As was the case for remote gaming and (much more recently) distributed ledger technology and cryptocurrencies, Malta was the first EU member state to publish legislation for Electronic Money Institutions under the Financial Institutions Act in 2011.

An Electronic Money Institution, or e-Money Institution (“EMI”) is a financial institution that is authorised to issue electronic, or digital (including magnetically stored) money. Said authorisation may be obtained through a licence in line with the Financial Institutions Act or through a similar grant from another EU jurisdiction in accordance with the Electronic Money Directive.

In addition, licenced EMIs may provide certain payment services and the operation of payment systems. These include:

  • Cash deposits on and cash withdrawals from a payment account
  • Payment transactions (including through a payment card or similar device)
  • Direct debits & standing orders
  • Issuing debit cards.

Since EMIs are not permitted to undertake lending or other bank related activities (hence the issuance of credit cards is not permitted), clients are not exposed to credit risk as would be the case with a normal bank. While EMIs may grant credit related to certain payment services, this is subject to the condition that any such credit shall not be granted from the funds received in exchange of e-money and held in accordance with the prescribed safeguarding requirements.

Similar to obligations imposed on licenced remote gaming companies in Malta, funds representing e-money must be ring-fenced and EMIs are liable for any shortfalls.

Fenlex Corporate Services Ltd. has a dedicated banking & compliance team with a working relationship with licenced EMIs in Malta. For more information to open an account with an EMI in Malta, kindly contact marion.borgmuscat@fenlex.com.