The Financials Institutions Act regulates the activities of non-bank ‘financial institutions’. It sets out statutory requirements and obligations of financial institutions which are less onerous when compared to the Banking Act.
The Financial Institutions Act regulates companies carrying on the business of amongst other things –
- Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account;
- Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account;
- Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider;
- Execution of direct debits, including one-off direct debits;
- Execution of payment transactions through a payment card or a similar device;
- Execution of credit transfers, including standing orders;
- Execution of payment transactions where the funds are covered by a credit line for a payment service user;
- Execution of direct debits, including one-off direct debits;
- Execution of payment transactions through a payment card or a similar device;
- Execution of credit transfers, including standing orders;
- Issuing and/or acquiring of payment instruments;
- Money remittance;
- Execution of payment transactions where the consent of the payer to a payment transaction is transmitted by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting solely as an intermediary on behalf of the payment service user and the supplier of the goods and services.
Financial Institutions shall not be funded through the taking of deposits or any other repayable funds from the public. They will be required to be licensed by MFSA to provide all the above payment services. According to the business plan submitted during the licence application stage, the MFSA will specifically authorise the company to provide one or more applicable payment services.
Applications must be submitted to MFSA. Payment service providers are expected to satisfy a minimum initial capital requirement of €125,000, unless the company provides only money remittance services, in which case the minimum capital requirement is €20,000.
The costs imposed by the MFSA are as follows:
One-time Application Fee payable upon submission of an application (€3,500)
Annual supervision fee which will be equivalent to a percentage of the total assets and must be not less than €2,500.