Cyprus Payment Institutions License and Supervision
A Cyprus Payment Institution (PI) license grants access to the EU market, a competitive tax regime, a skilled workforce, and a stable regulatory framework, positioning Cyprus as a top choice for businesses establishing a PI in the European Union.
Regulatory Authority
The Central Bank of Cyprus (CBC) regulates and supervises PIs. As an EU member, Cyprus has incorporated the EU’s Payment Services Directive (PSD2) into its legislation, governing PI activities.
Legal Framework
Key regulations for PI licensing and operations include:
- The Business of Electronic Money Law (2012), as amended.
- The Provision and Use of Payment Services Law (2018), enacting PSD2.
- The CBC Directive on PI Authorisation and Supervision (2019).
Eligibility Criteria
Applicants for a PI license must:
- Be a legal entity registered in Cyprus or another EU state.
- Maintain at least €125,000 in capital throughout operations.
- Provide a detailed business plan outlining payment services, target markets, and risk management.
- Have a management team with proven financial services experience.
- Establish robust governance with a qualified board and senior management.
- Implement effective AML/CTF and risk management policies.
- Maintain secure IT systems for payment services.
- Obtain professional indemnity insurance or comparable guarantees.
Benefits of a Cyprus PI License
A Cyprus PI license provides:
- EU Market Access: EU passporting enables services across member states without
- additional licenses, broadening customer reach.
- Competitive Taxes: A 12.5% corporate tax rate and extensive double tax treaties optimize tax structures.
- Skilled Workforce: Cyprus offers educated, English-speaking professionals and strong support services.
- Stable Regulations: Alignment with EU directives ensures a predictable legal environment.
- Efficient Licensing: The CBC’s thorough yet streamlined process supports timely market entry.
- Reputable Hub: Cyprus’ status as a trusted financial center enhances PI credibility.
- Strong Infrastructure: Modern telecom and strategic location support multi-regional operations.
Application Process
Steps to obtain a PI license include:
- Preparing a complete application per CBC guidelines.
- Submitting it with a non-refundable fee.
- Addressing CBC requests for additional details.
- Receiving the license upon approval, meeting any conditions.
- Paying the annual fee and fulfilling conditions within three months.
Ongoing Compliance
Licensed PIs must:
- Submit regular reports (financials, risk management, AML/CTF).
- Maintain minimum capital.
- Notify CBC of significant operational changes.
- Cooperate with CBC inspections.
PI vs. EMI Services
PIs offer payment services like:
- Payment transactions (credit transfers, direct debits).
- Money remittances.
- Payment initiation and account information services.
- Foreign exchange for payments.
Electronic Money Institutions (EMIs) provide these services but also issue, distribute, and redeem e-money (digital fiat currency), including e-wallets and prepaid cards. Only EMIs handle e-money services.
Services for Obtaining a PI License
Papasavvas & Liskavidou LLC supports companies seeking a PI license in Cyprus with comprehensive services, including:
- Guidance on regulatory and eligibility requirements.
- Assistance with legal entity formation and corporate structure.
- Preparation of the application, including business plan and risk policies.
- Liaising with the CBC to address queries during the process.
- Advice on ongoing compliance and reporting obligations.
- Support for expanding PI operations within the EU.
The experienced legal and financial team at Papasavvas & Liskavidou LLC offers tailored assistance, leveraging deep knowledge of Cyprus’ financial sector to navigate regulatory complexities and secure a PI license.
