authorised by the law of another Member State to issue electronic money shall not, in the State, issue electronic money or provide a payment service that is not covered by its authorisation.

• (5) A person referred to in paragraph (1)(g) shall not issue electronic money or provide a payment service other than one it is registered to provide.

• (6) A person referred to in paragraph (1)(h) shall not issue electronic money other than electronic money it is permitted under Part 6 to provide.

The Register

• (a) electronic money institutions and their agents and branches,

• (b) credit unions that have been approved to issue electronic money as an additional service under the Credit Union Act 1997 , and

• (c) persons who have been registered after qualifying as a small electronic money institution under Regulation 33 and their agents and branches.

• (2) The Register shall specify the payment services for which an electronic money institution is authorised or for which a person referred to in paragraph (1)(c) has been registered.

• (3) Electronic money institutions, credit unions referred to in paragraph (1)(b) and the persons referred to in paragraph (1)(c) shall be separately registered.

• (4) The Bank shall make the Register publicly available for consultation and accessible online, and shall keep the Register up to date.

Chapter 2 Authorisation and registration of electronic money institutions

Applications for authorisation

• (a) a programme of operations, setting out in particular the type of business envisaged,

• (b) a business plan, including a forecast budget calculation for the first 3 financial years that demonstrates that the applicant is able to employ the appropriate and proportionate systems, resources and procedures to operate soundly,

• (c) evidence that the applicant holds initial capital in accordance with Regulation 13,

• (d) in the case of an applicant to which Regulations 29 and 30 apply, a description of the measures taken, in accordance with those Regulations, for protecting electronic money holders’ funds,

• (e) a description of the applicant’s governance arrangements and internal control mechanisms (including its administrative, risk-management and accounting procedures) that demonstrates that those governance arrangements, control mechanisms and procedures are proportionate, appropriate, sound and adequate,

• (f) a description of the internal control mechanisms that the applicant has established to comply with its obligations in relation to money laundering and terrorist financing and its obligations under Regulation (EC) No. 1781/2006 of the European Parliament and of the Council of 15 November 2006⁷ on information on the payer accompanying transfers of funds,

• (g) a description of the applicant’s structural organisation, including, if applicable, a description of the intended use of agents and branches, a description of any outsourcing arrangements and a description of its participation in a national or international payment system,

• (h) the name of each person holding in the applicant, directly or indirectly, a qualifying holding (within the meaning of Regulation 3 of the European Communities (Markets in Financial Instruments) Regulations 2007 ( S.I. No. 60 of 2007 )), the size of each such holding, and evidence of each such person’s suitability taking into account the need to ensure the sound and prudent management of an electronic money institution,

• (i) the name of each director or other person responsible for the management of the applicant and, where relevant, each person responsible for the management of the proposed electronic money activities of the applicant, and evidence that each such person is of good repute and possesses appropriate knowledge and experience as determined by the home Member State of the electronic money institution,

• (j) the name of the person who will carry out for the applicant the functions of audit required by the Companies Acts,

• (k) the applicant’s legal status and memorandum and articles of association or other constitutional documents, and

• (l) the address of the applicant’s head office.

• (2) The applicant shall provide a description of its audit arrangements and the organisational arrangements it has set up with a view to taking all reasonable steps to protect the interests of its users and to ensure continuity and reliability in the performance of electronic money services.

• (3) The Bank may request from an applicant, by notice in writing, any further information that it requires for the purposes of considering the application.

• (4) If the Bank makes a request for further information under paragraph (3), the Bank is not obliged to consider the application until the applicant concerned provides the information so requested.

Decision to grant or refuse authorisation

• (a) grant an authorisation to operate as an electronic money institution,

• (b) refuse to grant such an authorisation, or

• (c) grant such an authorisation subject to a specified condition or requirement.

• (2) If the Bank proposes to refuse to grant authorisation as an electronic money institution, it shall give the applicant concerned notice in writing of its intention to refuse, setting out a statement of the reasons for the proposed refusal and specifying a period (not less than 21 calendar days) within which the applicant may make submissions in writing in relation to the proposed refusal.

• (3) If the Bank proposes to grant authorisation as an electronic money institution subject to a specified condition or requirement, it shall give the applicant concerned notice in writing of its intention to do so, setting out a statement of the reasons for the proposed condition or requirement and specifying a period (not less than 21 calendar days) within which the applicant may make submissions in writing in relation to the proposed condition or requirement.

• (4) In making its decision on an application referred to in paragraph (2) or (3), the Bank shall take into account any submissions made by the applicant.

Bank may require adjustments to applicant’s business plan

Conditions for granting of authorisation

• (a) a legal person established in the State that has its head office and its registered office in the State, or

• (b) a legal person which has a branch that is located in the State and whose head office is situated in a territory that is outside the European Economic Area.

• (2) The Bank shall grant an authorisation if the information and evidence accompanying the application complies with all the requirements of Regulation 8 and if the Bank’s overall assessment, having scrutinised the application, is favourable. Before granting an authorisation, the Bank may consult other relevant public authorities.

• (3) The Bank shall grant an authorisation only if, taking into account the need to ensure the sound and prudent management of an electronic money institution, the electronic money institution has robust governance arrangements, including—

• (a) a clear organisational structure with well-defined, transparent and consistent lines of responsibility,

• (b) effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and

• (c) adequate internal control mechanisms, including sound administrative and accounting procedures.

Those arrangements, procedures and mechanisms shall be comprehensive and proportionate to the nature, scale and complexity of the services provided by the electronic money institution.

• (4) Where an electronic money institution issues electronic money and is also engaged in other business activities, the Bank may require the electronic money institution to establish a separate entity for the issuance of electronic money if the other business activities of the electronic money institution impair or are likely to impair either the financial soundness of the electronic money institution or the ability of the Bank to monitor the electronic money institution’s compliance with its obligations under these Regulations.

• (5) The Bank shall refuse to grant an authorisation if, taking into account the need to ensure the sound and prudent management of an electronic money institution, it is not satisfied as to the suitability of any shareholder or member that has a qualifying holding within the meaning of Regulation 37.

• (6) Where close links exist between an electronic money institution and another person, the Bank shall grant an authorisation only if those links do not prevent the effective exercise of its supervisory functions.

• (7) The Bank shall grant an authorisation only if the laws, regulations or administrative provisions of a third country that govern a person with whom the electronic money institution has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, do not prevent the effective exercise of its supervisory functions.

• (8) For the purposes of paragraphs (6) and (7) “close links” exist between 2 or more persons if—

• (a) they are linked by—

• (i) participation in ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking, or

• (ii) a control relationship (that is, the relationship between a parent undertaking and a subsidiary, or a similar relationship between a person and an undertaking),

or

• (b) they are permanently linked to the same third person by a control relationship.

• (9) The Bank shall notify the European Commission of all authorisations for branches of electronic money institutions having their head office outside the European Economic Area.

Communication of the decision

Chapter 3 Conditions of authorisation

Initial capital

• (2) For the purposes of calculating an applicant’s initial capital, only the elements of its own funds described in subparagraphs (a) and (b) of Regulation 3(1) of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006 ( S.I. No. 661 of 2006 ) shall be taken into account.

Own funds

• (a) the higher of—

• (i) the amount required by virtue of Regulation 13 as its initial capital, and

• (ii) the amount calculated—

• (I) in respect of the issuance of electronic money, by Method D, and

• (II) if it proposes to engage in payment services which are not related to the issuance of electronic money, by whichever of Methods A, B or C the Bank directs the institution, under Regulation 16(2), to use.

• (b) if the Bank so permits under paragraph (5), the amount required by virtue of Regulation 13 as the applicant’s initial capital.

• (2) Method D is set out in Regulation 15.

• (3) Methods A, B and C are set out in Regulations 14, 15 and 16 respectively of the Payment Services Regulations.

• (4) On the basis of an evaluation of the risk-management processes, risk-loss database and internal control mechanisms of an electronic money institution, the Bank may require an applicant to hold an amount of own funds that is up to 20% higher than, or permit it to hold an amount of own funds that is up to 20% lower than, the amount that results from the application of the method directed by the Bank under Regulation 16(1) and, if applicable, Regulation 16(2).

• (5) The Bank may permit an applicant, on a case by case basis, not to hold own funds in accordance with paragraph (1)(a) if the electronic money institution is included in the consolidated supervision of a parent credit institution and meets the following conditions:

• (a) there is no current or foreseen material practical or legal impediment to the prompt transfer of own funds or repayment of liabilities by the parent credit institution;

• (b) either the parent credit institution satisfies the Bank regarding the prudent management of the electronic money institution and has declared, with the consent of the Bank, that it guarantees the commitments entered into by the electronic money institution, or the risks in the electronic money institution are of negligible interest;

• (c) the risk-evaluation, measurement and control procedures of the parent credit institution cover the electronic money institution; and

• (d) the parent credit institution holds more than 50% of the voting rights attaching to shares in the capital of the electronic money institution, or has the right to appoint or remove a majority of the members of the management body of the electronic money institution.

Calculation of own funds — Method D

Calculation of amount of own funds

• (2) Subject to Regulation 14(5), the Bank shall direct an applicant in writing to employ Method A, Method B or Method C to calculate the amount of own funds that the applicant must hold in respect of payment services in which an electronic money institution may engage which are not related to the issuance of electronic money.

• (3) Regardless of the method that an applicant is to use in calculating own funds, in doing so, the applicant may take into account only components referred to in Regulations 3 and 9 of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006, subject to Regulations 7 and 8 and the limits set out in Regulation 11, of those Regulations.

• (4) Regardless of the method that an applicant is to use in calculating own funds, in doing so—

• (a) where the applicant belongs to the same group as another electronic money institution, credit institution, payment institution, investment firm, asset management company or insurance or reinsurance undertaking, the applicant shall not take into account elements that also form part of a calculation of own funds for another member of the group, or

• (b) where the applicant carries out activities other than the issuance of electronic money or the provision of payment services, it shall not, in calculating own funds, take into account elements that are properly attributable to any of those other activities.

Average outstanding electronic money

• (a) a person carries out payment services that are not related to the issuance of electronic money or carries out any of the activities which fall within Regulation 28(1)(b) to (e), and

• (b) the amount of outstanding electronic money is unknown in advance, the person may make an assessment for the purposes of Regulation 14(1)(a) on the basis of a representative portion assumed to be used for the issuance of electronic money, provided that the representative portion can be reasonably estimated on the basis of historical data and to the satisfaction of the Bank.

• (2) Where a person has not completed a sufficiently long period of business to compile historical data adequate to make the assessment under paragraph (1), the person must make the assessment on the basis of projected outstanding electronic money as evidenced by its business plan, subject to any adjustments to that plan which are, or have been, required by the Bank.

Maintenance of authorisation

Accounting and audit

• (2) The obligations of an auditor of the holder of a licence under section 47 of the Central Bank Act 1989 (No. 16 of 1989) shall be taken to apply to the auditor of an electronic money institution. For that application—

• (a) references in that section to the holder of a licence shall be taken to be references to a electronic money institution,

• (b) a reference in that section to depositors shall be taken to be a reference to electronic money holders, and

• (c) references in that section to the Central Bank Acts 1942 to 1989 shall be taken to be references to these Regulations.

Use of distributors, agents or any other entity acting on behalf of electronic money institution

• (2) An electronic money institution shall not issue electronic money through a distributor, agent or any other entity acting on its behalf.

• (3) An electronic money institution may engage a distributor or an agent to distribute or redeem electronic money in the exercise of its passport rights.

• (4) An electronic money institution may provide payment services in the State through an agent only if the agent is included on the Register.

• (5) An electronic money institution may provide payment services in the exercise of its passport rights through an agent only if the agent is included on the Register.

Requirement for agents to be registered

• (a) the name and address of the agent;

• (b) a description of the internal control mechanisms that will be used by the agent to comply with the electronic money institution’s obligations in relation to money laundering and terrorist financing;

• (c) the names of directors and persons responsible for the management of the agent; and

• (d) evidence that they are fit and proper persons.

• (2) When the Bank receives the information required by paragraph (1) it may list the agent in the Register.

• (3) Before listing the agent in the Register, the Bank may, if it considers that the information provided to it is incorrect, take action to verify the information.

• (4) If, after taking action to verify the information, the Bank is not satisfied that the information provided to it pursuant to paragraph (1) is correct, it may refuse to list the agent in the Register.

• (5) If an electronic money institution wishes to provide payment services in another Member State by engaging an agent, before the Bank registers the agent, the Bank shall inform the competent authorities of the host Member State of its intention to register the agent and shall take their opinion into account.

• (6) An electronic money institution shall ensure that any agent acting on its behalf informs payment service users that it is acting on behalf of the electronic money institution.

Outsourcing of functions

• (a) the continuing compliance of the electronic money institution concerned with the requirements of its authorisation or its other obligations under these Regulations,

• (b) its financial performance, or

• (c) the soundness or continuity of its payment services.

• (2) If an electronic money institution intends to outsource an operational function of the issuance of electronic money or the provision of payment services, it shall notify the Bank in writing accordingly at least 30 calendar days before the outsourcing is to commence.

• (3) The Bank may direct an electronic money institution not to outsource an important operational function if the Bank is of the opinion that the outsourcing would—

• (a) result in the delegation by senior management of its responsibility,

• (b) alter the relationship and obligations of the electronic money institution towards its electronic money holders or payment service users under these Regulations,

• (c) undermine the conditions with which the electronic money institution is to comply in order to be authorised and remain so,

• (d) remove or modify any other condition of the electronic money institution’s authorisation,

• (e) materially impair the quality of the electronic money institution’s internal control, or

• (f) materially impair the ability of the Bank to monitor the electronic money institution’s compliance with its obligations under these Regulations.

Establishment of branch or engagement of agent in the State by electronic money institution authorised in another Member State

• (a) money laundering or terrorist financing is taking place, has taken place or has been attempted, or

• (b) the establishment of the branch or the engagement of the agent, as the case may be, could increase the risk of money laundering or terrorist financing,

it shall so inform the competent authorities of the electronic money institution’s home Member State.

Liability

• (2) An electronic money institution remains fully liable for any acts of—

• (a) its employees, or

• (b) any distributor, agent, branch or entity to which activities are outsourced.

Record-keeping

Obligation to give notice of intention to commence providing certain services in another Member State

• (a) commence providing electronic money issuance, redemption or distribution services in another Member State, or

• (b) commence payment services in another Member State,

shall so notify the Bank in writing at least one month before the date that it proposes to commence providing those services in the other Member State.

• (2) Within one month of receiving the notification referred to in paragraph (1), the Bank shall inform the competent authorities of the host Member State of—

• (a) the name and address of the electronic money institution,

• (b) the names of the individuals to be responsible for the management of the branch,

• (c) its organisational structure, and

• (d) the kind of services referred to in paragraph (1) that it intends to provide in the host Member State.

• (3) If an electronic money institution authorised in the State wishes to establish a branch in another Member State or wishes to engage an agent to provide payment services in another Member State, and the competent authorities of that Member State inform the Bank that those competent authorities have reasonable grounds to suspect that, in connection with the intended establishment of the branch or the engagement of the agent, as the case may be—

• (a) money laundering or terrorist financing is taking place, has taken place or has been attempted, or

• (b) the establishment of the branch or the engagement of the agent, as the case may be, could increase the risk of money laundering or terrorist financing,

the Bank may refuse to register the agent or branch.

• (4) The Bank shall cooperate with the competent authorities of the host Member State.

• (5) The Bank shall notify the competent authorities of the host Member State whenever it intends to carry out an on-site inspection in the territory of the latter. However, if it so wishes, the Bank may delegate to the competent authorities of the host Member State the task of carrying out on-site inspections of the institution concerned.

• (6) The Bank shall provide the competent authorities of the host Member State with all essential and relevant information, in particular information about infringements or suspected infringements by any distributor, agent, branch or entity to which activities are outsourced. The Bank shall communicate all relevant information upon request, and all essential information on its own initiative.

• (7) Paragraphs (1) to (6) do not affect any obligation of the Bank to supervise or monitor an electronic money institution’s compliance with the requirements of any law in relation to money-laundering or terrorist financing.

Chapter 4 Withdrawal of authorisation

Withdrawal of authorisation

• (a) if the institution—

• (i) does not engage in the business of the issuance of electronic money, or the provision of payment services, in accordance with the authorisation within 12 months, expressly renounces the authorisation or ceases to engage in that business for more than 6 months,

• (ii) obtained the authorisation through false statements or any other irregular means, or

• (iii) would constitute a threat to the stability of the payment system by continuing its electronic money or payment services business,

or

• (b) on being satisfied on reasonable grounds that—

• (i) the holder of the authorisation has contravened or is contravening, or has failed or is failing to comply, with a provision of this Part, a condition of the authorisation or a requirement imposed by or under this Part,

• (ii) if the holder of the authorisation is a partnership, the partnership is dissolved by the death or bankruptcy of a partner or because of the operation of the Partnership Act 1890 (53 & 54 Vic., c.39),

• (iii) the winding-up of the holder of the authorisation has commenced,

• (iv) the holder of the authorisation is so structured, or the business of the holder is so organised, that the holder is no longer capable of being regulated to the satisfaction of the Bank,

• (v) the circumstances under which the authorisation was granted have changed to the extent that an application for authorisation would be refused had it been made in the changed circumstances,

• (vi) the holder of the authorisation suspends payments due to creditors, or is unable to meet any other obligations to creditors of the holder,

• (vii) if the holder of the authorisation is a branch or subsidiary of a body corporate that has its head office in another Member State, the authority of that other Member State that performs functions similar to those of the Bank under this Part has terminated the authority of that body to carry on a regulated business in that other Member State,

• (viii) the holder of the authorisation, or an officer of the holder, is convicted of—

• (I) an offence against this Part or against any other designated enactment or designated statutory instrument, or

• (II) an offence involving fraud, dishonesty, breach of trust, money laundering or financing terrorism,

or

• (ix) the holder of the authorisation has failed to comply with a condition, requirement or direction imposed under these Regulations and the Bank is of the opinion that the stability and soundness of the holder is or has been materially affected by the failure.

• (2) In paragraph (1)(b)(viii)(I) “designated enactment” and “designated statutory instrument” have the same respective meanings as in the Central Bank Act 1942 (No. 22 of 1942).

• (3) Before withdrawing an authorisation, the Bank shall—

• (a) give notice in writing of the proposed withdrawal to the institution concerned, setting out a summary of the relevant evidence and the reasons for the proposal and specifying a reasonable period (not less than 21 calendar days) within which the institution may make representations in writing concerning the proposal, and

• (b) consider any representations made by the institution within the specified period.

• (4) The Bank shall notify the electronic money institution concerned in writing of the withdrawal of an authorisation, setting out the reasons for the withdrawal.

• (5) The Bank shall give public notice of the withdrawal of an authorisation.

• (6) If the Bank withdraws an authorisation, it shall remove from the Register the entries in relation to the electronic money institution concerned and any agent or branch of it.

• (7) Withdrawal of an authorisation under this Regulation takes effect on and from the date of the notice of withdrawal or, if a later date is specified in the notice, on and from that date, irrespective of whether an appeal against the withdrawal is made under Part VIIA of the Central Bank Act 1942 .

Chapter 5 Additional activities

Additional activities in which electronic money institutions may engage

• (a) the provision of payment services;

• (b) the granting of credit related to a payment service subject to paragraph (3);

• (c) the provision of operational and closely related ancillary services such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data, in respect of the issuance of electronic money or to the provision of payment services referred to in subparagraph (a);

• (d) the operation of payment systems referred to in point 6 of Article 4 of the Payment Services Directive and without prejudice to Article 28 of that Directive;

• (e) business activities other than issuance of electronic money and the provision of payment services.

• (2) The receipt of funds by an electronic money institution from an electronic money holder shall—

• (a) be exchanged for electronic money without delay, and

• (b) not constitute the taking of a deposit or other repayable funds.

• (3) An electronic money institution may grant credit related to a payment service referred to in point 4, 5 or 7 of Schedule 1 to the Payment Services Regulations only if the following conditions are met:

• (a) the credit shall be ancillary and granted exclusively in connection with the execution of a payment transaction;

• (b) notwithstanding any law in relation to providing credit by means of credit cards, the credit shall be repaid within a short period that is not to be longer than 12 months;

• (c) credit shall not be granted from funds received or held for the purpose of executing a payment transaction; and

• (d) the own funds of the electronic money institution shall at all times and to the satisfaction of the Bank be appropriate in view of the overall amount of credit granted.

• (4) An electronic money institution shall not engage in the business of taking deposits or other repayable funds.

• (5) When an electronic money institution engages in the provision of one or more payment services that are not linked to the issuance of electronic money, it may hold only payment accounts used exclusively for payment transactions.

• (6) The receipt of funds by an electronic money institution with a view to the provision of a payment service does not constitute—

• (a) the taking of a deposit or other repayable funds, or

• (b) electronic money.

• (7) An electronic money institution which has a branch which is located in the State and whose head office is situated in a territory which is outside the European Economic Area may only provide payment services if those services are related to the issuance of electronic money.

Chapter 6 Safeguarding requirements

Safeguarding for electronic money institutions engaged in the issuance of electronic money

“electronic money institution” includes a credit union;

“secure and low-risk”, in relation to assets, means that the assets are—

• (a) asset items falling into one of the categories set out in Table 1 of point 14 of Annex I to Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006⁸ on the capital adequacy of investment firms and credit institutions (recast) for which the specific risk capital charge is no higher than 1.6%, but excluding other qualifying items as defined in point 15 of that Annex, or

• (b) UCITS which invests solely in assets as specified in paragraph (a);

“users’ funds” means funds that have been received in exchange for electronic money that has been issued, and includes funds that have been credited to an electronic money institution’s payment account or are otherwise made available to the electronic money institution in accordance with the execution time requirements laid down in the Payment Services Directive, where applicable, in exchange for electronic money that has been issued.

• (2) Subject to paragraph (3), an electronic money institution that is engaged in the issuance of electronic money shall safeguard users’ funds in either of the following ways:

• (a) users’ funds—

• (i) shall not be mixed at any time with the funds of any person other than the electronic money holder’s on whose behalf the funds are held, and

• (ii) if still held by the electronic money institution and not yet delivered to the payee or transferred to another electronic money institution by the end of the business day after the day of receipt, shall be deposited in a separate account in a credit institution or invested in assets accepted by the Bank as secure and low-risk;

or

• (b) users’ funds shall be insured by an insurance company, or guaranteed by a credit institution, that does not belong to the same group as the electronic money institution, payable in the event that the electronic money institution is unable to meet its financial obligations, for an amount equal to that which would have been segregated if the method set out in subparagraph (a) had been used.

• (3) Where an electronic money institution referred to in subparagraph (2) receives users’ funds in the form of a payment instrument—

• (a) such funds do not need to be safeguarded until they are credited to the electronic money institution’s payment account or are otherwise made available to the institution, and

• (b) such funds shall be safeguarded by no later than 5 business days after the issuance of the electronic money concerned.

• (4) No liquidator, receiver, administrator, examiner or creditor of an electronic money institution, nor the Official Assignee in Bankruptcy, has any recourse or right against users’ funds held in accordance with paragraph (2)(a)(ii) received from electronic money holders or through a payment service provider until all proper claims of electronic money holders or of their heirs, successors or assigns against users’ funds relating to such electronic money have been satisfied in full.

• (5) In exceptional circumstances, the Bank may determine that the assets specified in paragraph (2)(a)(ii) do not constitute secure and low-risk assets for the purposes of safeguarding if—

• (a) the determination is based on an evaluation of security, maturity, value or other risk element of the assets, and

• (b) there is adequate justification for the determination.

• (6) Where an electronic money institution that is required to safeguard users’ funds receives funds from an electronic money holder and part of those funds is to be used for future electronic money transactions and the remainder for activities other than the issuance of electronic money, the electronic money institution shall protect the part of the funds to be used for future electronic money transactions in accordance with paragraph (2). Where that part is variable or not known in advance, the electronic money institution may safeguard a representative part likely to be used for electronic money transactions if such a representative part can be reasonably estimated on the basis of historical data to the satisfaction of the Bank.

• (7) The Bank may determine the method of safeguarding to be used in instances where the Bank has concerns that an electronic money institution has not taken adequate measures for the purpose of safeguarding electronic money holders’ funds in accordance with this Regulation. The Bank shall communicate those concerns to the electronic money institution prior to determining the method.

Safeguarding for electronic money institutions engaged in payment services not related to the issuance of electronic money

“secure and low-risk”, in relation to assets, means that the assets are—

• (a) asset items falling into one of the categories set out in Table 1 of point 14 of Annex I to Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 for which the specific risk capital charge is no higher than 1.6%, but excluding other qualifying items as defined in point 15 of that Annex, or

• (b) UCITS which invests solely in assets as specified in paragraph (a);

“users’ funds” means funds that have been received by an electronic money or payment institution from payment service users or through another payment service provider for the execution of payment transactions.

• (2) An electronic money institution that is engaged in payment services that are not related to the issuance of electronic money shall safeguard users’ funds in either of the following ways:

• (a) users’ funds—

• (i) shall not be mixed at any time with the funds of any person other than the payment service users on whose behalf the funds are held, and

• (ii) if still held by the electronic money institution and not yet delivered to the payee or transferred to another payment service provider by the end of the business day after the day of receipt, shall be deposited in a separate account in a credit institution or invested in assets accepted by the Bank as secure and low-risk;

or

• (b) users’ funds shall be insured by an insurance company, or guaranteed by a credit institution, that does not belong to the same group as the electronic money institution, payable in the event that the electronic money institution is unable to meet its financial obligations, for an amount equal to that which would have been segregated if the method set out in subparagraph (a) had been used.

• (3) No liquidator, receiver, administrator, examiner or creditor of an electronic money institution, nor the Official Assignee in Bankruptcy, has any recourse or right against users’ funds held in accordance with paragraph (2)(a)(ii) received from payment service users or through another payment service provider until all proper claims of payment service users or of their heirs, successors or assigns against users’ funds relating to such payment services have been satisfied in full.

• (4) Where an electronic money institution that is required to safeguard users’ funds receives funds from a payment service user and part of those funds is to be used for future payment transactions and the remainder for non-payment services, the electronic money institution shall protect the part of the funds to be used for future payment transactions that are not related to the issuance of electronic money in accordance with paragraph (2). Where that part is variable or not known in advance, the electronic money institution may safeguard a representative part likely to be used for payment services that are not related to the issuance of electronic money if such a representative part can be reasonably estimated on the basis of historical data to the satisfaction of the Bank.

• (5) The Bank may require an electronic money institution that is not engaged in business activities which fall within Regulation 27(1)(c) of the Payment Services Regulations to comply with the requirements of paragraph (2).

• (6) The Bank may limit the application to an electronic money institution of a requirement under this Regulation to users’ funds of payment service users each of whom has deposited more than €600 with the institution.

• (7) The Bank may determine the method of safeguarding to be used in instances where the Bank has concerns that an electronic money institution has not taken adequate measures for the purpose of safeguarding electronic money holders’ funds in accordance with this Regulation. The Bank shall communicate those concerns to the electronic money institution prior to determining the method.

Material change in measures of safeguarding

Chapter 7 Registration of small electronic money institutions

Application for registration as small electronic money institution

• (2) An application under paragraph (1) must be made in such manner as the Bank may direct.

• (3) At any time after receiving an application and before determining it, the Bank may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.

• (4) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

Small electronic money institutions — waiver of application of certain provisions of Chapters 2, 3, 4 and 6

• (a) the total business activities of the person immediately before the time of registration do not generate average outstanding electronic money that exceeds €1 million, and

• (b) the average amount of payment transactions executed by the person and any agent for which the person bears full responsibility during the previous 12 months, or the average amount of payment transactions likely to be executed by the person within the next 12 months, assessed on the projected total amount of payment transactions in its business plan, is not more than €3 million per month.

• (2) The Bank may waive the application to a person of all or part of the procedure and conditions set out in Chapters 2, 3, 4 and 6, and may register the person as a small electronic money institution, if—

• (a) the person satisfies the Bank that the person qualifies as a small electronic money institution,

• (b) none of the individuals responsible for the management or operation of the person’s business has been convicted of any offence relating to money laundering or terrorist financing or any other financial crime, and

• (c) it has its head office in the State.

• (3) A person registered as a small electronic money institution under paragraph (2) shall be taken to be an electronic money institution for the purposes of these Regulations except that—

• (a) its registration as a small electronic money institution is valid only in the State, and

• (b) it is not entitled to issue electronic money in any other Member State.

• (4) A person registered as a small electronic money institution may engage in payment services not related to the issuance of electronic money which fall within Regulation 28(1), only if the conditions set out in Regulation 35 of the Payment Services Regulations are met to the satisfaction of the Bank.

• (5) The Bank may direct that a person registered as a small electronic money institution shall not engage in one or more of the activities which fall within Regulation 28(1).

• (6) A person registered as a small electronic money institution in accordance with paragraph (2) shall—

• (a) forthwith notify the Bank of any change that may affect whether it continues to qualify as a small electronic money institution in accordance with this Regulation, and

• (b) at least annually, and on a date specified by the Bank, report to the Bank on the average outstanding electronic money.

Average outstanding electronic money

• (a) a person carries out activities that are not related to the issuance of electronic money or carries out any of the activities which fall within Regulation 28(1)(b) to (e), and

• (b) the amount of outstanding electronic money is unknown in advance, the person may make an assessment for the purposes of Regulation 33(1)(a) on the basis of a representative portion assumed to be used for the issuance of electronic money, provided that the representative portion can be reasonably estimated on the basis of historical data and to the satisfaction of the Bank.

• (2) Where a person has not completed a sufficiently long period of business to compile historical data adequate to make the assessment under paragraph (1), the person must make the assessment on the basis of projected outstanding electronic money as evidenced by its business plan, subject to any adjustments to that plan which are, or have been, required by the Bank.

Requirement to apply for authorisation in certain circumstances

• (2) If a person referred to in paragraph (1) applies for authorisation in accordance with that paragraph, within the period of 30 calendar days referred to in that paragraph, it may continue issuing electronic money or providing a payment service until the Bank notifies it of its decision on the application. If such a person fails to apply for authorisation in accordance with that paragraph, it shall cease to issue electronic money or providing a payment service at the end of that period of 30 calendar days.

Withdrawal of waiver

• (a) if the undertaking—

• (i) does not begin to engage in the business of electronic money issuance or the provision of payment services in accordance with the waiver within 12 months, expressly renounces the waiver or ceases to engage in that business for more than 6 months,

• (ii) obtained the waiver through false statements or any other irregular means,

• (iii) no longer qualifies as a small electronic money institution, or

• (iv) would constitute a threat to the stability of the payment system by continuing to issue electronic money or provide payment services,

or

• (b) on being satisfied on reasonable grounds that—

• (i) the undertaking has contravened or is contravening, or has failed or is failing to comply with, a provision of this Part, a condition of the authorisation or a requirement imposed by or under this Part,

• (ii) in the case of a partnership, the partnership is dissolved by the death or bankruptcy of a partner or because of the operation of the Partnership Act 1890,

• (iii) the winding-up of the undertaking has commenced,

• (iv) the undertaking is so structured, or its business is so organised, that the person is no longer capable of being regulated to the satisfaction of the Bank,

• (v) the circumstances under which the waiver was granted have changed to the extent that an application for authorisation would be refused had the application been made in the changed circumstances,

• (vi) the undertaking suspends payments due to creditors, or is unable to meet any other obligations to its creditors,

• (vii) if the undertaking is a branch or subsidiary of a body corporate that has its head office in another country that is an European Economic Area country, the authority of that other country that performs functions similar to those of the Bank under this Part has terminated the authority of that body to carry on a regulated business in that other country,

• (viii) the undertaking or an officer of it is convicted of—

• (I) an offence against this Part or against any other designated enactment or designated statutory instrument, or

• (II) an offence involving fraud, dishonesty, breach of trust, money laundering or financing terrorism,

or

• (ix) the undertaking has failed to comply with a condition, requirement or direction imposed under these Regulations and the Bank is of the opinion that the stability and soundness of the person is or has been materially affected by the failure.

• (2) In paragraph (1)(b)(viii)(I) “designated enactment” and “designated statutory instrument” have the same respective meanings as in the Central Bank Act 1942 .

• (3) Before withdrawing a waiver, the Bank shall—

• (a) give notice in writing of the proposed withdrawal to the person concerned, setting out a summary of the relevant evidence and the reasons for the proposal and specifying a reasonable period (not less than 21 calendar days) within which the person may make written representations concerning the proposal, and

• (b) consider any representations made by the person within the specified period.

• (4) The Bank shall notify the person concerned in writing of the withdrawal of a waiver, setting out the reasons for the withdrawal.

• (5) The Bank shall give public notice of the withdrawal of a waiver.

• (6) If the Bank withdraws a waiver it shall remove from the Register the entries in relation to the undertaking concerned.

• (7) Withdrawal of a waiver under this section takes effect on and from the date of the notice of withdrawal or, if a later date is specified in the notice, on and from that date, irrespective of whether an appeal against the revocation is made under Part VIIA of the Central Bank Act 1942 .

Chapter 8 Restrictions on acquiring and disposing of qualifying holdings in electronic money institutions

Interpretation

“prescribed percentage” means 20%, 30% or 50%;

“proposed acquirer” means a person who proposes to acquire or increase a qualifying holding in an electronic money institution, and includes a group of persons acting in concert to acquire or increase such a holding;

“proposed acquisition” means—

• (a) the proposed acquisition of a qualifying holding in an electronic money institution, or

• (b) a proposed increase in a qualifying holding in such an institution that results in the size of the holding reaching or exceeding a prescribed percentage;

“qualifying holding”, in relation to an electronic money institution, means a direct or indirect holding—

• (a) that represents 10% or more of the capital of, or the voting rights in, the electronic money institution, or

• (b) that makes it possible to exercise a significant influence over the management of the electronic money institution.

Restrictions on acquiring and disposing of qualifying holdings in electronic money institutions

• (2) A proposed acquirer who has a qualifying holding in an electronic money institution shall not, directly or indirectly, increase the size of the holding without having previously notified the Bank in writing of the intended size of the holding if, as a result of the increase—

• (a) the percentage of the capital of, or the voting rights in, the electronic money institution that the proposed acquirer holds would reach or exceed a prescribed percentage, or

• (b) in the case of a proposed acquirer that is a company or other body corporate, the electronic money institution would become the proposed acquirer’s subsidiary.

• (3) A person shall not, directly or indirectly, dispose of a qualifying holding in an electronic money institution without having previously notified the Bank in writing of the intended size of the holding.