PI Application Requirements
For authorisation as a PI, an application must be submitted to the CBC, together with the following:
- A programme of operations, setting out the payment services envisaged.
- A business plan including a forecast budget calculation for the first three financial years that demonstrates that the applicant can employ such systems, resources and procedures to operate soundly.
- Evidence that the PI holds the required initial capital.
- A description of the measures for safeguarding payment service users’ funds.
- A description of the applicant’s governance arrangements and internal control mechanisms, including administrative, risk management and accounting procedures, which demonstrates that these governance arrangements and control mechanisms are appropriate and adequate.
- A description of the procedure in place to monitor, handle and follow up a security incident and security related customer complaints, including an incident reporting mechanism that takes account of the PI’s notification obligations.
- A description of the process in place to file, monitor, track and restrict access to sensitive payment data.
- A description of business continuity arrangements including a clear identification of the critical operations, effective contingency plans and a procedure to regularly test and review the adequacy and efficiency of such plans.
- A description of the principles and definitions applied for the collection of statistical data on performance, transactions and fraud.
- A security policy document, including a detailed risk assessment in relation to its payment services and a description of security control and mitigation measures taken to adequately protect payment service users against the risks identified, including fraud and illegal use of sensitive and personal data.
- A description of the internal control mechanisms which the applicant has established to comply with the requirements for PIs subject to the obligations in relation to money laundering and terrorist financing.
- A description of the applicant’s structural organisation, including, where applicable, a description of the intended use of agents and branches and of the off-site and on-site checks that the applicant undertakes to perform on them at least annually, as well as a description of outsourcing arrangements, and of its participation in a national or international payment system.
- The identity of persons holding in the applicant, directly or indirectly, qualifying holdings, the size of their holdings and evidence of their suitability taking into account the need to ensure the sound and prudent management of a PI.
- The identity of directors and persons responsible for the management of the PI and, where relevant, persons responsible for the management of the payment services activities of the payment institution, as well as evidence that they are of good repute and possess appropriate knowledge and experience to perform payment services as determined by CBC.
- Where applicable, the identity of statutory auditors and audit firms.
- The applicant’s legal status and articles of association.
- The address of the applicant’s head office. accompanying transfers of funds, as it may further be amended or replaced
PIs are required to hold, at the time of authorisation, initial capital, comprised of one or more of the items as follows:
- Where the PI provides only a money remittance payment service, its capital must at no time be less than €20,000.
- Where the PI provides only a payment initiation services, its capital must at no time be less than €50,000.
- Where the PI provides any other payment services, its capital must at no time be less than €125,000.
Notwithstanding the initial capital requirements, PIs (except for those only offering payment initiation or account information services) are required to hold, at all times, own funds calculated in accordance with one of the following three methods:
Method A – The PI’s own funds must amount to at least 10% of its fixed overheads of the preceding year. The CBC may adjust this requirement in the event of a material change in a PI’s business since the preceding year. Where a PI has not completed a full year’s business at the date of the calculation, the requirement will be that its own funds amount to at least 10% of the corresponding fixed overheads as projected in its business plan, unless an adjustment to that plan is required.
Method B – Where payment volume (PV) represents one twelfth of the total amount of payment transactions executed by the PI in the preceding year:
- 4% of the slice of PV up to €5 million, plus
- 5% of the slice of PV between €5 million and €10 million, plus
- 1% of the slice of PV between €10 million and €100 million, plus
- 5% of the slice of PV between €100 million and €250 million, plus
- 25 % of the slice of PV above €250 million
The PI’s own funds must amount to at least the sum of the above elements multiplied by the scaling factor ‘k’, which is defined as 0.5, 0.8 or 1 according to the payment services provided.
Method C – The PI’s own funds must amount to at least the ‘relevant indicator’, multiplied by the ‘multiplication factor’ and by the ‘scaling factor k’, which is defined as 0.5, 0.8 or 1 according to the payment services provided.
- The relevant indicator is the sum of the following:
- Interest income less interest expenses,
- Commissions and fees received, and
- Other operating income.
- The multiplication factor is:
- 10% of the slice of the relevant indicator up to €2.5 million.
- 8% of the slice of the relevant indicator between €2.5 million and €5 million.
- 6% of the slice of the relevant indicator between €5 million and €25 million.
- 3% of the slice of the relevant indicator between €25 million and €50 million.
- 5% above €50 million.
PI application process
Legal persons interested in obtaining a PI authorisation for providing payment services in Cyprus must complete and apply to the CBC and ensure that all required data and documents are included before submission, together with proof of necessary funds.
Sovereign Trust (Cyprus) Limited will support you in the efficient and effective implementation of all the steps required under the assist with all aspects of the PI application process, as follows:
- Incorporation of a company with special articles of association applicable to the PI licence
- Preparation of the PI licence application
- Compiling all accompanying information and documentation
- Preparation of a detailed time plan for establishment of the PI
- Designing and drafting an appropriate business plan
- Assisting with drafting of the required questionnaires
- Due diligence in respect of shareholders, directors and other stakeholders
- Acting as project manager
- Recruitment assistance in respect of key functions
- Outsourcing arrangements in respect of accounting, payroll and HR functions
- Arranging for appropriate audit
- Ensuring tax and corporate compliance
The CBC will decide on an application for authorisation as a PI and notify the legal person applying for authorisation of the approval or the rejection of the application within three months of receiving a duly completed application.