Q26. What criteria must we meet to be a "small payment institution"?
The conditions are set out in regulation 13 and include the following:
- the average of the preceding 12 months' total amount of payment transactions executed by you, including your agents in the UK, does not exceed 3 million euros (or an equivalent amount) per month;
- none of the individuals responsible for the management or operation of your business has been convicted of offences relating to money laundering or terrorist financing, the Act, the PSD regulations or financial crimes;
- if you are a partnership, an unincorporated association, or a body corporate, you must satisfy us that any persons having a qualifying holding in your business are fit and proper persons having regard to the need to ensure the sound and prudent conduct of the affairs of a small payment institution;2
- you must satisfy us that your directors (if you are a body corporate), any persons responsible for the management of your business, and where relevant the persons responsible for the management of your payment services, are of good repute and possess appropriate knowledge and experience to provide payment services;2
- if you are a body corporate you must satisfy us that any close links you have with another person are not likely to prevent our effective supervision of you. If it appears to us that you have any close links that are subject to the laws, regulations or administrative provisions of a territory outside of the EEA ("the foreign provisions") you must satisfy us that neither the foreign provisions, nor any deficiency in their enforcement, would prevent our effective supervision of you;2
- your head office, registered office or place of residence, as applicable, is in the UK; and
- you must comply with the registration requirements of the Money Laundering Regulations 2007, where they apply to you.
Q27. We satisfy the conditions for registration as a small payment institution - does that mean we have to register as one?
No, there are other options available to you. If you register as a small payment institution, you cannot acquire passport rights under the regulations, so you may wish to become an authorised payment institution if you wish to take advantage of the passport. You may also choose to become an agent of a payment services provider. An overview of the options available to you is set out in PERG 15 Annex 1, Flowcharts 1 and 2.
Q28. We only wish to be an agent of a payment institution. Do we need to apply to the FSA for registration?
No. If your principal is a payment institution, it is its responsibility to apply for registration on your behalf. Assuming your principal is not an EEA firm, you are required to be registered on the FSA register before you provide payment services, subject to any relevant transitional provisions (see PERG 15.7) which may delay or avoid the need for registration. If your principal is an EEA firm, your principal will need to comply with the relevant Home State legislation relating to your appointment.
Q29. We are an agent of a credit institution for the purpose of providing payment services. Do we need to apply to the FSA for registration?
No. If you are such an agent of a credit institution which is permitted to provide payment services in the UK, you are not required to be registered under the PSD regulations. A credit institution will be permitted to provide payment services if it has a Part IVpermission to accept deposits, or if it is an EEA credit institution exercising passport rights under paragraph 4 of the Annex to the Banking Consolidation directive.
Q30. We are an agent of an e-money issuer for the purpose of providing payment services. Do we need to apply to the FSA for registration?
As such an agent you will need to be registered by your principal under the Electronic Money Regulations, see PERG 3A Q21. However, in our view you do not need to be registered as an agent under the PSD regulations unless you are also providing payment services on behalf of another payment institution.1
Q31. We are a credit union. Are we exempt from the regulations?
Yes. You are exempt from the regulations by virtue of regulation 3.
Q32. We are a municipal bank. Are we exempt from the regulations?
Yes. You are exempt from the regulations (together with credit unions and the National Savings Bank), by virtue of regulation 3. Unlike credit unions, you are required to notify us if you wish to provide payment services, although you only need to do this once.11