The Banking Act 1994 introduced the concept of electronic money and electronic money institutions. Although credit institutions were already given the opportunity to undertake the business of electronic banking, this possibility has now been extended to ‘stand alone’ institutions. Thus, Electronic Money Institutions now have regulatory parameters and a licensing framework in place.
The directive on Electronic Money Institutions which has been issued by the Malta Financial Services Authority and is based on EU Directive 2000/46/EC, sets out the regulatory framework for institutions of this kind. Unlike credit institutions, it is not permissible for Electronic Money Institutions to carry out lending and other bank related activities and they can only invest in very liquid marketable assets.
The minimum paid up capital for an electronic money institution has been set at Euro 1 million. It is expected that this capital requirement will be reduced to EUR 350,000 with effect from 1st April 2011, pursuant to Directive 2009/110/EC.
Advance revenue rulings may be obtained as to the tax treatment of transactions involving financial instruments and international business. These rulings apply for 5 years and may be renewed for a further 5 years. Such rulings also survive any change in the relevant legislation for a maximum period of 2 years.
Various fiscal incentives are available to Electronic Money Institutions upon particular criteria being satisfied.
The firm advises and assists clients in the banking and finance sectors both in the setting up process and on an ongoing basis thereafter.