Need to know for EMIs/PIs: as of 2021 more activity reports to be submitted to the Bank of Lithuania

In order to identify possible risks arising in the activities of electronic money and payment institutions (“Institutions”) as early as possible, the Bank of Lithuania will require even more activity reports to be submitted as of 2021.

In July 2020, amendments were adopted to the Description of the Procedure for the Preparation of Financial and Activity Reports for the Supervision of Electronic Money Institutions and Payment Institutions and for the Submission of These Reports and Other Information to the Bank of Lithuania approved by Resolution No 03-259 of 20 December 2018 of the Board of the Bank of Lithuania, adopting several new Institution activity report forms:

1. Report Form for Substantial Changes in the Requirements for the Protection of Funds of Electronic Money Holders and/or Payment Service Users.

It is important to know that the Institution will be obliged to notify the Bank of Lithuania of any changes in the method of protecting funds (separation of client funds in a separate account; investment; insurance contract; or guarantee agreement or letter of guarantee) at least one month before the entry into force, termination or expiry of the agreement to protect the funds of electronic money holders and/or payment service users. The Institution has to complete and submit Table 1 of the Report Form for Substantial Changes in the Requirements for the Protection of Funds of Electronic Money Holders and/or Payment Service Users.

Regardless of whether the method of protecting funds changes or not, the Institution must notify the Bank of Lithuania of a newly concluded agreement to protect the funds of electronic money holders and/or payment service users within five working days of its conclusion. The Institution has to complete and submit Table 2 of the Report Form for Substantial Changes in the Requirements for the Protection of Funds of Electronic Money Holders and/or Payment Service Users.

2. Report Form for Confirming Compliance of the Conditions of a Professional Liability Insurance Contract or Other Equivalent Means of Ensuring Liability with Legislative Requirements.

3. Report Form for Calculating the Minimum Amount of a Professional Liability Insurance Contract or Other Equivalent Means of Ensuring Liability.

Institutions that only provide account information service and/or payment initiation service must submit a Report Form for Confirming Compliance of the Conditions of a Professional Liability Insurance Contract or Other Equivalent Means of Ensuring Liability with Legislative Requirements and a Report Form for Calculating the Minimum Amount of a Professional Liability Insurance Contract or Other Equivalent Means of Ensuring Liability within five business days of the expiry of the professional liability insurance contract or other equivalent means of ensuring liability.

If the professional liability insurance contract concluded provides for a deduction or an amount is established in the agreement for the other equivalent means of ensuring liability which this agreement does not cover, the Institution must submit documents proving that the claims of the payment service users and the payment service providers handling the account with respect to the events specified in Articles 38 and 51-53 of the Law on Payments will be fully satisfied (e.g. an extract of the decision of the general meeting to establish a reserve or other document proving that the Institution has an additional amount of money at its disposal which is at least as much as the uncovered amount of the professional liability insurance contract or other equivalent means of ensuring liability and which can only be used to meet the requirements specified in this item).

Submission of the above-mentioned reports to the supervisory authority is expected to act as a preventive measure that will help ensure the implementation of the requirements related to the protection of electronic money holders and/or payment service users. Given that the obligation to provide information was already established in the Law on Electronic Money and Electronic Money Institutions and the Law on Payment Institutions, the adoption of standardised information submission forms should not create significant additional administrative burdens for Institutions.

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