Cyprus, a well-established EU jurisdiction, offers Cyprus Electronic Monetary Institutions (EMI) License-holders passporting rights to operate businesses in any other EEA jurisdiction without additional licensing requirements and without having to establish a physical branch or office in another EEA country.
The EMI, once established and duly licensed, can offer its services in all EU member states on a cross-border basis without any further authorization.
Legal framework and regulatory requirements of EMIs:
- The authorization for the operation of a Cyprus EMI is only granted to a legal entity incorporated in Cyprus,
- The management and control of the EMI must be exercised by the headquarters, which shall be incorporated in Cyprus,
- A business plan including the forecast budget of the first three financial years is required with the application, to ensure the ability to employ resources and develop adequate systems and procedures for the smooth operation of the EMI,
- The initial capital of at least €350,000 is required at the time of the authorization, along with the proof of available funds for the three years of operations,
- An EMI is required to maintain the minimum own funds equal to 2% of the average value of electronic money in circulation, while the own funds may not fall (at any time) below the level of the initial €350,000 capital,
- Description of the outsourcing arrangements, the use of agents (if any) and the intention of the EMI to provide its services in another EU member state via branch needs to be made in the application,
- If agents are employed within the structure of the EMI, then it is required to ensure the agents meet the criteria and requirements to be listed in the public register maintained by the Central Bank of Cyprus (CBC).
- The organizational structure of the EMI needs to be disclosed,
- Detailed information of the systems and procedures governed in the Internal Operations Manual, including the creation of sound policies and procedures reflecting the operations of the accounting and payments, the risk management, the compliance, and anti-money laundering departments,
- It is very important to establish adequate internal controls and mechanisms for the safe keeping of clients’ funds.