EMI Licence Malta: Guide to MFSA Application, Requirements & Operations

Understanding the EMI Licence Malta: Pathway to European Fintech Operations

An Electronic Money Institution (EMI) licence issued by the Malta Financial Services Authority (MFSA) offers a robust and respected framework for fintech innovators looking to operate within the European Union. Operating under Malta’s Financial Institutions Act (Chapter 376 of the Laws of Malta) and fully aligned with the EU’s Electronic Money Directive (EMD2), a Maltese EMI licence provides significant advantages. These include the coveted ability to passport services across all European Economic Area (EEA) member states, offering a gateway to a market of over 450 million potential customers.

The Regulatory Landscape: The Malta Financial Services Authority (MFSA)

The MFSA is the single regulator for financial services in Malta. Its role concerning EMIs includes:

• Assessing applications and granting EMI licences in Malta.
• Supervising licensed EMIs to ensure ongoing compliance with Maltese and EU regulations.
• Promoting market stability and consumer protection within the financial sector.
• Combating financial crime through rigorous anti-money laundering (AML) and counter-financing of terrorism (CFT) oversight.

Authorized Activities for EMIs with a Malta Licence

Once you secure your EMI licence in Malta, and with prior authorisation from the MFSA, your institution can engage in a diverse range of financial activities. These are not limited to but prominently feature:

• Issuance of Electronic Money: The core activity, enabling the creation of digital cash alternatives.
• Providing Specific Payment Services: As defined by the Second Payment Services Directive (PSD2), this can include:
  
  • Services enabling cash to be placed on a payment account and all operations required for operating a payment account.
  • Services enabling cash withdrawals from 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.
    
     
  • Issuing payment instruments and/or acquiring payment transactions.
  • Money remittance.
  • Payment Initiation Services (PIS). 
    
     
  • Account Information Services (AIS).
• Extending Credit: This is permissible when directly related to specific payment services (e.g., short-term credit linked to a payment transaction) and must adhere to stringent, prescribed safeguarding requirements to protect customer funds.
• Offering Operational and Ancillary Services: These must be closely related to the issuance of electronic money or the provision of payment services (e.g., currency conversion services, safeguarding of data).
• Operating Payment Systems: Developing and managing the infrastructure for payment processing.
• Conducting Other Business Activities: Beyond e-money issuance, always in full compliance with relevant Maltese and EU laws, ensuring no conflict with the EMI’s primary regulated activities.

Key Requirements for Your Malta EMI Licence Application

To successfully apply for an EMI licence in Malta, your entity (which must first be incorporated in Malta, typically as a Limited Liability Company) must meet several core requirements set by the MFSA:

• Minimum Initial Capital: A fully paid-up initial capital of at least €350,000 is mandatory. This capital must be maintained at all times.
• Prudent Management & Governance:
  
  • Board of Directors: The Board must comprise at least two executive directors, with a third non-executive director often recommended. Directors must possess demonstrable expertise, experience, and be of good repute (‘fit and proper’).
  • Key Personnel: All key individuals, including proposed Directors, qualifying Shareholders (holding 10% or more), the Compliance Officer, and the Money Laundering Reporting Officer (MLRO), must pass a rigorous ‘fit and proper’ test. This involves thorough due diligence, including checks on solvency, competence, and integrity (e.g., police conduct certificates, professional references, statements of affairs).
  • Local Presence: While key functions can be outsourced (subject to MFSA approval), a tangible presence and mind & management in Malta are generally expected, often including a resident director and key operational staff.
  • Robust Governance Framework: This includes clear organisational structures, well-defined lines of responsibility, effective risk management procedures, and internal control mechanisms.
• Safeguarding Requirements: EMIs must have robust measures in place to safeguard funds received from electronic money holders. This typically involves segregating these funds from the EMI’s own funds, either by depositing them in a separate account with an authorised credit institution or by investing them in secure, liquid low-risk assets.

The Strategic Advantage: Passporting Your EMI Licence Malta across the EEA

As a full European Union member state, Malta offers a significant benefit for EMIs: passporting rights. An EMI licence Malta grants your institution the privilege to:

• Access the entire European Economic Area (EEA) market, expanding your reach to customers and businesses across numerous EU/EEA states without needing separate licences in each country.
• Establish branches in other EEA countries or provide services remotely (Freedom to Provide Services), enabling seamless cross-border expansion and scalability.

The EMI Licensing Process in Malta: A Step-by-Step Overview

Obtaining your EMI licence in Malta involves a thorough application and review process with the Malta Financial Services Authority (MFSA). While timelines can vary depending on the complexity of the application and the quality of documentation, an indicative timeframe is often between 9 to 12 months from the submission of a complete application.

1. Preliminary Phase (Optional but Recommended): Engage with the MFSA for an initial introductory meeting to discuss the proposed business model and ensure alignment with regulatory expectations.
2. Company Incorporation: Formally establish your Maltese legal entity.
3. Submission of Application: The formal application, along with all supporting documentation, must be submitted directly to the MFSA.
4. Comprehensive Documentation Review: The MFSA will conduct a detailed assessment of all submitted documents. Key documents include:
   
   • A meticulously detailed Business Plan outlining:
     
     • The EMI’s objectives, strategy, and market analysis (including target audience).
     • A description of the e-money and payment services to be offered.
     • Organisational structure, governance arrangements, and internal controls.
     • A robust Risk Management Framework (identifying operational, security, legal, and financial risks).
     • Detailed AML/CFT policies and procedures.
     • Description of IT systems, security measures, and business continuity plans.
   • Incorporation Documents of the applicant institution (e.g., Memorandum and Articles of Association).
   • Personal Questionnaires (PQs) for all proposed Directors, qualifying Shareholders, and key personnel, accompanied by thorough due diligence documentation as mentioned earlier.
   • Detailed three-year Financial Projections (P&L, Balance Sheet, Cash Flow), including stress-testing scenarios.
   • Own Funds Calculations demonstrating compliance with initial and ongoing capital requirements.
   • An Internet and Electronic Banking Questionnaire detailing IT infrastructure and security.
   • The official MFSA Application Form and applicable supporting documents.
5. MFSA Review and Feedback: The MFSA will review the application in detail and may request further information, clarifications, or revisions. This is an iterative process.
6. In-Principle Approval: If the MFSA is satisfied, it may issue an ‘in-principle’ approval, outlining any pre-licensing conditions.
7. Licence Issuance: Once all conditions are met (e.g., full payment of capital, finalisation of any outstanding points), the EMI licence will be formally issued.
8. Commencing Operations & Passporting:
   
   • Upon licence issuance, your EMI can commence operations.
   • Remote passporting of services to other EU jurisdictions can begin almost immediately after notifying the MFSA and the relevant host state authorities.
   • Establishing a physical branch in another EEA state typically requires additional notification and may be authorized after the EMI has demonstrated a period of stable operation (often 6-12 months).

Understanding the Cost of an EMI Licence in Malta

When budgeting for your Malta EMI licence, consider the following:

• MFSA Fees:
  
  • Application and Processing Fee: A one-time, non-refundable fee of €10,000 (subject to MFSA updates).
  • Annual Supervision Fee: Levied annually, varying on a case-by-case basis, with a current minimum of €25,000. This can increase based on the EMI’s turnover, complexity, and risk profile.
• Other Costs:
  
  • Company Incorporation Costs.
  • Professional Fees: For legal, advisory, and consultancy services to prepare the application and ensure compliance.
  • Capital Outlay: The €350,000 minimum initial capital.
  • Operational Costs: Office space (if applicable), staffing, IT systems, ongoing compliance, and audit fees.

Disclaimer: The fees mentioned are subject to change by the MFSA. Always refer to the official MFSA guidelines and consult with professional advisors for the most current and comprehensive cost assessment.

Post-Licensing Obligations for Maltese EMIs

Obtaining the EMI licence in Malta is the beginning of your regulatory journey. Ongoing compliance is crucial and includes:

• Adherence to MFSA Rules and EU Directives: Continuously meeting all applicable regulatory requirements.
• Regular Reporting: Submitting financial statements, regulatory reports, and AML/CFT reports to the MFSA.
• Maintaining Capital Adequacy: Ensuring own funds do not fall below the prescribed levels.
• Ongoing AML/CFT Compliance: Implementing and updating robust AML/CFT policies, procedures, and customer due diligence measures.
• Safeguarding of Client Funds: Continuously adhering to the strict safeguarding requirements.
• Operational Resilience: Maintaining robust IT security and business continuity plans.
• Internal Audit and Compliance Monitoring: Regular checks to ensure internal controls are effective.

Why Choose Malta for Your EMI Licence? The Broader Appeal

Securing an EMI licence in Malta offers more than just regulatory approval; it positions your fintech venture within a dynamic and supportive ecosystem:

• Pro-Business Environment: Malta has a long-standing reputation for being business-friendly with accessible regulators.
• Skilled Workforce: A multilingual, well-educated workforce, particularly in finance, legal, and IT sectors.
• English as an Official Language: Simplifies business operations and regulatory interactions.
• Competitive Tax Regime: Malta offers an attractive corporate tax system, which, when structured correctly, can be highly efficient.
• Government Support for Fintech: Initiatives and a national strategy aimed at fostering innovation in the digital finance space.
• Strategic Location: Excellent connectivity to Europe, North Africa, and the Middle East.
• EU Membership & Eurozone: Full access to the EU single market and the stability of the Euro currency.

Ready to Secure Your EMI Licence in Malta? As MFSA-authorized company formation agents and leading Malta-based corporate service providers, Contact Advisory Services Ltd. can expertly guide you through the EMI licensing process. Start your journey today: info@contact.com.mt