HomeCyprus Electronic Money Institutions (EMI)
In recent decades, the FinTech industry has been rapidly developing worldwide. During this time, electronic money institutions (EMI) and payment institutions (PI) have established themselves as an effective alternative to traditional banks. Such technologies provide fast service at minimal cost, allowing money transfers to be completed in a matter of seconds.
Thanks to a favorable regulatory framework and developed electronic money laws, Cyprus has become a sought-after jurisdiction for electronic money institutions (EMI) and the fintech industry as a whole. Are you looking for a reliable way to expand financial operations in one of the key European hubs? Cyprus Electronic Money Institutions (EMI) offer ideal conditions for international payments, transaction processing, and electronic money regulation. Our company provides expert consultations for obtaining an electronic money institution license, ensures document preparation and communication with regulators, compliance, and legal support at all stages of the process.
What is Cyprus Electronic Money Institutions (EMI)?
Cyprus Electronic Money Institutions (EMI) are licensed organizations authorized to issue electronic money and provide related payment services within the territory of Cyprus and other European Union countries. These institutions are engaged in the issuance of electronic money, management of electronic wallets, execution of payment services, and a number of other financial operations related to cashless funds.
Electronic money is a digital equivalent of cash stored on an electronic medium (card, mobile application, electronic wallet), which can be used for purchases and transfers. Unlike traditional non-cash payments, electronic money can only be issued by an institution that has obtained the appropriate license from electronic money institutions (EMI).
The main functions of electronic money institutions are the issuance of electronic money and control over their circulation. They create and maintain the infrastructure where clients can hold and use electronic funds, pay for goods and services online and offline.
In Cyprus, the license is issued by the Central Bank, which ensures that the institution complies with strict requirements and electronic money laws in the areas of compliance, capitalization, risk management, and cybersecurity. Electronic money institutions (EMI) are subject to European legislation (Directive 2009/110/EC on electronic money, PSD2, etc.), which facilitates their operations within the Single Euro Payments Area (SEPA).
Although payment institutions (PI) and EMI can offer similar services (transfers, online payments), EMI has the unique right to issue electronic money. PI, on the other hand, can only perform transfers of third-party funds without the right to issue their own electronic funds. Electronic money institutions (EMI) do not maintain traditional deposit accounts and do not engage in lending; their activities are limited to issuing, storing, and operating with electronic money.
Advantages of creating EMI in Cyprus
Cyprus electronic money institutions (EMI) are extremely popular among investors and entrepreneurs from different countries.
By obtaining an EMI license in Cyprus, you gain the right to freely provide electronic money services in all countries of the European Economic Area (EEA). This significantly simplifies entry into the large EU market, opening up opportunities for scaling and serving clients in multiple countries at once.
Electronic money institution (EMI) in Cyprus operates under the same standards and directives as other European electronic payment services (e.g., PSD2), which simplifies synchronization with partners in the EU. Cyprus’s participation in SEPA (Single Euro Payments Area) ensures convenient and fast payments in euros.
Cyprus has one of the lowest corporate tax rates in the EU (12.5%), which attracts international business. There are tax benefits and double taxation avoidance agreements with many countries, allowing for the optimization of financial flows.
Dividends received by Cyprus electronic money institutions from foreign sources may not be subject to taxes. There is also no capital gains tax (except for transactions involving Cypriot real estate).
Cyprus aims to attract innovative projects and is ready to support enterprises offering modern solutions in the field of electronic money and payment services. Convenient infrastructure and a growing startup community in fintech create a favorable ecosystem for electronic money institutions.
Our legal services for EMI
The process of creation, licensing, and compliance with regulatory requirements in the field of electronic money institutions is quite complex. Our law firm offers comprehensive support at all stages — from obtaining an EMI license to organizing an internal corporate structure. We have many years of experience working with the financial sector of Cyprus and are ready to provide legal support, allowing you to focus on developing your business.
Let us consider the main areas of our activity aimed at the success and security of your operations within Cyprus electronic money institutions:
Assistance in obtaining a license
We conduct a preliminary audit to ensure that your business model and the concept of electronic money institutions comply with the requirements of the Cypriot regulator. After that, our specialists develop and compile all the necessary materials: a business plan, financial forecasts, compliance policy, internal regulations. The completeness and accuracy of these documents determine the speed of application review.
For electronic money institutions (EMI), AML anti-money laundering procedures, KYC customer verification, and internal audit are extremely important. We help create clear regulations that comply with EU directives.
When applying for a license, it is often necessary to explain the nuances of the business model and capital structures. We take on communication with regulators and the preparation of responses to additional inquiries. Thanks to our experience in interacting with Cypriot authorities, we know how to minimize the risk of delays or application rejection.
Already at the licensing stage, we provide consultations on issues related to the choice of company type, authorized capital, and required positions. In case deficiencies are identified in the business model or compliance system, our lawyers promptly make adjustments, helping to avoid rejection or requests for application revision. We continue to provide consultations after the application is submitted, up until the license is obtained, addressing any legal issues that arise and interacting with inspectors.
Thanks to a comprehensive approach, our specialists strive to ensure that you obtain an EMI license as quickly as possible and that your activities in Cyprus comply with legal requirements.
Compliance with regulatory requirements
After obtaining the license, special attention is paid to compliance with the strict regulatory standards of Cyprus and the EU (including AML/CFT and PSD2). We help create an effective compliance program that protects electronic money institutions from potential risks.
One of the most important conditions of work is the implementation of procedures to counter money laundering and terrorism financing, as well as client identification. Lawyers analyze and adapt your processes to local regulations and EU directives. We offer periodic checks and audits of internal documentation to promptly address any discrepancies.
In case of inspections or questions from the regulator, we assist you in negotiations, prepare responses, and prove that your electronic money institutions comply with all necessary regulations. We help establish a system for early detection and assessment of risks related to clients, transactions, and counterparties.
If you plan to expand the EMI product line, our lawyers will assess compliance with new European and Cypriot requirements.
Corporate structuring
Depending on the goals and scale of the project, we help determine the optimal type of company and explain the differences in tax and legal aspects.
An Electronic Money Institution (EMI) must have a board of directors, a compliance officer, and other responsible persons. We define the qualification requirements for personnel and help select suitable candidates. Cyprus may require a certain minimum capital for an EMI (depending on the development plan and risks). We provide consulting on how to properly form the capital and confirm its sources.
If the involvement of foreign capital, the introduction of partnership agreements, or employee stock option programs is necessary, our lawyers prepare structured solutions taking into account tax benefits.
If EMI plans to attract investments, enter into partnership agreements, purchase or lease an office, we take on the legal review and preparation of contracts. We help draft employment contracts for key employees, prepare NDAs and non-compete agreements, taking into account Cypriot labor law.
On a regular basis, we check whether the structure and activities of the company comply with local laws, EU directives, and its own charter. When electronic money institutions expand their range of services, enter new markets, merge or acquire competitors, we provide legal support at every stage of the transformation.
Key requirements for EMI licensing in Cyprus
To establish and legally operate electronic money institutions on the island, it is necessary to obtain a license regulated by the Central Bank of Cyprus. Let us consider the key requirements for obtaining an EMI in Cyprus:
- Senior management. Management must have the necessary experience in the financial sector and proven competence in the field of electronic payment solutions. The Central Bank conducts a fit and proper test, assessing whether candidates for leadership positions have any criminal records or evidence of involvement in financial violations;
- Minimum authorized capital. The amount of initial capital for electronic money institutions is determined by European directives and the national regulations of Cyprus. As a rule, the amount starts from 350,000 euros but may be higher depending on the scale and risks of the activity;
- Insurance. Often, EMI is required to have professional liability insurance schemes or similar mechanisms to protect clients’ funds;
- AML/CFT. An Electronic Money Institution (EMI) is required to develop and implement an internal AML/CFT policy, regularly update it in accordance with European directives and local legislation. It is stipulated to appoint a qualified compliance officer (MLRO) who monitors the correctness of operations;
- Compliance with PSD2 Directive. Within the EU, Cyprus adheres to the Payment Services Directive (PSD2), therefore EMI must ensure secure electronic payments, protection of personal data, transparency of fees;
- Management structure. An Electronic Money Institution (EMI) is required to ensure a clear division of directors’ functions, the presence of a board of directors, and internal corporate governance policies. It is important to document all processes related to the issuance of electronic money and operations with clients;
- Business plan. The license application must include a detailed business plan, a description of target markets, income/expense forecasts, an analysis of potential threats, and methods for their mitigation. The regulator evaluates the company’s ability to manage operational, credit, market, cyber, and legal risks.
The first step in submitting an application is the formation of a document package. The applicant gathers a business plan, financial reports, charter documents, information on ownership structure and corporate governance, as well as prepares compliance policies.
The Central Bank of Cyprus is reviewing the application, may request additional materials and explanations, and conducts interviews with key figures of the company.
After approval, the Electronic Money Institution (EMI) regularly reports to the regulator: submits financial statements, AML reports, and notifies about changes in the corporate structure.
The latest events in the EMI sector in Cyprus
The sector of Electronic Money Institutions (EMI) in Cyprus continues to actively develop under the influence of European directives, global trends in the fintech industry, and local legislative initiatives.
In light of updated European directives and revised CBC standards, some Electronic Money Institutions have faced the need to increase capital to comply with the new standards. This change is aimed at strengthening the financial stability of EMIs, allowing for the minimization of risks for clients. Requirements have increased for reserve formation and maintaining funds independent of operational activities so that the company remains stable in case of market fluctuations or unforeseen expenses.
The EU continues to develop the regulatory framework for electronic and payment services, including through the Payment Services Directive PSD2 and additional acts on combating money laundering AMLD5. GDPR, in combination with payment directives, increases the responsibility of EMI for the security of clients’ personal and financial information.
Some electronic money institutions have started offering solutions in the field of cryptocurrencies, including conversion, electronic wallets, and transactions. A particular focus is on transaction transparency and protecting clients from volatility and fraudulent schemes.
Why should you choose our company to solve your tasks in the field of EMI?
Working with electronic money institutions in Cyprus requires a deep understanding of local and European legislation, the ability to effectively interact with regulators, and offering the client a sustainable and practical legal solution. Our law firm specializes in providing comprehensive services in this field and is deservedly trusted by clients seeking to open or develop EMI in Cyprus.
Expertise in the field of EMI licensing
Our team of lawyers not only has an excellent knowledge of Cypriot legislation but also regularly monitors changes in EU directives related to electronic money. This approach allows us to anticipate potential innovations and adapt your business processes accordingly.
We have already helped numerous companies prepare documents and negotiate with CBC. Through our contacts and systematic analysis of procedures, we accelerate the licensing process and minimize the risk of rejection.
After obtaining a license, EMIs are subject to regular inspections. We advise clients on compliance, financial reporting, and provide support during inspections, helping to avoid fines and restrictions.
At the licensing stage, we will help select the legal form, management system, and board of directors composition that meet the requirements of the Central Bank of Cyprus and your business objectives.
Individual legal solutions
Every business has its own characteristics, and we strive to understand your strategy and plans. Our team does not use template approaches — we work based on specific tasks.
The lawyers of our firm are skilled at quickly responding to changes in legislation and promptly adapting legal strategies to new situations. This ensures high efficiency in supporting EMI at all stages.
Along with the license, the entrepreneur also takes on obligations to comply with numerous rules. We help establish a convenient and reliable internal control system that reduces risks and facilitates communication with the regulator.
Thanks to a comprehensive approach, we take on the maximum possible amount of work, freeing your management and specialists from bureaucratic procedures. This allows you to focus on business development. We maintain constant contact with clients: inform them about legislative changes, respond to inquiries, and provide recommendations based on real experience and judicial practice.
Schedule a consultation on EMI issues in Cyprus.
The creation and development of an Electronic Money Institution (EMI) in Cyprus is a process that requires compliance with numerous legal regulations and detailed planning. We offer not just legal services but comprehensive support, covering both obtaining the license and long-term business assistance.
To protect your business from legal risks and save time on complex bureaucratic procedures, contact us for professional legal support. We will help you obtain a Cyprus Electronic Money Institutions (EMI) license and build a reliable legal foundation for growth and success in the rapidly developing world of electronic money.
