S.I. No. 6/2018 - European Union (Payment Services) Regulations 2018

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 12th January, 2018.

I, PASCHAL DONOHOE, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015¹ hereby make the following Regulations:

PART 1 Preliminary

Citation and commencement

1.

• (2) Subject to paragraph (3), these Regulations come into operation on 13 January 2018.

• (3) Regulations 89(2)(c), 90(4)(d) and (5)(a), 91(3)(c) and (4)(a) and 120 come into operation 18 months from the date the regulatory technical standards referred to in Article 98 of the Payment Services Directive enter into force.

Interpretation

2.

“Act of 1942” means the Central Bank Act 1942 (No. 22 of 1942);

“applicant” means a person who applies for an authorisation under Regulation 7;

“Bank” means the Central Bank of Ireland;

“Commission Recommendation” means the Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises² ;

“competent authority of another Member State” means a competent authority of another Member State designated for the purposes of the Payment Services Directive under the law of that Member State;

“court” means the High Court;

“credit institution” has the same meaning as it has in the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014 );

“credit union” has the same meaning as it has in the Credit Union Act 1997 (No. 15 of 1997);

“Directive 2009/110/EC” 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/EC³ ;

“Directive 2013/36/EU” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC⁴ ;

“Directive (EU) 2015/849” means Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC⁵ ;

“electronic money institution” has the same meaning as it has in the European Communities (Electronic Money) Regulations 2011 ( S.I. No. 183 of 2011 );

“Financial Services and Pensions Ombudsman” has the same meaning as it has in the Act of 1942;

“General Data Protection Regulation” means Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC⁶ ;

“insurance undertaking” has the same meaning as it has in the European Union (Insurance and Reinsurance) Regulations 2015 ( S.I. No. 485 of 2015 );

“investment firm” has the same meaning as it has in the European Union (Markets in Financial Instruments) Regulations 2017 ( S.I. No. 375 of 2017 );

“market operator of a regulated market” has the same meaning as it has in the European Union (Markets in Financial Instruments) Regulations 2017;

“Member State” means Member State of the European Union and, where relevant, includes a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 (as adjusted by the Protocol signed at Brussels on 17 March 1993), as amended;

“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 Services Directive” means Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC⁷ ;

“payment institution” means a payment institution authorised by the Bank under Regulation 18;

“payment services provider” means a person referred to in Regulation 6(1) ;

“Register” has the meaning assigned to it by Regulation 25;

“Regulation (EU) 2015/847” means Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006⁸ ;

“Regulation (EU) No 575/2013” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012⁹ ;

“Regulation (EU) No 1093/2010” means Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC¹⁰ ;

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

“reinsurance undertaking” has the same meaning as it has in European Union (Insurance and Reinsurance) Regulations 2015;

“UCITS management company” means a management company within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ( S.I. No. 352 of 2011 ).

• (2) A word or expression that is used in these Regulations and is also used in the Payment Services Directive has, unless the contrary intention appears, the same meaning in these Regulations that it has in the Payment Services Directive.

Application of certain provisions of these Regulations

3.(1) Subject to the limitations with regard to the currency of a payment transaction specified in paragraphs (2), (3) and (4), Parts 3 and 4 apply—

• (a) in respect of a payment service provided by a payment service provider—

• (i) established in the State, or

• (ii) providing that payment service to a payment service user in the State—

(I)in the exercise of the right of establishment, or

(II)through an agent established in the State, or

• (b) in a case in which the provision concerned applies to or imposes an obligation on a payment service user, where that payment service user is resident in or established in the State.

• (2) Parts 3 and 4 apply to payment transactions in the currency of a Member State where both the payer’s payment service provider and the payee’s payment service provider are, or the sole payment service provider in the payment transaction is, located in a Member State.

• (3) Part 3, except Regulation 69(1) (b), Regulation 76(b) (v) and Regulation 80(a), and Part 4, except for Regulations 105 to 109, apply to payment transactions in a currency that is not the currency of a Member State where both the payer’s payment service provider and the payee’s payment service provider are, or the sole payment service provider in the payment transaction is, located within the Union, in respect to those parts of the payments transaction which are carried out in a Member State.

• (4) Part 3, except for Regulation 69(1) (b), Regulation 76(b) (v), Regulation 76(e) (vii) and Regulation 80(a), and Part 4, except for Regulation 86(3) and (6), Regulations 100, 101, 105, 107(1) and (2), 112 and 115, apply to payment transactions in all currencies where only one of the payment service providers is located in a Member State, in respect to those parts of the payments transaction which are carried out in a Member State.

Payment transactions, etc., to which these Regulations do not apply

4.(1) These Regulations do not apply to-—

• (a) payment transactions made exclusively in cash directly by a payer to a payee, without any intermediary intervention,

• (b) payment transactions from a payer to a payee through a commercial agent authorised under an agreement to negotiate or conclude the sale or purchase of goods or services on behalf of the payer only or the payee only,

• (c) professional physical transport of banknotes and coins, including their collection, processing and delivery,

• (d) payment transactions consisting of non-professional cash collection and delivery within the framework of a non-profit or charitable activity,

• (e) services where cash is provided by a payee to a payer as part of a payment transaction following an explicit request by the payment service user just before the execution of the payment transaction through a payment for the purchase of goods or services,

• (f) cash-to-cash currency exchange operations where the funds are not held on a payment account,

• (g) payment transactions based on any of the following classes of document drawn on a payment service provider with a view to placing funds at the disposal of a payee:

• (i) paper cheques governed by the Geneva Convention of 19 March 1931 providing a uniform law for cheques;

• (ii) paper cheques similar to those referred to in clause (i) and governed by the law of a Member State which is not a party to the Geneva Convention of 19 March 1931 providing a uniform law for cheques;

• (iii) paper-based drafts in accordance with the Geneva Convention of 7 June 1930 providing a uniform law for bills of exchange and promissory notes;

• (iv) paper-based drafts similar to those referred to in clause (iii) and governed by the law of a Member State which is not a party to the Geneva Convention of 7 June 1930 providing a uniform law for bills of exchange and promissory notes;

• (v) paper-based vouchers;

• (vi) paper-based traveller’s cheques;

• (vii) paper-based postal money orders, as defined by the Universal Postal Union,

• (h) without prejudice to Regulation 43, payment transactions carried out within a payment or securities settlement system between—

• (i) on the one hand, settlement agents, central counterparties, clearing houses or central banks and other participants of the system, and

• (ii) on the other hand, payment service providers,

• (i) payment transactions related to securities asset servicing, including dividends, income or other distributions, or redemption or sale, carried out by persons referred to in subparagraph (h) or by investment firms, credit institutions, collective investment undertakings or asset management companies providing investment services and any other entities allowed to have the custody of financial instruments,

• (j) services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information technology and communication network provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services,

• (k) services based on specific payment instruments that can be used only in a limited way, that meet one of the following conditions:

• (i) instruments allowing the holder to acquire goods or services only in the premises of the issuer or within a limited network of service providers under direct commercial agreement with a professional issuer;

• (ii) instruments which can be used only to acquire a very limited range of goods or services;

• (iii) instruments valid only in a single Member State provided at the request of an undertaking or a public sector entity and regulated by a national or regional public authority for specific social or tax purposes to acquire specific goods or services from suppliers having a commercial agreement with the issuer,

• (l) payment transactions by a provider of electronic communications networks or services provided in addition to electronic communications services for a subscriber to the network or service—

• (i) for purchase of digital content and voice-based services, regardless of the device used for the purchase or consumption of the digital content and charged to the related bill, or

• (ii) performed from or via an electronic device and charged to the related bill within the framework of a charitable activity or for the purchase of tickets,

provided that the value of any single payment transaction referred to in clauses (i) and (ii) does not exceed €50 and—

• (I) the cumulative value of payment transactions for an individual subscriber does not exceed €300 per month, or

• (II) where a subscriber pre-funds its account with the provider of the electronic communications network or service, the cumulative value of payment transactions does not exceed €300 per month,

• (m) payment transactions carried out between payment service providers, their agents or their branches for their own account,

• (n) payment transactions and related services between a parent undertaking and its subsidiary or between subsidiaries of the same parent undertaking, without any intermediary intervention by a payment service provider other than an undertaking belonging to the same group, and

• (o) subject to paragraph (2), cash withdrawal services offered by means of an automated teller machine, where the provider—

• (i) acts on behalf of one or more card issuers,

• (ii) is not a party to a framework contract with a customer who withdraws money from a payment account, and

• (iii) does not conduct other payment services referred to in the Schedule.

• (2) A customer referred to in subparagraph (o) of paragraph (1) shall be provided with the information on any withdrawal charges referred to in Regulations 69, 72, 73 and 83—

• (a) before making a withdrawal referred to in that subparagraph, and

• (b) on receipt of the cash at the end of the transaction after withdrawal.

Relationship with Consumer Credit Act 1995

PART 2 Payment Service Providers

Chapter 1 Right to Provide Payment Services

Payment service providers

• (a) a credit institution within the meaning of point (1) of Article 4(1) of Regulation (EU) No 575/2013, including branches of that credit institution within the meaning of point (17) Article 4(1) of that Regulation where such branches are located in the Union, whether the head offices of those branches are located within the Union or, in accordance with Article 47 of Directive 2013/36/EU and the law of the State, outside the Union,

• (b) an electronic money institution within the meaning of point (1) of Article 2 of Directive 2009/110/EC, including, in accordance with Article 8 of that Directive and with the law of the State, branches of that electronic money institution, where such branches are located within the Union and their head offices are located outside the Union, in as far as the payment services provided by those branches are linked to the issuance of electronic money,

• (c) An Post in its capacity as a provider of banking and giro services, or the postal authority of another Member State in its capacity as the provider of a giro service,

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

• (e) a Member State, or a regional or local authority of a Member State, when not acting in its capacity as a public authority,

• (f) a credit union,

• (g) a payment institution authorised under Chapter 2 or by Regulation 140 whose authorisation has not been revoked,

• (h) a person exempted by the Bank under Regulation 41 and entered by the Bank in the Register in accordance with Regulation 25(1) (b),

• (i) a person exempted in accordance with Regulation 42 and entered by the Bank in the Register in accordance with Regulation 25(1) (b),

• (j) a person permitted to provide payment services under Regulation 140, or

• (k) a payment institution authorised as such in another Member State pursuant to the law of that Member State giving effect to the Payment Services Directive.

• (2) A payment institution referred to in paragraph (1) (k) shall not provide, in the State, a payment service unless the Bank has been given notice in accordance with Regulation 37.

• (3) A payment institution authorised under Regulation 18 to provide a payment service shall not provide, in the State or in another Member State, a payment service that is not covered by its authorisation.

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

• (5) A person referred to in paragraph (1) (h) shall not provide a payment service other than those services referred to in paragraphs 1 to 6 of the Schedule.

• (6) A person referred to in paragraph (1) (i) shall not provide a payment service other than those services referred to in paragraph 8 of the Schedule.

• (7) A person referred to in paragraph (1) (j) shall not provide a payment service save to the extent and for the duration that it is permitted under Regulation 140 to provide.

Chapter 2 Payment Institutions

Applications for authorisation

• (2) An application for authorisation as a payment institution made to the Bank shall be in the form directed by the Bank and shall contain or be accompanied by—

• (a) a programme of operations, setting out in particular the type of payment services 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 8,

• (d) in the case of an applicant to which Regulation 17(2) applies, a description of the measures taken, in accordance with Regulation 17, to safeguard payment service users’ 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 procedure in place to monitor, handle and follow up a security incident and security related customer complaints, including an incidents reporting mechanism which takes account of the notification obligations of a payment institution under Regulation 119,

• (g) a description of the process in place to file, monitor, track and restrict access to sensitive payment data,

• (h) a description of business continuity arrangements including a clear identification of the critical operations, effective contingency plans and a procedure to regularly test and review the adequacy and efficiency of such plans,

• (i) a description of the principles and definitions applied for the collection of statistical data on performance, transactions and fraud,

• (j) a security policy document, including a detailed risk assessment in relation to the applicant’s payment services and a description of security control and mitigation measures taken to adequately protect payment service users against the risks identified, including fraud and illegal use of sensitive and personal data,

• (k) for applicants subject to the obligations in relation to money laundering and terrorist financing under Directive (EU) 2015/849 and Regulation (EU) 2015/847, a description of the internal control mechanisms which the applicant has established in order to comply with those obligations,

• (l) a description of the applicant’s structural organisation, including, where applicable, a description of the intended use of agents and branches and of the off-site and on-site checks that the applicant undertakes to perform on them at least annually, as well as a description of outsourcing arrangements, and of its participation in a national or international payment system,

• (m) the identity of persons holding in the applicant, directly or indirectly, qualifying holdings within the meaning of point (36) of Article 4(1) of Regulation (EU) No 575/2013, the size of their holdings and evidence of their suitability taking into account the need to ensure the sound and prudent management of a payment institution,

• (n) the identity of directors and persons responsible for the management of the applicant and, where relevant, persons responsible for the management of the payment services activities of the applicant, as well as evidence that they are of good repute and possess appropriate knowledge and experience to perform payment services, as determined by the State,

• (o) where applicable, the identity of statutory auditors and audit firms as defined in the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 ( S.I. No. 312 of 2016 ),

• (p) the applicant’s legal status and articles of association, and

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

• (3) For the purposes of subparagraphs (d), (e), (f) and (l) of paragraph (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 payment services.

• (4) The security control and mitigation measures referred to in subparagraph (j) of paragraph (2) shall indicate how those measures ensure a high level of technical security and data protection, including for the software and information technology systems used by the applicant or the undertakings to which it outsources the whole or part of its operations.

• (5) The measures referred to in paragraph (4) shall also include the security measures referred to in Regulation 118(1) and (2) and shall take into account the European Banking Authority’s guidelines on security measures where such guidelines have been issued under Article 95(3) of the Payment Services Directive.

• (6) An applicant that applies for authorisation to provide the payment services referred to in paragraph 7 of the Schedule, shall as a condition of its authorisation, hold a professional indemnity insurance policy, covering the territories in which it offers services, or some other comparable guarantee against liability to ensure that it can cover its liabilities as specified in Regulations 97, 112, 113 and 115.

• (7) An applicant that applies for authorisation or registration for the purposes of providing the payment services referred to in paragraph 8 of the Schedule, shall as a condition of its authorisation or registration, as the case may be, hold a professional indemnity insurance policy covering the territories in which it offers services, or some other comparable guarantee against its liability vis--vis an account servicing payment service provider or a payment service user resulting from non-authorised or fraudulent access to or non-authorised or fraudulent use of payment account information.

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

• (9) For the purposes of Regulation 23, an application shall be deemed to be incomplete until such time as the applicant concerned has provided the information requested by the Bank under paragraph (8).

Initial capital

• (a) where the applicant proposes to provide only the payment service referred to in paragraph 6 of the Schedule, €20,000,

• (b) where the applicant proposes to provide the payment service referred to in paragraph 7 of the Schedule, €50,000, and

• (c) where the applicant proposes to provide a payment service referred to in any one or more of paragraphs 1 to 5 of the Schedule, €125,000.

• (2) For the purposes of calculating an applicant’s initial capital, only the items referred to in Article 26(1) (a) to (e) of Regulation (EU) No 575/2013 shall be taken into account.

Own funds

• (a) the higher of—

• (i) the amount of initial capital required under Regulation 8, and

• (ii) the own funds requirement of that payment institution calculated in accordance with a direction issued by the Bank under Regulation 11, or

• (b) where paragraph (2) or (3) applies, the amount of initial capital required under Regulation 8.

• (2) This paragraph applies where the Bank is satisfied that a payment institution—

• (a) meets the conditions specified in Article 7 of Regulation (EU) No 575/2013, and

• (b) is included in the consolidated supervision of the parent credit institution in accordance with Directive 2013/36/EU.

• (3) This paragraph applies where a payment institution offers—

• (a) only the services referred to in paragraph 7 of the Schedule, or

• (b) only the services referred to in paragraphs 7 and 8 of the Schedule.

• (4) Where a payment institution offers only the payment service referred to in paragraph 8 of the Schedule, paragraph (1) shall not apply to the payment institution.

Basis for calculation of own funds

10.In calculating own funds—

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

• (b) where a payment institution carries out activities other than providing payment services, the payment institution shall not, in calculating own funds, take into account elements that are properly attributable to any of those other activities.

Calculation of own funds — directions

• (2) A payment institution shall be deemed to have been directed by the Bank to calculate its own funds requirement—

• (a) in accordance with Regulation 12, where the payment’s institution’s authorisation specifies that the payment institution is to calculate its own funds requirement in accordance with Regulation 12 or “Method A”,

• (b) in accordance with Regulation 13, where the payment’s institution’s authorisation specifies that the payment institution is to calculate its own funds requirement in accordance with Regulation 13 or “Method B”, and

• (c) in accordance with Regulation 14, where the payment’s institution’s authorisation specifies that the payment institution is to calculate its own funds requirement in accordance with Regulation 14 or “Method C”.

Method A

OFR = 0.1 * FO

where—

OFR is the own funds requirement,

FO is—

• (a) where the payment institution has completed a full year’s business at the date of the calculation, the amount of the fixed overheads of the payment institution for the previous year, subject to any adjustment applied by the Bank where there has been a material change in the business of the payment institution since the preceding year, or

• (b) where the payment institution has not completed a full year’s business at the date of the calculation, the amount of the fixed overheads of the payment institution as projected in the business plan of the payment institution, subject to any adjustment to that business plan required by the Bank in accordance with Regulation 22.

Method B

OFR = K*SE

where—

OFR is the own funds requirement,

K is the scaling factor described in Regulation 15,

SE is—

• (a) in a case in which the payment volume is less than or equal to €5,000,000, 4 per cent of the amount of the payment volume,

• (b) in a case in which the payment volume is greater than €5,000,000 and less than or equal to €10,000,000, €200,000 plus 2.5 per cent of the amount by which the payment volume exceeds €5,000,000,

• (c) in a case in which the payment volume is greater than €10,000,000 and less than or equal to €100,000,000, €325,000 plus one per cent of the amount by which the payment volume exceeds €10,000,000,

• (d) in a case in which the payment volume is greater than €100,000,000 and less than or equal to €250,000,000, €1,225,000 plus 0.5 per cent of the amount by which the payment volume exceeds €100,000,000, and

• (e) in a case in which the payment volume is greater than €250,000,000, €1,975,000 plus 0.25 per cent of the amount by which the payment volume exceeds €250,000,000.

• (2) In this Regulation “payment volume” means one twelfth of the total amount of payment transactions executed by the payment institution concerned in the preceding year.

Method C

OFR = KRIMF

where—

OFR is the own funds requirement,

K is the scaling factor described in Regulation 15,

RI is the relevant indicator calculated in accordance with paragraph (2),

MF is the multiplication factor calculated in accordance with paragraph (3).

(2)(a) The relevant indicator is the sum of the following in respect of the payment institution concerned:

• (i) interest income;

• (ii) interest expenses;

• (iii) commissions and fees received;

• (iv) other operating income.

• (b) In calculating the relevant indicator—

• (i) an amount paid to the payment institution concerned shall be given a positive value,

• (ii) an amount paid by the payment institution concerned shall be given a negative value,

• (iii) income from extraordinary or irregular items shall not be used, and

• (iv) business estimates for the amounts referred to in subparagraph (a) may be used to calculate the relevant indicator where audited figures are not available.

• (c) Expenditure on the outsourcing of services rendered by third parties may be used to reduce the relevant indicator if the expenditure is incurred from an undertaking subject to supervision under these Regulations or the law of another Member State giving effect to the Payment Services Directive.

• (d) The relevant indicator is calculated over the previous financial year on the basis of the 12-monthly observation at the end of the previous financial year.

• (3) The amount of the multiplication factor is as follows:

• (a) in a case in which the relevant indicator is less than or equal to €2,500,000, 10 per cent of the amount of the relevant indicator;

• (b) in a case in which the relevant indicator is greater than €2,500,000 and less than or equal to €5,000,000, €250,000 plus 8 per cent of the amount by which the relevant indicator exceeds €2,500,000;

• (c) in a case in which the relevant indicator is greater than €5,000,000 and less than or equal to €25,000,000, €450,000 plus 6 per cent of the amount by which the relevant indicator exceeds €5,000,000;

• (d) in a case in which the relevant indicator is greater than €25,000,000 and less than or equal to €50,000,000, €1,650,000 plus 3 per cent of the amount by which the relevant indicator exceeds €25,000,000;

• (e) in a case in which the relevant indicator is greater than €50,000,000, €2,400,000 plus 1.5 per cent of the amount by which the relevant indicator exceeds €50,000,000.

• (4) Where the own funds requirement of a payment institution calculated in accordance with paragraph (1) for the previous financial year is less than 80 per cent of the average of the own funds requirements calculated in accordance with paragraph (1) for the previous 3 financial years, the own funds requirement of that financial institution is the amount of that average.

Scaling factor

• (a) 0.5,where the payment institution provides only the payment service referred to in paragraph 6 of the Schedule, and

• (b) 1,where the payment institution provides any of the payment services referred to in paragraphs 1 to 5 of the Schedule.

Adjustment to own funds requirement

• (a) require the payment institution to hold an amount of own funds which is up to 20 per cent higher than the amount calculated in accordance with a direction issued to the payment institution under Regulation 11, or

• (b) permit the payment institution to hold an amount of own funds which is up to 20 per cent lower than the amount calculated in accordance with a direction issued to the payment institution under Regulation 11.

Safeguarding requirements

• (2) A payment institution that provides payment services referred to in paragraphs 1 to 6 of the Schedule shall safeguard user’s funds in either of the following ways:

• (a) user’s funds—

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

• (ii) where the funds are still held by the payment 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 designated or approved by the Bank for the purpose of these Regulations as secure, liquid and low-risk assets;

• (b) user’s funds shall be covered by an insurance policy or some other comparable guarantee issued by an insurance company or a credit institution, that does not belong to the same group as the payment institution, payable in the event that the payment 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 a payment institution, nor the Official Assignee in Bankruptcy, has any recourse or right against user’s funds safeguarded in accordance with paragraph (2)(a) until all proper claims of payment service users or of their heirs, successors or assigns against user’s funds relating to the payment transaction concerned have been satisfied in full.

• (4) Where a payment institution that is required to safeguard user’s funds in accordance with paragraph (2) receives funds from a payment service user and a part of those funds is to be used for future payment transactions and the remainder for non-payment services, the payment institution shall protect the part of the funds to be used for future payment transactions in accordance with paragraph (2).

• (5) Where the part of the funds to be used for future payment transactions referred to in paragraph (4) is variable or not known in advance, the payment institution may safeguard a representative part likely to be used for payment services if such a representative part can be reasonably estimated on the basis of historical data to the satisfaction of the Bank.

Granting of authorisation

• (a) the information and evidence accompanying the application for authorisation complies with all of the requirements specified in Regulation 7,

• (b) the Bank’s overall assessment, having scrutinised the application for authorisation, is favourable,

• (c) taking into account the need to ensure the sound and prudent management of a payment institution, the applicant has robust governance arrangements for its payment services business, which include—

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

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

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

• (d) taking into account the need to ensure the sound and prudent management of a payment institution, the Bank is satisfied as to the suitability of the shareholders or members that have qualifying holdings in the applicant,

• (e) if close links, as defined in point (38) of Article 4(1) of Regulation (EU) No 575/2013, exist between the applicant and other persons, those links do not prevent the effective exercise of the Bank’s supervisory functions,

• (f) if the applicant has close links, as defined in point (38) of Article 4(1) of Regulation (EU) No 575/2013, with persons in a third country, the laws, regulations or administrative provisions of the third country governing those persons or difficulties involved in the enforcement of those laws, regulations or administrative provisions, do not prevent the effective exercise of the Bank’s supervisory functions, and

• (g) the applicant is a legal person established in the State.

• (2) Before granting an authorisation, the Bank may consult with relevant public authorities.

• (3) If the Bank proposes to refuse to grant an authorisation, it shall give the applicant concerned written notice 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 written submissions in relation to the proposed refusal.

• (4) The Bank shall take into account any submissions made by an applicant under paragraph (3) when making its decision on an application for authorisation.

• (5) The arrangements, procedures and mechanisms referred to in paragraph (1) (c) shall be comprehensive and proportionate to the nature, scale and complexity of the payment services proposed to be provided by the applicant.

• (6) An authorisation granted under this Regulation shall be valid in all Member States and shall permit the payment institution concerned to carry on business in all Member States, by way of establishment and by way of the provision of services.

Conditions

• (2) If the Bank proposes to grant an authorisation subject to a specified condition or requirement, it shall give the applicant concerned written notice 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 written submissions in relation to the proposed condition or requirement.

• (3) The Bank shall take into account any submissions made by an applicant under paragraph (2) when making its decision in relation to the imposition of a specified condition or requirement.

Separate entity

Head office

Adjustments to business plan

• (2) Where the Bank requires an adjustment to a business plan, a reference in these Regulations to a business plan shall be construed as a reference to the plan as adjusted.

Communication of decision

• (i) of the receipt of an application for authorisation, or

• (ii) where the application is incomplete, of all of the information required for the Bank to make a decision on the application,

the Bank shall inform the applicant whether the authorisation has been granted or refused.

• (2) The Bank shall give reasons to an applicant where it refuses to grant an authorisation.

Withdrawal of authorisation

• (a) does not make use of the authorisation within 12 months,

• (b) expressly renounces the authorisation,

• (c) has ceased to engage in business for more than 6 months,

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

• (e) no longer meets the conditions for the granting of the authorisation or fails to inform the Bank of major developments in this respect,

• (f) would constitute a threat to the stability of, or the trust in, the payment system by continuing its payment services business, or

• (g) may have its authorisation withdrawn in accordance with another law of the State.

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

• (a) give written notice of the proposed withdrawal to the payment institution concerned—

• (i) setting out a summary of the relevant evidence,

• (ii) setting out the reasons for the proposed withdrawal, and

• (iii) specifying a reasonable period (not less than 21 calendar days from the date of the notice) within which the institution may make written representations concerning the proposed withdrawal, and

• (b) consider any representations made by the payment institution within the period specified in the notice referred to in subparagraph (a) .

• (3) Where the Bank decides to withdraw an authorisation, it shall notify the payment institution concerned in writing of the withdrawal, setting out the reasons for the withdrawal.

• (4) The Bank shall give public notice of the withdrawal of an authorisation and shall also notify the European Banking Authority.

• (5) 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 Act of 1942.

Register

• (a) payment institutions and their agents,

• (b) persons benefitting from an exemption pursuant to Regulation 41 or 42 and their agents,

• (c) credit unions, and

• (d) descriptions of activities notified under Regulation 45(6) or Regulation 46(6) and the names of the service providers concerned.

• (2) Where a branch of a payment institution for which the State is the home Member State provides services in another Member State, the Bank shall list the branch in the Register.

• (3) The Register shall specify the payment services for which a payment institution is authorised or in respect of which a person referred to in paragraph (1) (b) has been registered.

• (4) Authorised payment institutions shall be listed separately in the Register to persons benefitting from an exemption pursuant to Regulation 41 or 42.

• (5) The Bank shall ensure that the Register is publicly available for consultation, accessible online, and up-to-date.

• (6) The Bank shall enter in the Register any withdrawal of an authorisation and any withdrawal of an exemption pursuant to Regulation 41 or 42.

• (7) The Bank shall notify the European Banking Authority of the reasons for the withdrawal of—

• (a) any authorisation, and

• (b) any exemption pursuant to Regulation 41 or 42.

European Banking Authority Register

• (2) The Bank shall ensure that the information provided to the European Banking Authority under paragraph (1) is accurate and up-to-date.

Maintenance of authorisation

• (a) any change affects the accuracy of information or evidence provided by a payment institution under Regulation 7, and

• (b) the State is the home Member State of the payment institution,

the payment institution shall, without undue delay, inform the Bank accordingly.

Accounting and statutory audit

28.(1) The European Union (Credit Institutions: Financial Statements) Regulations 2015 ( S.I. No. 266 of 2015 ) and Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002¹¹ shall apply to a payment institution, subject to the modification that a reference in the European Union (Credit Institutions: Financial Statements) Regulations 2015 to a credit institution shall be construed as a reference to a payment institution.

• (2) Part 6 of the Companies Act 2014 (No. 38 of 2014) shall apply mutatis mutandis to a payment institution to which that Act does not otherwise apply.

• (3) Unless exempted under the Companies Act 2014 (including as applied in accordance with paragraph (2)) and, where applicable, the European Union (Credit Institutions: Financial Statements) Regulations 2015, the annual accounts and consolidated accounts of a payment institution shall be audited by a statutory auditor or audit firm within the meaning of the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 ( S.I. No. 312 of 2016 ).

• (4) For supervisory purposes, a payment institution shall provide separate accounting information for payment services and activities referred to in Regulation 29(1), which shall be subject to an auditor’s report prepared, where applicable, by the statutory auditors or an audit firm.

• (5) Regulation 52 of the European Union (Capital Requirements) Regulations 2014 shall apply to the statutory auditor or audit firm of a payment institution in respect of payment services activities, subject to the modification that a reference in those Regulations to a credit institution shall be construed as a reference to a payment institution.

Activities

29.(1) In addition to the provision of payment services, a payment institution may engage in the following activities:

• (a) 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;

• (b) without prejudice to Regulation 43, the operation of payment systems;

• (c) business activities other than the provision of payment services, subject to any law of the State or of the Union applicable to such activities.

• (2) Where a payment institution engages in the provision of one or more payment services, it may hold only payment accounts which are used exclusively for payment transactions.

• (3) Funds received by a payment institution from a payment service user with a view to the provision of payment services shall not constitute—

• (a) a deposit or other repayable funds, within the meaning of Article 9 of Directive 2013/36/EU, or

• (b) electronic money, within the meaning of the European Communities (Electronic Money) Regulations 2011.

• (4) A payment institution may only grant credit relating to payment services referred to in paragraph 4 or 5 of the Schedule where all of the following conditions are met:

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

• (b) notwithstanding any law in relation to the provision of credit by means of a credit card, credit granted in connection with a payment and executed in accordance with Regulations 18(6) and 37 is repaid within a short period which shall in no case exceed 12 months;

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

• (d) the own funds of the payment institution are, at all times and to the satisfaction of the Bank, appropriate in view of the overall amount of credit granted.

• (5) A payment institution shall not conduct the business of taking deposits or other repayable funds, within the meaning of Article 9 of Directive 2013/36/EU.

• (6) Nothing in these Regulations affects the operation of Union law or the law of the State regarding conditions for granting credit to consumers, where that law of the State is not harmonised by the Payment Services Directive and complies with Union law.

Use of agents, branches or entities to which activities are outsourced

30.(1) Where a payment institution whose home Member State is the State intends to provide payment services through an agent it shall communicate the following information to the Bank:

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

• (b) a description of the internal control mechanisms that will be used by the agent in order to comply with the obligations in relation to money laundering and terrorist financing under the law of the State giving effect to Directive (EU) 2015/849, to be updated without delay in the event of material changes to the particulars communicated at the initial notification;

• (c) the identity of directors and persons responsible for the management of the agent to be used in the provision of payment services and, for agents other than payment service providers, evidence that they are fit and proper persons;

• (d) the payment services of the payment institution for which the agent is mandated;

• (e) where applicable, the unique identification code or number of the agent.

• (2) Within 2 months of receipt of the information referred to in paragraph (1), the Bank shall inform the payment institution whether the details of the agent concerned have been entered in the Register.

• (3) An agent shall not commence provision of payment services prior to the entry of its details in the Register.

• (4) Before listing an agent in the Register, the Bank shall, if it considers that the information provided to it pursuant to paragraph (1) is incorrect, take further action to verify the information.

• (5) Where, 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 shall not list the agent in the Register and shall inform the payment institution accordingly without undue delay.

• (6) Where a payment institution proposes to provide payment services in another Member State by engaging an agent or establishing a branch, it shall follow the procedures set out in Regulation 37.

• (7) Where a payment institution whose home Member State is the State proposes to outsource an operational function relating to payment services, it shall inform the Bank accordingly not less than 30 days prior to the date on which it proposes to commence such outsourcing.

• (8) Outsourcing of important operational functions, including information technology systems, shall not be undertaken in a manner that materially impairs the quality of the payment institution’s internal control and the ability of the Bank to monitor and review the payment institution’s compliance with these Regulations.

• (9) For the purposes of paragraph (8), an operational function shall be regarded as important if a defect or failure in its performance would materially impair the continuing compliance of a payment institution with the requirements of its authorisation under this Part, its other obligations under these Regulations, its financial performance, or the soundness or the continuity of its payment services.

• (10) A payment institution may only outsource an important operational function where it meets the following requirements:

• (a) the outsourcing will not result in the delegation by senior management of its responsibility;

• (b) the relationship and obligations of the payment institution towards its payment service users under these Regulations will not be altered;

• (c) the conditions with which the payment institution is to comply in order to be authorised and remain so in accordance with this Part will not be breached;

• (d) none of the other conditions subject to which the payment institution’s authorisation was granted will be removed or modified.

• (11) A payment institution shall ensure that agents or branches acting on its behalf inform payment service users of this fact.

• (12) A payment institution whose home Member State is the State shall communicate to the Bank without undue delay any change regarding the use of—

• (a) entities to which activities are outsourced, and

• (b) in accordance with the procedure provided for in paragraphs (2), (3), (4) and (5), agents, including additional agents.

Liability

31.(1) Where a payment institution relies on a third party for the performance of operational functions, the payment institution shall take reasonable steps to ensure that the third party complies with the requirements of these Regulations in so far as those requirements apply to the third party.

• (2) A payment institution remains fully liable for any acts of its employees, and any agent, branch or entity to which activities are outsourced.

Record-keeping

32.(1) A payment institution shall keep all appropriate records for the purpose of this Part for at least 5 years.

• (2) Paragraph (1) does not affect the operation of the law of the State giving effect to Directive (EU) 2015/849 or other relevant European law.

Competent authority

33.(1) The Bank is the competent authority in the State for the purposes of the Payment Services Directive.

• (2) Paragraph (1) shall not be construed as implying that the Bank is required to supervise any business activity of a payment institution other than the provision of payment services and the activities referred to in Regulation 29(1) .

Supervision

34.(1) Without prejudice to the Bank’s powers under the Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013), the Bank may, for the purposes of confirming compliance with this Part, take the following steps:

• (a) require a payment institution to provide any information needed to monitor compliance, specifying the purpose of the request, as appropriate, and the time limit by which the information is to be provided;

• (b) carry out on-site inspections at the payment institution, at any agent or branch providing payment services under the responsibility of the payment institution, or at any entity to which activities are outsourced;

• (c) issue recommendations and guidelines;

• (d) withdraw an authorisation pursuant to Regulation 24.

• (2) The Bank may use the powers referred to in paragraph (1) to ensure that a payment institution has sufficient capital for payment services, in particular where the non-payment services activities of the payment institution impair or are likely to impair the financial soundness of the payment institution.

Appealable decisions

35.The following decisions of the Bank are appealable decisions for the purposes of Part VIIA of the Act of 1942:

• (a) a decision of the Bank in relation to the granting of an authorisation under Regulation 18;

• (b) a decision under Regulation 24 to withdraw such an authorisation;

• (c) a decision under Regulation 41(4) to require a person exempted under Regulation 41(1) to engage only in a specified activity;

• (d) a decision under Regulation 56 to impose a condition or requirement or to vary a condition or requirement;

• (e) a decision under Regulation 57 to oppose a proposed acquisition;

• (f) a decision under Regulation 123 to give a direction to a person.

Settlement of disagreements between competent authorities of different Member States

36.(1) Where the Bank considers that, in a particular matter, cross-border cooperation with competent authorities of another Member State referred to in Regulations 37, 38, 39 or 40 does not comply with the relevant conditions set out in those provisions, it may refer the matter to the European Banking Authority and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

• (2) Where the European Banking Authority has been requested to assist in accordance with Article 19 of Regulation (EU) No 1093/2010 or the European Banking Authority, on its own initiative, is assisting the Bank and competent authorities of other Member States in reaching an agreement in accordance with the second subparagraph of Article 19(1) of that Regulation, the Bank shall defer its decision on the matter concerned pending resolution under Article 19 of that Regulation.

Application to exercise the right of establishment and freedom to provide services

37.(1) A payment institution authorised under Regulation 18 which proposes to provide payment services for the first time in another Member State, in the exercise of the right of establishment or the freedom to provide services, shall communicate the following information to the Bank not less than 3 months prior to the date on which it proposes to commence provision of those payment services:

• (a) the name, address and, where applicable, authorisation number of the payment institution;

• (b) the Member State or Member States, as the case may be, in which it intends to operate;

• (c) the payment services to be provided;

• (d) where the payment institution intends to make use of an agent, the information referred to in Regulation 30(1) ;

• (e) where the payment institution intends to make use of a branch, the information referred to in Regulation 7(2)(b) and (e) with regard to the payment service business in the host Member State, a description of the organisational structure of the branch and the identity of those responsible for the management of the branch;

• (f) where the payment institution proposes to outsource operational functions of payment services to other entities in the host Member State, that it proposes to do so.

• (2) Where a payment institution becomes aware of any relevant change regarding the information communicated in accordance with paragraph (1), including as regards additional agents, branches or entities to which activities are outsourced in the host Member States in which it operates, it shall communicate any such change to the Bank without undue delay.

• (3) Within 1 month of receipt of all of the information referred to in paragraph (1), or change regarding such information received in accordance with paragraph (2), as the case may be, the Bank shall send the information to the competent authority of the host Member State.

• (4) Where the Bank receives information from a competent authority of another Member State in accordance with the law of that Member State equivalent to paragraph (3), the Bank shall, within 1 month of receipt of the information assess that information and provide that competent authority with relevant information in connection with the proposed provision of payment services by the payment institution, authorised by that competent authority, in the exercise of the freedom of establishment or the freedom to provide services.

• (5) The Bank shall, when providing relevant information in accordance with paragraph (4), inform the competent authority concerned in particular of any reasonable grounds for concern in connection with the intended engagement of an agent or establishment of a branch with regard to money laundering or terrorist financing within the meaning of Directive (EU) 2015/849.

• (6) Where the Bank does not agree with an assessment provided by the competent authority of a host Member State, provided by that competent authority in accordance with the law of that Member State equivalent to paragraphs (4) and (5), it shall provide that competent authority with the reasons for the Bank’s disagreement with that assessment.

• (7) If the assessment of the Bank, in particular in light of the information received from the competent authority of the host Member State provided by that competent authority in accordance with the law of that Member State equivalent to paragraphs (4) and (5), is not favourable, the Bank shall refuse to register the agent or branch or shall withdraw the registration if already made.

• (8) If the assessment of the Bank, in particular in light of the information received from the competent authority of the host Member State provided by that competent authority in accordance with the law of that Member State equivalent to paragraphs (4) and (5), is favourable, the Bank shall enter the agent or branch in the Register.

• (9) Within 3 months of receipt of the information referred to in paragraph (1) or, where a change to that information has been provided in accordance with paragraph (2), receipt of the most recently received of such information, the Bank shall communicate its decision to the competent authority of the host Member State and to the payment institution.

• (10) Upon entry in the Register, the agent or branch, as the case may be, of the payment institution concerned may commence its activities in the host Member State.

• (11) The payment institution concerned shall notify the Bank of the date from which it commences its activities through the agent or branch, as the case may be, in the relevant host Member State.

• (12) The Bank shall inform the competent authority of the host Member State concerned of the information provided by the payment institution concerned in accordance with paragraph (11).

Supervision of payment institutions exercising the right of establishment and freedom to provide services

• (2) The Bank shall notify the competent authority of the host Member State concerned where the Bank intends to carry out an on-site inspection in that Member State.

• (3) The Bank may delegate to the competent authority of the host Member State concerned the task of carrying out on-site inspections of the agent or branch concerned.

• (4) The Bank may require a payment institution authorised in another Member State having an agent or branch in the State to report to the Bank periodically on the activities carried out in the State.

• (5) A report referred to in paragraph (4) shall be required for information or statistical purposes and, as far as the agent or branch concerned conducts the payment service business under the right of establishment, to monitor compliance with Parts 3 and 4.

• (6) The Bank shall provide the competent authority of a host Member State of the agent or branch of a payment institution authorised under Regulation 18 with all essential and relevant information, in particular in the case of infringements or suspected infringements of these Regulations by an agent or a branch, and where such infringements occurred in the context of the exercise of the freedom to provide services.

• (7) The Bank shall, for the purposes of compliance with paragraph (6), communicate, upon request, all relevant information and, on its own initiative, all essential information, including on the compliance of the payment institution with Regulation 21.

• (8) The Bank may require a payment institution operating in the State through an agent under the right of establishment, the head office of which is situated in another Member State, to appoint a central contact point in the State to—

• (a) ensure adequate communication and information reporting on compliance with Parts 3 and 4, without prejudice to any obligations under anti-money laundering law or counter terrorist financing law, and

• (b) facilitate supervision by the competent authority of the home Member State and any other host Member States of the payment institution concerned, including by providing such competent authorities with documents and information on request.

Measures in case of non-compliance, including precautionary measures

• (2) Where the Bank receives information from a competent authority in another Member State pursuant to the law of that Member State equivalent to paragraph (1), the Bank shall, after having evaluated the information received, without undue delay, take all appropriate measures, available to it under this or any other law of the State, to ensure that the payment institution concerned ceases its contravention.

• (3) Where the Bank takes measures under paragraph (2), it shall communicate those measures without delay to the competent authority of the host Member State of the payment institution concerned and to the competent authorities of any other Member State concerned.

• (4) In an emergency situation, where immediate action is necessary to address a serious threat to the collective interests of the payment service users in the State, where the State is the host Member State, the Bank may, in parallel with the cross-border cooperation between competent authorities and pending measures by the competent authorities of the home Member State of the payment institution concerned, as provided by Regulation 38, take such precautionary measures, available to it under this or any other law of the State, as it considers appropriate in the circumstances.

• (5) A precautionary measure taken under paragraph (4) shall—

• (a) be appropriate and proportionate to its purpose to protect against a serious threat to the collective interests of the payment service users in the State,

• (b) not result in a preference for payment service users of the payment institution concerned in the State over payment service users of the payment institution in other Member States,

• (c) be temporary, and

• (d) be terminated when the serious threats identified are addressed, including with the assistance of or in cooperation with the home Member State’s competent authority or with the European Banking Authority in accordance with Regulation 36(1) .

• (6) Where compatible with the emergency situation referred to in paragraph (4), the Bank shall inform—

• (a) the competent authorities of the home Member State of the payment institution concerned and those of any other Member State concerned,

• (b) the Commission, and

• (c) the European Banking Authority,

in advance and in any case without undue delay, of the precautionary measures taken under paragraph (4) and of their justification.

Reasons and communication