The Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018

• (a) if the application is granted, the person's transition period ends with the day before the day stated in accordance with regulation 9(6) of PSR 2017 (as applied by regulation 15 of those Regulations) as that on which the authorisation takes effect, and

• (b) if the application is refused, the decision notice under regulation 9(8) of PSR 2017 (as so applied) must state the date on which the person's transition period is to end.

• (4) In any other case, the person's transition period ends at the end of the 3 years beginning with the day on which IP completion day falls.

• (5) The person may give notice to the FCA specifying a date (earlier than that determined under sub-paragraphs (2) to (4)) on which the person will cease to engage in new business covered by the person's transitional authorisation.

• (6) The FCA may by notice to the person require the person to specify a date under sub-paragraph (5) before the end of a period specified in the notice, and if the person does not do so the FCA may itself specify a date on which the person's transitional authorisation will cease to cover new business.

Power to extend period specified in paragraph 22(4)

23

• (1) The Treasury may by regulations made by statutory instrument amend paragraph 22(4) so as to extend the period referred to in that provision, if the Treasury consider it necessary to do so.

• (2) The Treasury may make regulations under sub-paragraph (1) only if, no later than 6 months before the end of the period to be extended, the FCA has submitted to the Treasury an assessment as to the effect of extending, or not extending, the period on persons (in general) to whom paragraph 14 applies.

• (3) Regulations under sub-paragraph (1) may not extend the period for the time being by more than 12 months.

• (4) A statutory instrument containing regulations under sub-paragraph (1) is subject to annulment in pursuance of a resolution of either House of Parliament.

Directions

24

The power of the FCA to give directions under this Part of this Schedule includes power—

• (a) to give different directions in relation to different notifications or categories of notification, and

• (b) to vary or revoke a previous direction.

Signed

Rebecca Harris — Paul Maynard — Two of the Lords Commissioners of Her Majesty's Treasury — 2018-11-19

Explanatory note

(This note is not part of the Regulations)

Footnotes

Editorial notes

PART 1A — Continuation of authorisation for limited purposes: Electronic Money Regulations 2011

Interpretation

12A

The interpretative provisions in paragraph 1 apply also for the purposes of this Part of this Schedule and “PSR 2017” means the Payment Services Regulations 2017.

Continued authorisation for limited purposes

12B

• (1) This paragraph applies to a person in relation to whom the IP completion day conditions or the transitional authorisation conditions are satisfied.

• (2) The “IP completion day conditions”, in relation to a person, are—

• (a) that immediately before IP completion day the person was providing electronic money issuance or payment services through a branch or agent in the United Kingdom in the exercise of a passport right as an EEA authorised electronic money institution,

• (b) that immediately after IP completion day the person is not (apart from under this Part of this Schedule) an authorised electronic money institution, and

• (c) that immediately after IP completion day—

• (i) the person has outstanding obligations under contracts which the person entered into through a branch or agent in the United Kingdom as an EEA authorised electronic money institution exercising passport rights, or

• (ii) any electronic money issued by the person through a branch or agent in the United Kingdom as an EEA authorised electronic money institution exercising passport rights has not been redeemed.

• (3) The “transitional authorisation conditions”, in relation to a person, are—

• (a) that on IP completion day the person became authorised to provide electronic money issuance, redemption, distribution or payment services in the United Kingdom by virtue of paragraph 2,

• (b) that the person has provided any such services in the United Kingdom either—

• (i) before IP completion day, in the exercise of a passport right as an EEA authorised electronic money institution, or

• (ii) on or after IP completion day, in accordance with paragraph 2,

• (c) that immediately after the end of the transition period defined in paragraph 10 the person is not (apart from under this Part of this Schedule) an authorised electronic money institution, and

• (d) that immediately after the end of that period—

• (i) the person has outstanding obligations under contracts which the person entered into as an EEA authorised electronic money institution exercising passport rights, or

• (ii) electronic money issued by the person as an EEA authorised electronic money institution exercising passport rights has not been redeemed.

• (4) During the extension period defined in paragraph 12G—

• (a) a person to whom this paragraph applies is to be taken to be an authorised electronic money institution whose authorisation under regulation 9 of EMR 2011 relates to the permitted services specified in paragraph 12E, ...

• (b) accordingly, references in EMR 2011 and the Payment Services Regulations 2017 to an authorised electronic money institution are to be read as including a person to whom this paragraph applies, and

• (c) a requirement imposed by a home state competent authority and which has effect immediately before IP completion day continues to have effect on and after that day as if it were imposed by the FCA under regulation 7 of EMR 2011 insofar as it could be imposed by the FCA under that regulation.

• (5) Sub-paragraph (4) is subject to paragraphs 12C(4), 12H and 12I.

• (6) In this paragraph reference to providing services at a particular time includes where the performance of a pre-existing contract requires, or may require, a service to be provided at another time.

Duty to notify FCA

12C

• (1) A person to whom paragraph 12B or 12L applies must notify the FCA of that fact as soon as reasonably practicable, and in any event not later than one month after the person first becomes aware of an obligation to perform a pre-existing contract.

• (2) In this Part a “pre-existing contract”, in relation to a person to whom paragraph 12B applies, means a contract—

• (a) which was entered into before the extension period defined in paragraph 12G through branch or agent in the United Kingdom, and

• (b) under which the person is obliged to issue electronic money or to provide payment services.

• (3) Notification under sub-paragraph (1) must be made in such manner, and be accompanied by such information, as the FCA may direct.

• (4) The FCA is not obliged to include a person to whom paragraph 12B applies on the register maintained under regulation 4 of EMR 2011 until the person notifies the FCA under sub-paragraph (1).

• (5) During the extension period defined in paragraph 12G, a person to whom paragraph 12B applies must notify the FCA of any of the matters mentioned in paragraph 6(2)(b) to (d).

Agents

12D

If a notification under paragraph 12C includes information as to the use of an agent who is registered with the home state competent authority, the FCA must include the agent on the register maintained under regulation 4 of EMR 2011.

Permitted services

12E

• (1) This paragraph sets out the permitted services for the purposes of paragraph 12B(4)(a).

• (2) The permitted services are—

• (a) where the IP completion day conditions in paragraph 12B(2) are met, services of the kind mentioned in paragraph 12B(2)(a), but only to the extent that the issue of electronic money, or the provision of payment services, is necessary to enable the person to whom paragraph 12B applies to perform a pre-existing contract or to redeem outstanding electronic money, or

• (b) where the transitional authorisation conditions in paragraph 12B(3) are met, services of the kind mentioned in paragraph 12B(3)(b)(i) or (ii), but only to the extent that the issue of electronic money, or the provision of payment services, is necessary to enable the person to whom paragraph 12B applies to perform a pre-existing contract or to redeem outstanding electronic money.

• (3) If a pre-existing contract is varied by agreement for the purpose of complying with regulatory requirements or reducing a risk to the person to whom paragraph 12D applies, but without extending the duration of the contract or materially altering its commercial effect, the contract as varied remains a pre-existing contract.

• (4) The FCA may, on an application made before the end of the extension period by a person to whom paragraph 12B applies, approve a plan (a “wind-down plan”) under which new contracts may be entered into for the purposes of the orderly winding down of the person’s business of issuing electronic money or payment services in the United Kingdom.

• (5) If a wind-down plan is approved by the FCA, the permitted services include services provided in accordance with the wind-down plan.

• (6) A person providing permitted services in accordance with this paragraph must, when required by the FCA, provide the FCA with such evidence as the FCA may reasonably require to demonstrate the person’s compliance with the law of the person’s home state implementing Article 7 of the electronic money directive (safeguarding).

Notification that authorisation no longer required

12F

• (1) A person to whom paragraph 12B applies and who has notified the FCA under paragraph 12C(1) must notify the FCA once it no longer has obligations under pre-existing contracts and has redeemed electronic money issued through a branch in the United Kingdom.

• (2) On receiving a notification under sub-paragraph (1), the FCA must, if satisfied that the person giving the notification no longer has obligations under pre-existing contracts and has redeemed electronic money issued through a branch in the United Kingdom—

• (a) notify the person of the date on which the person will cease to be an authorised electronic money institution by virtue of this Part of this Schedule, and

• (b) remove the person from the register from that date.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extension period

12G

• (1) The extension period in relation to a person begins—

• (a) where the IP completion day conditions are met, with the day on which IP completion day falls, and

• (b) where the transitional authorisation conditions are met, with the end of the transition period defined by paragraph 10.

• (2) The extension period in relation to a person ends with the earliest of the following—

• (a) the day before the date stated in accordance with regulation 9(5) of EMR 2011 as that on which the person’s authorisation as an electronic money institution (otherwise than by virtue of this Schedule) takes effect;

• (b) the day on which the transfer to another person of the person’s business of providing electronic money issuance, redemption, distribution or payment services in the United Kingdom takes effect;

• (c) in a case where the person has notified the FCA under paragraph 12C(1), the day determined by the FCA under paragraph 12F(2);

• (d) in a case where the person has not notified the FCA under paragraph 12C(1), the time when all the person’s obligations under relevant contracts have been discharged and the person has redeemed electronic money issued through a branch or an agent in the United Kingdom;

• (e) the day on which any cancellation under paragraph 12J takes effect;

• (f) the day the person ceases to be authorised by its home state competent authority;

• (g) the end of the period of 5 years beginning with the day on which the extension period began.

• (3) “Relevant contract”, in relation to a person to whom paragraph 12B applies, means a contract—

• (a) which—

• (i) is a pre-existing contract; or

• (ii) was entered into in accordance with a wind-down plan approved by the FCA under paragraph 12E(4); and

• (b) under which the person is obliged to issue electronic money or payment services.

Supervision and enforcement

12H

• (1) In relation to a person to whom paragraph 12B applies, the provisions of EMR 2011 (other than those disapplied by paragraph 7(1)) apply while the person is an authorised electronic money institution by virtue of paragraph 12B(4).

• (2) Paragraph 7(2) applies in relation to that person as if the reference—

• (a) to a person’s transitional authorisation were a reference to authorisation by virtue of paragraph 12B(4);

• (b) to the transition period were a reference to the extension period in paragraph 12G.

Variation and cancellation of authorisation

12I

• (1) In respect of a person to whom paragraph 12B applies, the FCA may—

• (a) cancel the person’s authorisation by virtue of that paragraph as an authorised electronic money institution, or

• (b) limit the permitted services to which the authorisation relates.

• (2) The FCA may only exercise the power in sub-paragraph (1) where—

• (a) the person’s authorisation by the person’s home state competent authority is cancelled,

• (b) the person has failed to comply with the terms of the person’s authorisation by the person’s home state competent authority,

• (c) the person does not issue electronic money in the United Kingdom during the 12 months beginning with IP completion day,

• (d) the person ceases to engage in business activity in the United Kingdom for more than six months,

• (e) the person’s notification under paragraph 12C contains false statements,

• (f) the person has not taken adequate measures for the purposes of safeguarding electronic money holders’ funds in accordance with regulation 20 of EMR 2011 and the 2018 Regulations,

• (g) the person would constitute a threat to the stability of, or trust in, a payment system by continuing the person’s electronic money or payment services business,

• (h) the cancellation is desirable in order to protect the interests of electronic money holders or payment service users, ...

• (i) the person’s provision of payment services or issuance of electronic money is otherwise unlawful, including where such provision of services in unlawful because the person’s registration in a register maintained under regulation 54 or 55 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 has been cancelled under regulation 60 of those Regulations,or

• (j) the person has not submitted a notification in accordance with paragraph 12C.

Variation and cancellation: procedure

12J

• (1) If the FCA proposes to exercise the power in paragraph 12I or 12L(3) in relation to a person, it must give the person a warning notice.

• (2) If the FCA decides to exercise the power in paragraph 12I or 12L(3) in relation to a person, it must give the person a decision notice.

• (3) Part 26 of the 2000 Act (notices) applies to a notice under sub-paragraph (1) or (2) as it applies (by virtue of Schedule 3 to EMR 2011) in relation to a notice under EMR 2011.