On 22 October 2010, HM Treasury published a consultation on the new Electronic Money Directive (2009/110/EC) (“2EMD”) and the draft Electronic Money Regulations 2010.
2EMD was adopted by the European Parliament and the Council of the European Union on 16 September 2009 and must be implemented by member states by 30th April 2011.
The consultation sets out the changes that need to be made to the legal framework on electronic money to implement 2EMD and describes the Government’s proposed approach to the discretionary elements of the Directive. The principal regulatory changes include:
- A new definition of e-money which includes magnetically stored value: this extends the definition to electronic money held on a plastic card or an IT server.
- Creating an authorisation procedure for electronic money issuers.
- Expanding the scope of activities that electronic money institutions can undertake so that they are not restricted to only issuing and administering e-money, or storing data.
- Introducing new requirements for safeguarding and redeeming customers’ funds.
- Changing the initial capital (own funds) requirements for electronic money institutions and exempting small electronic money institutions from certain prudential requirements.
- Increasing the exemption from carrying out customer due diligence checks to €500 for national payment transactions.
(The consultation closes on 30 November 2010.)