Bank of Lithuania urges electronic money and payment institutions to comply with capital requirements

2020-08-27

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The Bank of Lithuania reminds electronic money and payment institutions (EMIs/PIs) about the necessity of holding sufficient and legally established capital buffers.

'Capital requirements, along with the prevention of money laundering and safeguarding of customer funds, are the key areas that fall under our supervision. Unfortunately, some EMIs and PIs pay too little attention to this particular aspect, which is in fact an important indicator of their financial state. However, after having received a warning, they tend to quickly resolve all capital adequacy issues and accumulate the necessary buffers,' said Rūta Merkevičiūtė, Head of the Electronic Money and Payment Institutions Supervision Division of the Bank of Lithuania.

The Supervision Service of the Bank of Lithuania has established that, according to the data as of the end of the first quarter of 2020, three EMIs - Guru Pay, UAB, PHOENIX PAYMENTS, UAB, Transactive Systems, UAB - and one PI - DSBC Financial Europe, UAB - failed to meet the applicable capital requirements (lacking from €4,000 to €77,000) and thus violated the Republic of Lithuania Law on Electronic Money and Electronic Money Institutions as well as the Law on Payment Institutions. The aforementioned institutions have already eliminated the indicated shortcomings and took measures to prevent their reoccurrence in the future. It has also been established that no customer interests were violated. In view of the above, the Bank of Lithuania decided to impose a mild enforcement measure by making these infringements public.

Moreover, Transactive systems, UAB violated the requirements set out in the Republic of Lithuania Law on Financial Institutions, i.e. failed to timely approve by the decision of the general meeting of shareholders the set of audited annual financial statements and make a decision on profit distribution. Therefore, the Supervision Service of the Bank of Lithuania imposed an additional enforcement measure on Transactive Systems, UAB - the institution was warned and obliged to approve the set of annual financial statements, make a decision on profit distribution and submit them to the Bank of Lithuania by 31 August 2020.

Following the Republic of Lithuania Law on Electronic Money and Electronic Money Institutions, an EMI must hold a minimum equity capital of not less than €350,000, while in case of PIs, the Republic of Lithuania Law on Payment Institutions stipulates that this amount depends on the provided services and may vary from €20,000 to €125,000.

Supervision of financial market participants, Payment institutions , Electronic money institutions , Transactive Systems UAB, UAB Guru Pay