LAW OF THE REPUBLIC OF LITHUANIA

Consolidated version valid as of 15 June 2020

REPUBLIC OF LITHUANIA

LAW

ON PAYMENT INSTITUTIONS

10 December 2009 No XI-549

(As last amended on 21 May 2020 – No XIII-2968)

Vilnius

CHAPTER I

GENERAL PROVISIONS

Article 1. Purpose of the Law

1. This Law shall establish the procedure for licensing, pursuing of business of, terminating and supervising payment institutions with a view to ensure the stability, reliability, efficiency and security of the system of payment institutions.

2. This Law shall apply to the payment institutions established in the Republic of Lithuania, their branches and agents, the payment institutions of other Member States, their branches and agents involved in the provision of payment services in the Republic of Lithuania. Provisions of Article 13 of this Law shall apply mutatis mutandis to licensed credit unions.

3. The provisions of this Law have been harmonised with the legal acts of the European Union referred to in the Annex to this Law.

Article 2. Definitions

1. ‘Close links’ – as defined in Article 4(1)(38) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1) (hereinafter: ‘Regulation (EU) No 575/2013’) .

2. ‘Another Member State’ means a Member State, with the exception of the Republic of Lithuania.

3. ‘Payment institution of another Member State’ means a legal person established in another Member State to which an authorisation to provide payment services in all Member States has been granted.

4. ‘Qualifying holding of the authorised capital and/or of the voting rights’ – as defined in Article 4(1)(36) of Regulation (EU) No 575/2013.

5. ‘Payment institution’ means a legal person which has been issued with a payment institution licence or a licence of a payment institution providing only account information service or a payment institution licence for restricted activities (hereinafter in this Law all these types of licences collectively: a ‘licence’).

6. Branch of a payment institution (hereinafter: a ‘branch’) means a structural subdivision of a payment institution which has no legal personality, but which has its head office and carries out all or part of the functions of the payment institution. All of the places of business set up in the same Member State by the payment institution with a head office in another Member State shall be regarded as a single branch.

7. ‘Own funds’ – as defined in Article (4)(1)(118) of Regulation (EU) No 575/2013.

8. ‘Agent of a payment institution’ (hereinafter: an ‘agent’) means a natural or legal person, another organisation or its subdivision providing payment services on behalf of a payment institution.

9. Other terms used in this Law shall be understood as they are defined in the Law of the Republic of Lithuania on Financial Institutions, the Law of the Republic of Lithuania on Payments and the Law of the Republic of Lithuania on Banks.

Article 3. Name, legal form and head office of a payment institution. Legal acts regulating activities of a payment institution

1. Only the persons providing payment services under this Law may use the term ‘payment institution’, other grammatical forms of or phrases with this term in their names, in advertising or for other purposes in the Republic of Lithuania.

2. The legal form of a payment institution may be solely a public limited liability company or a private limited liability company.

3. A payment institution shall be required to have a head office in the Republic of Lithuania.

4. In its activities, a payment institution shall comply with the Civil Code of the Republic of Lithuania, this Law, the Law on Payments, the legal acts of the European Union and of the supervisory authority, namely, the Bank of Lithuania (hereinafter: the ‘supervisory authority’), and its instruments of incorporation. The Law on Financial Institutions and the Law of the Republic of Lithuania on Companies shall apply to a payment institution to the extent this Law does not provide otherwise.

5. The provisions of this Law regarding granting of credit to consumers shall apply to the extent other laws regulating granting of credit to consumers do not provide otherwise.

Article 4. Payment services provided by a payment institution and other activities

1. A payment institution may provide solely the payment services indicated in the licence issued thereto by the supervisory authority.

2. Apart from the provision of payment services, a payment institution shall be entitled:

1) to provide the ancillary services closely related to payment services, such as foreign exchange, funds safekeeping activities, the storage and processing of data;

2) to operate payment systems in compliance with the requirements set out in Article 8 of the Law on Payments;

3) to pursue business activities other than the provision of payment services, with the exception of the cases specified in Article 5(8) and Article 7(8) of this Law;

4) to exchange currency (in cash).

3. When a payment institution engages in the provision of one or more of payment services, it may hold only payment accounts used exclusively for the provision of payment services. Any funds received by the payment institution from payment service users with a view to the provision of payment services shall not constitute a deposit or other repayable funds and electronic money.

4. A payment institution may grant credit related to the payment services as referred to in point 4 or 5 of Article 5 of the Law on Payments, only if the following conditions are met:

1) credit shall be granted exclusively as an ancillary instrument in connection with the execution of a payment transaction;

2) the funds granted in connection with a payment and executed in accordance with Article 11 of this Law must be repaid within a period not exceeding 12 months;

3) the payment institution may not grant credit from the funds received and held for the purpose of executing a payment transaction;

4) the own funds of the payment institution at all times meet the requirements of Article 16 of this Law and are appropriate to the satisfaction of the supervisory authority.

5. A payment institution may not conduct the business of taking deposits or other repayable funds from non-professional participants of the market and issuance of electronic money.

6. Prior to taking decisions which restrict a payment institution’s freedom to dispose of the funds in its account or which otherwise restrict the right of the payment institution to provide payment services to payment service users, a court of the Republic of Lithuania and other institutions or officials stipulated by laws must obtain a conclusion of the supervisory authority on the impact of these decisions on the stability and soundness of the payment institution and the whole system of payment institutions. The supervisory authority shall issue such a conclusion within five working days of receipt of the request to issue the conclusion.

CHAPTER II

LICENSING OF PAYMENT INSTITUTIONS

Article 5. Payment institution licence

1. A payment institution licence shall be valid also in other Member States entitling the payment institution to provide in those Member States the payment services indicated in the payment institution licence under the conditions specified in Article 11 of this Law.

2. A legal person being established or a legal person in operation (hereinafter in this Article: a ‘legal person’) applying for a payment institution licence must submit to the supervisory authority an application and the following documents and data:

1) the articles of association/draft articles of association;

2) a programme of operations setting out in particular the types of payment services envisaged and the place of their provision;

3) a business plan, including a forecast budget for the first three financial years which demonstrates that the payment institution is able to operate soundly and employs appropriate internal control systems, procedures and resources;

4) evidence that the minimum size of the initial capital does not fall below the amount specified in Article 14(2) of this Law;

5) a description of the measures taken/to be taken for safeguarding payment service users’ funds in accordance with the requirements of Article 17 of this Law;

6) a description of the governance arrangements and internal control mechanisms applied/to be applied, including administrative, risk management and accounting procedures, which demonstrates that those governance arrangements and internal control mechanisms are appropriate, sound and adequate in relation to the risks taken;

7) a description of the internal control mechanisms established/to be established in order to comply with obligations in relation to prevention of money laundering and terrorist financing under the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing and Regulation (EU) No 2015/847 of the European Parliament and of the Council of 20 May 2015 on information on the payer accompanying transfers of funds and repealing Regulation (EC) No 1781/2006 (OJ 2015 L 141, p. 1) (hereinafter: ‘Regulation (EU) No 2015/847’);

8) a description of the procedure to monitor, handle and follow up operational and security incidents and security-related customer complaints, including a reporting mechanism for major operational and security incidents established in accordance with requirements set out in Article 57 of the Law on Payments;

9) a description of the procedure to file, monitor, track and restrict access to sensitive payment data;

10) a description of business continuity arrangements including a clear identification of the critical operations, effective contingency plans and a procedure to regularly test and review the adequacy and efficiency of such plans;

11) a description of principles and definitions applied for the collection of statistical data on performance, transactions and fraud;

12) a description of security policies, including a detailed risk assessment in relation to its payment services, security control and risk mitigation measures taken to adequately protect payment service users against the risks identified, including fraud and illegal use of sensitive and personal data;

13) a description of the person’s structural organisation, including the intended use of branches and agents or third parties to whom the performance of operational functions will be outsourced, as well as a description of the obligation to carry out inspections of the branches and agents at least annually, and a description of its participation in payment systems;

14) the data on the basis of which the identity of persons who acquire/hold qualifying holdings of the authorised capital and/or of the voting rights in the legal person applying for a payment institution licence (hereinafter in this Article: the ‘legal person applying for a licence’), the size of their holdings of the authorised capital and/or of the voting rights being acquired/held, also the suitability of these persons within the meaning of provisions of Article 25(8) of the Law on Banks taking into account the need to ensure the sound and prudent management of a payment institution;

15) the identities of managers (the forename, surname, personal number (where the person has no personal number – the date and place of birth)), as well as evidence that they meet the requirements of good repute, qualifications and experience set out in Article 9(3) of this Law;

16) the identity of the manager/managers of a branch (the person’s forename, surname, personal number (where the person has no personal number – the date and place of birth)) where the provision of payment services is intended to be carried out through a branch established in another Member State in accordance with the procedure laid down in Article 11 of this Law;

17) the identity of an audit firm or certified auditor (hereinafter: an ‘auditor’) who carries out audits independently (hereinafter in this Law an audit firm and an auditor who carries out audits independently collectively: an ‘audit firm’) carrying out/intending to carry out an audit, provided that such an audit firm or certified auditor meets the requirements of the Law on Financial Institutions and the Law of the Republic of Lithuania on the Audit of Financial Statements;

18) the documents and data demonstrating that the applicant meets the requirements set out Article 20(1) and (3) of this Law and supporting the amount of professional indemnity insurance or other comparable guarantee where the applicant intends to provide a payment initiation service;

19) the documents and data demonstrating that the applicant meets the requirements set out Article 20(2) and (3) of this Law and supporting the amount of professional indemnity insurance or other comparable guarantee where the applicant intends to provide an account information service;

20) the address of the head office.

3. The information indicated in points 5, 6, 8 and 13 of paragraph 2 of this Article must be accompanied by a description of internal audit arrangements and the organisational arrangements specifying the steps to be taken to protect the interests of users and to ensure continuity and reliability in the performance of payment services.

4. A payment institution licence shall be issued only to a legal person applying for a licence who, taking account of the need to ensure reliable governance of a payment institution based on prudential principles, has put in place the payment institution activity management procedure which is consistent and proportionate to the nature, scope and complexity of the payment institution’s activities, including the comprehensible structural organisation which allows ensuring the separation of functions and vertical and horizontal responsibility relationships with clearly defined, transparent and consistent responsibility limits and systems of the identification, management, monitoring of existing/potential risks, management information and internal control, including reliable administrative arrangements and accounting system.

5. The supervisory authority shall have the right to carry out an on-site inspection of preparedness of a payment institution applying for the issuance of a payment institution licence to provide payment services. The on-site inspection of preparedness to provide payment services shall mutatis mutandis be subject to provisions of Article 29 of this Law.

6. The supervisory authority must examine the submitted documents, data and/or information, take a decision on the issuance of a payment institution licence and give a written notice thereof to the legal person applying for the licence not later than within three months of receipt of the application and having regard to provisions of Article 43¹ of the Law on the Bank of Lithuania.

7. The supervisory authority shall provide a justified refusal to issue a payment institution licence where:

1) the submitted documents, data and/or information accompanying the application do not meet the requirements of this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements, the legal person applying for the licence does not submit the documents, data and/or information specified in paragraph 2 of this Article by the deadline fixed by the supervisory authority when the latter requires to submit missing and/or updated documents, data and/or information necessary for taking the decision, or not all additionally requested documents, data and/or information are submitted or they are incorrect;

2) the legal person applying for the licence does not have a head office in the Republic of Lithuania, does not intend to provide services in the Republic of Lithuania, its legal form, managers, initial capital, professional indemnity insurance or other comparable guarantee do not meet the requirements set out by this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements;

3) there is a ground for believing that the persons acquiring/holding a qualifying holding of the authorised capital and/or of the voting rights in the legal person applying for a licence do not meet the criteria laid down in Article 25(8) of the Law on Banks;

4) close links exist between the legal person applying for the licence and a third party and are likely to prevent the effective exercise by the supervisory authority of supervision of the payment institution;

5) close links exist between the legal person applying for the licence and a person from a foreign state whose legal acts regulating the activities of this person or difficulties involved in the enforcement of such legal acts are likely to prevent the effective exercise by the supervisory authority of supervision of the payment institution;

6) the legal person applying for the licence does not meet the requirements set out in paragraph 4 of this Article.

8. Where a legal person applying for a licence intends to provide payment services referred to in points 1 to 7 of Article 5 of the Law on Payments and, at the same time, intends to engage or is engaged in other activities referred to in Article 4(2)(3) of this Law, the supervisory authority shall have the right to refuse the issuance of a payment institution licence until the establishment of a separate legal entity for the payment services business, where the non-payment services activities wherein the payment institution intends to engage or is engaged impair or are likely to impair either the financial soundness of the legal person applying for a licence or the ability of the supervisory authority to monitor the compliance of the legal person applying for a licence with all obligations laid down by this Law.

9. A payment institution holding a payment institution licence and intending to provide payment services referred to in Article 5 of the Law on Payments that are not specified in the licence issued thereto must apply to the supervisory authority for supplementing the valid licence with the payment services which it intends to provide and submit the data and documents referred to in paragraph 2 of this Article which have changed because of the changes in the size of the activities. Provisions of paragraph 6 of this Article shall apply mutatis mutandis when taking a decision on change of the licence.

10. A payment institution which acquires another licence entitling to provide the same services as specified in the payment institution licence held by it must, not later than within 30 days of obtaining of the last licence, apply to the supervisory authority for the withdrawal of one of the licences.

11. A payment institution holding a payment institution licence must, at all times, comply with the requirements set out in this Article for the issuance of a payment institution licence. The payment institution must, in accordance with the procedure and within the time limits laid down by legal acts of the supervisory authority implementing this Law, notify the supervisory authority of any changes in the data and/or information submitted for obtaining the payment licence.

12. A detailed procedure for the submission and examination of an application for a licence specified in this Article and detailed requirements for the content and format of the submitted documents referred to in paragraph 2 of this Article shall be set out by the supervisory authority.

Article 6. Licence of a payment institution providing only an account information service

1. A licence of a payment institution providing only an account information service shall also be valid in other Member States and entitle the payment institution to provide the account information service in those Member States under the conditions laid down in Article 11 of this Law. A payment institution that has been issued a licence of a payment institution providing only an account information service shall not be subject to provisions of Articles 10, 14, 16, 17, 18 and 19 of this Law.

2. A legal person being established or a legal person in operation (hereinafter in this Article: a ‘legal person’) applying for a licence of a payment institution providing only an account information service must submit to the supervisory authority an application and the following documents and data:

1) the articles of association/draft articles of association;

2) a programme of operations setting out in particular the place of provision of services;

3) a business plan, including a forecast budget for the first three financial years which demonstrates that the payment institution is able to operate soundly and employs the appropriate internal control systems, procedures and resources;

4) a description of the governance arrangements and internal control mechanisms applied/to be applied, including administrative, risk management and accounting procedures, which demonstrates that those governance arrangements and internal control mechanisms are appropriate, sound and proportionate to the risks assumed;

5) a description of the procedure to monitor, handle and follow up operational and security incidents and security-related customer complaints, including a reporting mechanism for major operational and security incidents established in accordance with requirements set out in Article 57 of the Law on Payments;

6) a description of the procedure to file, monitor, track and restrict access to sensitive payment data;

7) a description of business continuity arrangements including a clear identification of the critical operations, effective contingency plans and a procedure to regularly test and review the adequacy and efficiency of such plans;

8) a description of security policies, including a detailed risk assessment in relation to its payment services, security control and risk mitigation measures taken to adequately protect payment service users against the risks identified, including fraud and illegal use of sensitive and personal data;

9) a description of the person’s structural organisation, including the intended use of branches and agents or third parties to whom the performance of operational functions will be outsourced, as well as a description of the obligation to carry out inspections of the branches and agents at least annually, and a description of its participation in payment systems;

10) the identities of managers (the forename, surname, personal number (where the person has no personal number – the date and place of birth)), as well as evidence that they meet the requirements of good repute, qualifications and experience set out in Article 9(3) of this Law;

11) the identity of the manager/managers of a branch (the person’s forename, surname, personal number (where the person has no personal number – the date and place of birth)) where the provision of payment services is intended to be carried out through a branch established in another Member State in accordance with the procedure laid down in Article 11 of this Law;

12) the documents and data demonstrating that the applicant meets the requirements set out Article 20(2) and (3) of this Law and supporting the amount of professional indemnity insurance or other comparable guarantee;

13) the address of the head office.

3. The information indicated in points 4, 5 and 9 of paragraph 2 of this Article must be accompanied by a description of internal audit arrangements and the organisational arrangements specifying the steps to be taken to protect the interests of users and to ensure continuity and reliability in the performance of payment services.

4. A licence of a payment institution providing only an account information service shall be issued only to a legal person applying for a licence of a payment institution providing only an account information service (hereinafter: a ‘legal person applying for a licence’) who, taking account of the need to ensure reliable governance of a payment institution based on prudential principles, has put in place the payment institution activity management procedure which is consistent and proportionate to the nature, scope and complexity of the payment institution’s activities, including the comprehensible structural organisation which allows ensuring the separation of functions and vertical and horizontal responsibility relationships with clearly defined, transparent and consistent responsibility limits and systems of the identification, management, monitoring of existing/potential risks, management information and internal control, including reliable administrative arrangements and accounting system.

5. The supervisory authority shall have the right to carry out an on-site inspection of preparedness of a legal person applying for a licence to provide payment services. The on-site inspection of preparedness to provide payment services shall mutatis mutandis be subject to provisions of Article 29 of this Law.

6. The supervisory authority must examine the submitted documents, data and/or information, take a decision on the issuance of a licence of a payment institution providing only an account information service and give a written notice thereof to the legal person applying for the licence not later than within three months of receipt of the application and having regard to provisions of Article 43¹ of the Law on the Bank of Lithuania.

7. The supervisory authority shall provide a justified refusal to issue a licence of a payment institution providing only an account information service where:

1) the submitted documents, data and/or information accompanying the application do not meet the requirements of this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements, the legal person applying for the licence does not submit the documents, data and/or information specified in paragraph 2 of this Article by the deadline fixed by the supervisory authority when the latter requests to submit missing and/or updated documents, data and/or information necessary for taking the decision, or not all additionally requested documents, data and/or information are submitted or they are incorrect;

2) the legal person applying for the licence does not have a head office in the Republic of Lithuania, does not intend to provide services in the Republic of Lithuania, its legal form, managers, professional indemnity insurance or other comparable guarantee do not meet the requirements set out by this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements;

3) close links exist between the legal person applying for the licence and a third party and are likely to prevent the effective exercise by the supervisory authority of supervision of the payment institution;

4) close links exist between the legal person applying for the licence and a person from a foreign state whose legal acts regulating the activities of this person or difficulties involved in the enforcement of such legal acts are likely to prevent the effective exercise by the supervisory authority of supervision of the payment institution;

5) the legal person applying for the licence does not meet the requirements set out in paragraph 4 of this Article.

8. Where a payment institution holding a licence of a payment institution providing only an account information service intends to provide other payment services referred to in Article 5 of the Law on Payments, such a payment institution must submit to the supervisory authority an application for withdrawal of the licence held by it and for issuance of a payment institution licence.

9. A payment institution holding a licence of a payment institution providing only an account information service must, at all times, comply with the requirements set out in this Article for the issuance of the licence of a payment institution providing only an account information service. The payment institution must, in accordance with the procedure and within the time limits laid down by legal acts of the supervisory authority implementing this Law, notify the supervisory authority of any changes in the data and/or information submitted for obtaining the licence of a payment institution providing only an account information service.

10. A detailed procedure for the submission and examination of an application for a licence specified in this Article and detailed requirements for the content and format of the submitted documents referred to in paragraph 2 of this Article shall be set out by the supervisory authority.

Article 7. Payment institution licence for restricted activities

1. A payment institution licence for restricted activities shall be valid solely within the Republic of Lithuania and shall not entitle to provision of payment services in other Member States under the conditions specified in Article 11 of this Law. A payment institution holding a licence for restricted activities shall be entitled to provide payment services referred to in points 1 to 6 of Article (5) of the Law and specified in the licence issued by the supervisory authority. The average of the preceding 12 months’ total amount of payment transactions executed (where no activities are carried out, projected in a business plan) by a payment institution to which the payment institution licence for restricted activities has been issued, including any agent for which it assumes full responsibility, may not exceed EUR 3 000 000 per month, with the exception of the case specified in paragraph 4 of this Article. The payment institution to which the payment institution licence for restricted activities has been issued shall not be subject to provisions of Articles 10, 14 and 16 of this Law.

2. A legal person being established or a legal person in operation (hereinafter in this Article: a ‘legal person’) applying for a payment institution licence for restricted activities must submit to the supervisory authority an application and the following documents and data:

1) the articles of association/draft articles of association;

2) a business plan indicating the type/types of payment services envisaged and including a draft budget for the first financial year which demonstrates that the payment institution is able to operate soundly and employs the appropriate internal control systems, procedures and resources;

3) evidence that the average of the preceding 12 months’ total amount of payment transactions executed (where no activities are carried out – projected in a business plan) by the payment institution, including any agent for which it assumes full responsibility, does not exceed/will not exceed EUR 3 000 000 per month;

4) a description of the measures taken/to be taken for safeguarding payment service users’ funds in accordance with Article 17 of this Law;

5) a description of the internal control mechanisms established/to be established in order to comply with obligations in relation to prevention of money laundering and terrorist financing under the Law on Prevention of Money Laundering and Terrorist Financing and Regulation (EU) No 2015/847;

6) a description of the person’s structural organisation, including the intended use of branches and agents or third parties to whom the performance of operational functions will be outsourced, as well as a description of the obligation to carry out inspections of the branches and agents at least annually, and a description of its participation in payment systems;

7) the identities of managers (the forename, surname, personal number (where the person has no personal number – the date and place of birth)), as well as evidence that they meet the requirements of good repute, qualifications and experience set out in Article 9(4) of this Law;

8) the identity of the manager/managers of a branch (the person’s forename, surname, personal number (where the person has no personal number – the date and place of birth));

9) the address of the head office.

3. A payment institution licence for restricted activities shall be issued only to a legal person applying for a licence who, taking account of the need to ensure reliable governance of a payment institution based on prudential principles, has put in place the payment institution management procedure which is consistent and proportionate to the nature, scope and complexity of the payment institution’s activities, including the comprehensible structural organisation which allows ensuring the separation of functions and vertical and horizontal responsibility relationships with clearly defined, transparent and consistent responsibility limits, and an internal control system, including reliable administrative arrangements and accounting system.

4. Where a payment institution to which a payment institution licence for restricted activities has been issued no longer meets the requirements set out in paragraph 1 of this Article, it must, within 30 days, apply to the supervisory authority for the issuance of a payment institution licence in accordance with the procedure laid down in Article 5 of this Law. Where the payment institution to which the payment institution licence for restricted activities has been issued fails to apply for the issuance of the payment institution licence within 30 days or where the supervisory authority does not issue the payment institution licence within the time limits laid down in Article 5 of this Law, its payment institution licence for restricted activities shall be withdrawn.

6. The supervisory authority must examine the submitted documents, data and/or information and take a decision on the issuance of a payment institution licence for restricted activities and give a written notice thereof to the legal person applying for the licence not later than within two months of receipt of the application and having regard to provisions of Article 43¹ of the Law on the Bank of Lithuania.

7. The supervisory authority shall provide a reasoned refusal to issue a payment institution licence for restricted activities where:

1) the submitted documents, data and/or information accompanying the application do not meet the requirements of this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements, the legal person applying for the licence does not submit the documents, data and/or information specified in paragraph 2 of this Article by the deadline fixed by the supervisory authority when the latter requests to submit missing and/or updated documents, data and/or information necessary for taking the decision, or not all additionally requested documents, data and/or information are submitted or they are incorrect;

2) the legal person applying for the licence does not have a head office in the Republic of Lithuania, its legal form, managers do not meet the requirements set out by this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements;

3) the legal person applying for the licence does not meet the requirements set out in paragraph 1 or 3 of this Article.

8. Where a legal person applying for a licence intends to provide payment services referred to in points 1 to 6 of Article 5 of the Law on Payments and, at the same time, intends to engage or is engaged in other activities referred to in Article 4(2)(3) of this Law, the supervisory authority shall have the right to refuse the issuance of a payment institution licence for restricted activities until the establishment of a separate legal entity for the payment services business, where the non-payment services activities of the legal person applying for the licence impair or are likely to impair either its financial soundness or the ability of the supervisory authority to monitor the compliance of the legal person with all obligations laid down by this Law.

9. A payment institution holding a payment institution licence for restricted activities and intending to provide payment services referred to in points 1 to 6 of Article 5 of the Law on Payments that are not specified in the licence issued thereto must apply to the supervisory authority for supplementing the valid licence with the payment services which it intends to provide and submit the data and documents referred to in paragraph 2 of this Article which have changed because of the changes in the size of the activities. Provisions of paragraph 6 of this Article shall apply mutatis mutandis when taking a decision on the change of the licence.

10. A payment institution holding a payment institution licence for restricted activities must, at all times, comply with the requirements set out in this Article for the issuance of the payment institution licence for restricted activities. The payment institution must, in accordance with the procedure and within the time limits laid down by legal acts of the supervisory authority implementing this Law, notify the supervisory authority of any changes in the data and/or information submitted for obtaining the payment institution licence for restricted activities.

11. A detailed procedure for the submission and examination of an application for a licence specified in this Article and detailed requirements for the content and format of the submitted documents referred to in paragraph 2 of this Article shall be set out by the supervisory authority.

Article 8. Licence withdrawal, suspension and cancellation of suspension

1. A licence shall be withdrawn in the cases specified in Article 10(1) and points 1, 3 to 8 of Article 10(2) of the Law on Financial Institutions. In the case referred to in Article 7(4) of this Law, a licence shall be withdrawn by a decision of the supervisory authority.

2. In addition to the grounds specified in paragraph 1 of this Article, a licence may also be withdrawn by a decision of the supervisory authority where:

1) the payment institution no longer meets the licensing requirements set out in Article 5, 6 or 7 of this Law or fails to inform about that the supervisory authority;

2) the payment institution would constitute a threat to the stability of activities of other payment institutions and financial stability by continuing its payment services business;

3) the payment institution ceases to exist due to reorganisation or a decision is taken on its winding up;

4) in the case referred to in Article 5(10) or Article 6(8) of this Law, the payment institution does not apply for licence withdrawal within the specified time limit.

3. In the event of withdrawal of a licence on the grounds specified in point 3 or 4 of paragraph 2 of this Article or Article 7(4) of this Law or in Article 10(2)(8) of the Law on Financial Institutions, a decision of the supervisory authority shall give reasons for taking the decision and a notice of the decision taken shall be given to a payment institution within three working days of taking of the decision. In other cases, the licence shall be withdrawn in accordance with the procedure laid down in Articles 33 and 34 of this Law.

4. Validity of a licence shall be suspended on the grounds and in accordance with the procedure laid down in Articles 33 and 34 of this Law.

5. The supervisory authority, having taken a decision on licence suspension, shall notify a payment institution within three working days of taking of such a decision, indicate the infringement/infringements and set a time limit not exceeding two months within which the payment institution must eliminate the specified infringement/infringements.

6. After eliminating the infringement/infringements with respect to which a decision on licence suspension has been taken, the payment institution must give a notice thereof to the supervisory authority and the latter shall, within ten working days of receipt of the payment institution’s notification of the eliminated infringement/infringements, verify information on the elimination of the infringement/infringements and, if all infringements have been eliminated, take a decision on cancellation of licence suspension and inform the payment institution accordingly not later than within three working days of taking of the decision.

7. Upon withdrawal or suspension of a licence, a payment institution shall not have the right to provide payment services, except to the extent it is necessary to settle with payment service users.

8. Upon withdrawal of a licence and not later than within two months, bodies of a payment institution must take a decision on the winding up or reorganisation of the payment institution or take a decision on the change of the type of business and effect appropriate amendments to the articles of association, the name and other relevant amendments relating to the change in the type of business.

9. Information on licence withdrawal or suspension and cancellation of suspension shall be published by the supervisory authority on its website. The supervisory authority shall notify licence withdrawal or suspension and cancellation of suspension, including the reasons for licence withdrawal or suspension, to the European Banking Authority in accordance with the procedure laid down by delegated acts adopted by the European Commission within the meaning of Article 15(4) and (5) of Directive (EU) 2015/2366.

CHAPTER III

MANAGEMENT OF A PAYMENT INSTITUTION

Article 9. Bodies and managers of a payment institution and managers of its agents

1. A payment institution holding a payment institution licence must have the following bodies: the general meeting of shareholders, the board and the manager. A payment institution holding a payment institution licence for restricted activities and a payment institution holding a licence of a payment institution providing only an account information service must have the following bodies: the general meeting of shareholders and the manager, and where such a payment institution is a public limited liability company – also the supervisory board or the board.

2. Managers of a payment institution shall be:

1) the heads of the administration (the head and the deputy thereof);

2) the board members (where the board is formed);

3) the supervisory board members (where the supervisory board is formed);

4) the persons responsible for the management of the payment services activities of the payment institution (heads of structural subdivisions), where the payment institution provides payment services and, at the same time, is engaged in other activities referred to in Article 4(2)(3) of this Law (if such persons have been appointed).

3. Managers of a payment institution holding a payment institution licence and a payment institution holding a licence of a payment institution providing only an account information service must be of good repute and possess the qualifications and experience enabling them to properly perform their duties. Assessment of the good repute of these managers shall mutatis mutandis be subject to provisions of Article 34(12) and (13) of the Law on Banks. The qualifications and experience of the managers of the payment institution holding a payment institution licence and the payment institution holding a licence of a payment institution providing only an account information service shall be assessed by reference to the level and type of a person’s education, improvement of qualifications, nature and duration of professional activities or work experience as well as other factors likely to affect the person’s qualification and experience. Requirements for the repute, qualifications and experience of the managers of the payment institution holding a payment institution licence and the managers of the payment institution holding a licence of a payment institution providing only an account information service shall be assessed in accordance with the procedure laid down by legal acts of the supervisory institution.

4. Managers of a payment institution holding a payment institution licence for restricted activities must be fit and proper. The fitness and propriety of the managers of the payment institution holding a payment institution licence for restricted activity shall be assessed in accordance with the procedure laid down by legal acts of the supervisory institution. The fitness of the managers of the payment institution holding a payment institution licence for restricted activities shall be assessed having regard to the level and type of a person’s education, improvement of qualifications, nature and duration of professional activities or work experience as well as other factors likely to affect the person’s qualification and experience. The manager of a payment institution holding a payment institution licence for restricted activities may not be considered to be proper where he meets at least one of the following conditions:

1) the person has been convicted of a serious or grave crime, of a crime or of a misdemeanour against property, property rights and property interests, the economy and business practice, the financial system, public security, the civil service and public interests or of corresponding criminal acts under criminal laws of other states, where the person’s conviction for the crimes referred to in this point has not expired or has not been expunged, or where less than three years have elapsed from the coming into effect of a court judgment whereby a natural person was convicted of committing the misdemeanours referred to in this point;

2) the person has been subject to an administrative penalty or another statutory sanction for a serious infringement of a law or any other legal act regulating the provision of financial services or activities of financial institutions, an infringement of the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing, where less than three years have elapsed from the coming into effect of a decision to impose the administrative penalty or any other statutory sanction;

3) the person directly or indirectly holds or held a qualifying holding of the authorised capital and/or of the voting rights or a holding which makes it possible to exercise a direct and/or indirect dominant influence over the legal person, or is or was the manager of a legal person whose right to engage in the provision of financial services was withdrawn or which was subject to any other sanction for a serious infringement of a law or any other legal act regulating the provision of financial services or activities of financial institutions where less than three years have elapsed from the coming into effect of a decision to impose the sanction, or where that legal person is subject to an effective court judgment of conviction for the criminal acts referred to in point 1 of this paragraph and less than three years have not elapsed from the coming into effect of the court judgment.

5. The heads of administration of an agent (the head and deputy thereof) and the persons responsible for the management of the conduct of payment service business (heads of structural subdivisions) (hereinafter in this Law the agent’s heads of administration (the head and deputy thereof) and the agent’s person responsible for the management of the conduct of payment service business (heads of structural subdivisions) collectively: ‘managers of an agent’), where the agent is not a payment service provider, must be fit and proper. The fitness and propriety of the managers of the agent, where the agent is not a payment service provider, shall be assessed in accordance with the procedure laid down by legal acts of the supervisory institution. The fitness of the managers of the agent, where the agent is not a payment service provider, shall be assessed having regard to the level and type of a person’s education, improvement of qualifications, nature and duration of professional activities or work experience as well as other factors likely to affect the person’s qualification and experience. The managers of the agent, where the agent is not a payment service provider, shall be mutatis mutandis subject to the propriety requirements set out in paragraph 4 of this Article.

6. A payment institution must notify the supervisory authority in accordance with the procedure laid down thereby of envisaged changes in the managers of the payment institution, except in the cases referred to in paragraph 9 of this Article, when the notification is not required, and also supply information, as specified by the supervisory authority, which is necessary for evaluating whether the managers comply with the requirements applicable to them pursuant to paragraphs 3 or 4 of this Article. The newly elected/appointed managers of the payment institution may assume office only where the supervisory authority does not object to their candidacies. The supervisory authority shall have the right to object to the candidacies of the managers of the payment institution where they do not meet the requirements set out in paragraphs 3 to 4 of this Article.

7. Where an agent is not a payment service provider, a payment institution must ensure and, at the request of the supervisory authority, demonstrate that the managers of the agents acting on behalf of the payment institution meet the requirements set out in paragraph 7 of this Article.

8. Where, within 30 working days of notification of envisaged changes in the managers and of receipt of all required information, the supervisory authority does not express its objection, it shall be considered that the supervisory authority does not object to the candidacies of the managers to be elected/appointed.

9. It shall be considered that the supervisory authority does not object to the candidacy of the manager of a payment institution to be elected/appointed where:

1) the person is elected or appointed to a new post at the same payment institution whereat the person’s candidacy has already been assessed and not objected to by the supervisory authority, or is repeatedly elected or appointed to the same post at the same payment institution and at the time of election or appointment to the new post meets the requirements set out in paragraphs 3 and 4 of this Article;

2) the person is elected or appointed when for the purpose of ensuring safe and sound operation of a payment institution there is a need to elect or appoint its manager without delay, and for this reason the payment institution is unable to notify in advance the supervisory authority of the envisaged change of the manager of the payment institution.

10. A payment institution that has appointed or elected the manager in the cases referred to in paragraph 9 of this Article shall notify the supervisory authority in accordance with the procedure and within the time limits laid down thereby.

Article 10. Qualifying holding of the authorised capital and/or of the voting rights in a payment institution

The acquisition and loss of a qualifying holding of the authorised capital and/or of the voting rights in a payment institution, the loss of voting rights held by an acquirer, and the assessment of the proposed acquisition shall mutatis mutandis be subject to provisions of Articles 24 and 25 of the Law on Banks.

CHAPTER IV

RIGHTS OF A PAYMENT INSTITUTION AND OF A PAYMENT INSTITUTION OF ANOTHER MEMBER STATE

Article 11. Right of a payment institution to provide payment services in other Member States

1. A payment institution shall have the right to provide payment services in another Member State by establishing a branch, through an agent or without establishing a branch in accordance with the procedure laid down in this Article.

2. A payment institution intending to provide payment services in another Member State without establishing a branch shall inform about that the supervisory authority indicating its name, address, licence number, the Member State where it intends to provide payment services, and where the payment institution intends to provide payment services in another Member State by establishing a branch, the supervisory authority shall also be provided with the information referred to in points 3 and 6 of Article 5(2) of this Law about activities in another Member State, a description of the structural organisation of the branch, the identity of the manager/managers of the branch and a description of the obligation to carry out inspections of the branch at least annually. Where the payment institution intends provide payment services through an agent, the supervisory authority must also be provided with information referred to in Article 18(1) of this Law. A payment institution intending to outsource the performance of operational functions to a third party in another Member State shall notify thereof the supervisory authority. A detailed procedure for notification of the intention to provide payment services in another Member State, to delegate the performance of operational functions to a third party, examination of such notification and detailed requirements for the content and format of the submitted documents as referred to in this paragraph shall be set out by the supervisory authority.

3. The supervisory authority must forward information supplied by a payment institution and referred to in paragraph 2 of this Article to the supervisory authority of another Member State within one month of receipt of all information. The payment institution must be informed without delay of the forwarding of information or of the refusal to forward it to the supervisory authority of another Member State.

4. Where a payment institution has already established at least one branch in another Member State, the procedure laid down in this Article shall not apply to the establishment of other branches thereof in that Member State.

5. Where the assessment of a payment institution carried out by the supervisory authority taking account of the opinion of another Member State and supplied information is negative, the supervisory authority must refuse including the payment institution’s branch or agent in the public list of payment institutions referred to in Article 13 of this Law or remove it from this list where the payment institution’s branch or agent has already been included in the list.

6. The supervisory authority must take a decision on the inclusion of a payment institution’s branch or agent in the public list of payment institutions or a decision on authorisation of the payment institution to provide payment services in another Member State without establishing a branch and communicate the decision to the supervisory authority of another Member State and the payment institution within three months of receipt of information referred to in paragraph 2 of this Article. Where the supervisory authority disagrees with the assessment provided by the supervisory authority of another Member State regarding the payment institution’s intention to provide payment services by establishing a branch, through an agent, or without establishing a branch in another Member State, its decision notified to the supervisory authority of another Member State shall be accompanied by the reasons for the disagreement.

7. A payment institution’s branch or agent shall have the right to start providing payment services in another Member State after it is included in the public list of payment institutions referred to in Article 13 of this Law. The supervisory authority shall notify the payment institution of inclusion in the list within three working days of inclusion in the list.

8. A payment institution may start providing payment services in another Member State without establishing a branch from the date on which the supervisory authority notified the payment institution of its decision to authorise the provision of payment services in another Member State.

9. A payment institution must notify the supervisory authority in accordance with the procedure laid down thereby, of the date on which it is to start providing payment services by establishing a branch in another Member State or through an agent, and the supervisory authority must forward this information to the supervisory authority of another Member State.

10. A payment institution must notify the supervisory authority without delay of changes in the data referred to in paragraph 2 of this Article, as well as of new agents, branches or third parties to whom the performance of operational functions is outsourced in another Member State. In such a case, the procedure laid down in this Article shall apply.

11. Having received from the supervisory authority of another Member State information that a payment institution providing payment services by establishing a branch, through an established branch or through an agent involved by the payment institution in another Member State fails to comply with provisions of the legal acts of another Member State implementing Directive (EU) 2015/2366, the supervisory authority shall assess such information and, in order to preclude further infringement of these legal acts, take all necessary measures without delay. The supervisory authority shall notify the supervisory authority of another Member State and supervisory authorities of other Member States involved of the application of such measures.

12. The supervisory authority shall submit to the supervisory authority of another Member State information requested by the latter, in particular regarding the actual or suspected infringements committed by a payment institution providing payment services without establishing a branch, by a branch established or an agent involved by the payment institution in another Member State, as well as, on its initiative, all other relevant information, including information on whether the payment institution has its head office and conducts the payment service business in the Republic of Lithuania.

13. The supervisory authority shall, pursuant to the requirements set out in this Article, except for paragraph 14 thereof, cooperate and exchange information with the supervisory authority of another Member State in accordance with the procedure laid down by a delegated act adopted by the European Commission within the meaning of Article 28(5) of Directive (EU) 2015/2366.

14. In exercising supervision and imposing sanctions against a payment institution providing payment services in another Member State by establishing a branch, through an agent or without establishing a branch, the supervisory authority shall cooperate with the supervisory authority of another Member State in accordance with the procedure laid down by a delegated act adopted by the European Commission within the meaning of Article 29(6) of Directive (EU) 2015/2366.

Article 12. Right of a payment institution of another Member State to provide payment services in the Republic of Lithuania

1. A payment institution of another Member State may provide payment services in the Republic of Lithuania by establishing a branch, through an agent or without establishing a branch in the accordance with the procedure laid down in this Article.

2. Having received from the supervisory authority of another Member State information on the intention of a payment institution of another Member State to provide payment services by establishing a branch, through an agent or without establishing a branch in the Republic of Lithuania, the supervisory authority shall assess such information together with information referred to in Article 11(2) of this Law and submitted by the payment institution within one month of receipt of such information and provide to the supervisory authority of another Member State its opinion and available information related to the intention of the payment institution of another Member State to provide payment services in the Republic of Lithuania.

3. A payment institution of another Member State may start providing payment services in the Republic of Lithuania without establishing a branch after the supervisory authority of another Member State notifies the supervisory authority of a decision to authorise the payment institution to provide payment services in the Republic of Lithuania.

4. A branch or an agent of a payment institution of another Member State shall have the right to start providing payment services in the Republic of Lithuania after they are included in the public list of payment institutions of another Member State.

5. Where a payment institution of another Member State has already established at least one branch in the Republic of Lithuania, the procedure laid down in this Article shall not apply to the establishment of other branches thereof.

6. Where the supervisory authority has reasonable grounds for suspecting that, in connection with the establishment of a branch or involvement of an agent by a payment institution of another Member State, money laundering and/or terrorist financing has taken, is taking or will take place or that the establishment of such a branch or involvement of such an agent could increase the risk of money laundering and/or terrorist financing, it shall inform the supervisory authority of another Member State accordingly.

7. The supervisory authority shall, pursuant to the requirements set out in this Article, except for paragraph 8 thereof, cooperate and exchange information with the supervisory authority of another Member State in accordance with the procedure laid down by a delegated act adopted by the European Commission within the meaning of Article 28(5) of Directive (EU) 2015/2366.

8. The supervisory authority shall cooperate and exchange information with the supervisory authority of another Member State supervising a payment institution of another Member State providing payment services in the Republic of Lithuania by establishing a branch, through an agent or without establishing a branch in the Republic of Lithuania and imposing sanctions against such a payment institution in accordance with the procedure laid down by a delegated act adopted by the European Commission within the meaning of Article 29(6) of Directive (EU) 2015/2366.

Article 13. Public list of payment institutions

1. Payment institutions holding a licence issued by the supervisory authority and registered with the Register of Legal Entities, branches of payment institutions operating in other Member States and agents shall be entered in a public list of payment institutions specifying the payment services for which the licence has been issued. The entities referred to in Article 8(1) and (4) of the Law on Payments and the description of their activities within the meaning of Article 8(6) of the Law on Payments shall also be entered in the public list of payment institutions.

2. The manager of the public list of payment institutions – the supervisory authority – shall enter payment institutions in the public list of payment institutions within two working days of the date on which a licence is obtained and registered with the Register of Legal Entities, agents thereof – within two months of the date on which all documents and data referred to in Article 18(1) of this Law are received, the branches and agents of payment institutions operating in other Member States – within three months of the date on which all documents and data referred to in Article 11(2) of this Law are received, and the entities referred to in Article 8(1) and (4) of the Law on Payments – within two working days of the date on which a notification of the services provided is received.

3. Payment institutions holding a payment institution licence shall be entered in the public list of payment institutions separately from payment institutions holding a payment institution licence for restricted activities and from payment institutions providing only an account information service.

4. The supervisory authority shall announce about the entry in the list of a payment institution, withdrawal, suspension or cancellation of suspension of its licence, entry in the list of a payment institution’s branch operating in another Member State and of an agent, entry in the list of the entities referred to in Article 8(1) and (4) of the Law on Payments, as well as about a change in their data or information and shall regularly update this information in the public list of payment institutions published on the website of the supervisory authority.

5. Information referred to in paragraph 4 of this Article shall be notified by the supervisory authority without delay to the European Banking Authority in accordance with the procedure laid down by the delegated acts adopted by the European Commission within the meaning of Article 15(4) and (5) of Directive (EU) 2015/2366.

6. The public list of payment institutions shall be managed in accordance with the procedure laid down in legal acts of the supervisory authority and in delegated acts adopted by the European Commission within the meaning of Article 15(4) and (5) of Directive (EU) 2015/2366.

CHAPTER V

REQUIREMENTS FOR THE CAPITAL AND SAFEGUARDING OF A PAYMENT INSTITUTION

Article 14. Initial capital of a payment institution

1. The initial capital of a payment institution shall be comprised of the sum of one or more of the items specified in Article 26(1)(a) to (e) of Regulation (EU) No 575/2013.

2. A payment institution must hold initial capital in the following amounts:

1) where the payment institution intends to provide only the payment services as referred to in point 6 of Article 5 of the Law on Payments, its capital shall at no time be less than EUR 20 000;

2) where the payment institution intends to provide only payment services as referred to in point 7 of Article 5 of the Law on Payments, its capital shall at no time be less than EUR 50 000;

3) where the payment institution intends to provide the payment services as referred to in points 1 to 5 of Article 5 of the Law on Payments, its capital shall at no time be less than EUR 125 000.

Article 15. Procedure for the formation and use of the capital and reserves of a payment institution

1. The capital buffer (margin buffer) of a payment institution shall be formed of additional contributions of shareholders of the payment institution or deductions from its distributable profit. The purpose of the capital buffer (margin buffer) of the payment institution shall be to guarantee the financial stability of the payment institution. By a decision of an ordinary general meeting of shareholders, the capital buffer (margin buffer) of the payment institution may be used to cover losses of the payment institution or to increase its authorised capital.

2. The capital reserve (share premium) of a payment institution shall be formed of the difference of income resulting from the sale of newly issued shares at issue price exceeding their nominal value. By a decision of an ordinary general meeting of shareholders, the capital reserve (share premium) of the payment institution may be used to cover losses of the payment institution and included in the result available for appropriation or may be used to increase its authorised capital.

3. The legal reserve or reserve capital and other reserves shall be formed in accordance with the procedure laid down by the Law on Financial Institutions and the Law on Companies.

Article 16. Own funds of a payment institution

1. The Common Equity Tier 1 capital of a payment institution within the meaning of Article 50 of Regulation (EU) No 575/2013 may not be less than 75 % of Tier 1 capital.

2. Tier 2 capital of a payment institution may not exceed one third of Tier 1 capital.

3. A payment institution’s own funds shall, at no time, fall below either of the following amounts, whichever is the higher:

1) the initial capital referred to in Article 14(2) of this Law;

2) the own funds requirement calculated according to the methods specified by legal acts of the supervisory authority.

4. A payment institution may not make the multiple use of elements eligible for own funds where it belongs to the same group as another payment institution, credit institution, financial brokerage firm, management company or insurance undertaking. This provision shall also apply where the payment institution carries out activities other than providing payment services.

5. The procedure for the calculation and application of own funds of a payment institution providing payment services referred to in points 1 to 6 of Article 5 of the Law on Payments shall be laid down by the supervisory authority.

4. The supervisory authority may, based on an evaluation of the risk management process, risk loss data base and internal control mechanisms, determine for a payment institution an individual amount of own funds – up to 20 % lower or higher than the own funds requirement calculated according to the methods specified by legal acts of the supervisory authority.

Article 17. Requirements for safeguarding of funds of payment service users

1. A payment institution providing payment services referred to in points 1 to 6 of Article 5 of the Law on Payments must safeguard the funds of payment service users received directly from the payment service users or through another payment service provider for the execution of payment transactions, in either of the following ways:

1) by not commingling these funds at any time with the funds of any natural or legal person other than the payment service users. Where the funds are still held by the payment institution and not yet delivered to the payee or transferred to another payment service provider by the end of the business day following the day when the funds have been received, they must be deposited in a separate account in a credit institution of the Republic of Lithuania (including a branch of a foreign credit institution established in the Republic of Lithuania) or a credit institution of another Member State, the Bank of Lithuania or a central bank of another Member State or invested in secure, liquid low-risk assets in accordance with the procedure laid down by legal acts of the supervisory authority. The payment institution must, while safeguarding in accordance with the method specified in this point the funds of the payment service users received directly from the payment service users or through another payment service provider for the execution of payment transactions, take steps to ensure the protection of the rights of ownership of the payment service users, in particular in the event of insolvency of the payment institution. The payment service users’ funds transferred to the payment institution for the provision of payment services shall be the ownership of the payment service users, and no execution may be levied against such funds according to debts of the payment institution;

2) by covering these funds by an insurance policy or obtaining a guarantee or a surety bond issued by an insurance undertaking or a credit institution of the Republic of Lithuania (including a branch of a foreign insurance undertaking or a credit institution established in the Republic of Lithuania) or an insurance company or a credit institution of another Member State which does not belong to the same group as the payment institution itself, for an amount equivalent to that which would have been segregated in the case of application of the method indicated in point 1 of paragraph 1 of this Article, payable in the event that the payment institution is unable to meet its obligations.

2. Where a portion of the funds received by a payment institution from payment service users or through another payment service provider is to be used for future payment transactions with the remaining amount to be used for non-payment services, that portion of the funds to be used for future payment transactions shall also be subject to the requirements of paragraph 1 of this Article. Where that portion is variable or unknown in advance, the payment institution may calculate this portion on the basis of a representative portion assumed by the payment institution to be used for payment services provided such a representative portion can be reasonably estimated on the basis of historical data in compliance with the requirements set out in this Law.

3. Detailed requirements for the implementation of the safeguarding of the payment service users’ funds referred to in paragraph 1 of this Article shall be set out by the supervisory authority.

4. A payment institution must, one month in advance, give a notice to the supervisory authority of material changes in the safeguarding requirements of this Article applicable to payment service users’ funds.

CHAPTER VI

OTHER REQUIREMENTS FOR A PAYMENT INSTITUTION

Article 18. Requirements for a payment institution providing payment services through an agent and entry of the agent in the public list of payment institutions

1. In the cases when a payment institution intends to provide payment services through an agent, it must submit to the supervisory authority an application for entering the agent in the public list of payment institutions, a description of the obligation to carry out inspections of the agent at least annually and the following information on the agent:

1) where the agent is a legal person – the name, address and registration number; where the agent is a natural person – the forename, surname and business address;

2) a description of the internal control mechanisms that will be used by the agent in order to comply with the requirements provided for in the Law on the Prevention of Money Laundering and Terrorist Financing (where the agent is registered in the Republic of Lithuania), laws of another Member State implementing Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ 2015, L 141, p. 73), and Regulation (EU) No 2015/847;

3) the identities of the agent’s managers (the forename, surname, personal number (where the person has no personal number – the date and place of birth) and where the agent is not a payment service provider – also the documents demonstrating that the agent’s managers meet the requirements of Article 9(5) of this Law;

4) the payment services which the agent is authorised to provide.

2. Where payment services are to be provided through an agent who is a natural person, requirements of points 1, 2, 3 and 4 of paragraph 1 of this Article shall apply mutatis mutandis.

3. The supervisory authority must, within two months of receipt of documents, data and/or information referred to in paragraph 1 of this Article, take a decision and inform the payment institution whether its agent has been included in the list of payment institutions referred to in Article 13 of this Law. The agent shall have the right to start providing payment services from its entry in the list of payment institutions.

4. Where the supervisory authority considers that information provided about an agent is incorrect or incomplete, it shall have the right to take the action provided for in Article 5(5) of this Law and request to submit additional information.

5. The supervisory authority shall provide a justified refusal to include an agent in the list of payment institutions where:

1) the submitted documents, data and/or information accompanying the application do not meet the requirements of this Law and legal acts of the supervisory authority regulating the procedure of application of such requirements, the payment institution that has submitted the application does not submit the documents, data and/or information specified in paragraph 1 of this Article by the deadline fixed by the supervisory authority when the latter requires to submit missing and/or updated documents, data and/or information necessary for taking the decision, or not all additionally requested documents, data and/or information are submitted or they are incorrect;

2) the agent’s managers do not meet requirements of Article 9(5) of this Law;

3) where the supervisory authority has reasonable grounds for suspecting that, in connection with the intended involvement of the agent, money laundering and/or terrorist financing will take place or the risk of money laundering and/or terrorist financing will increase.

6. In the cases when a payment institution no longer intends to provide payment services through an agent, it must request the supervisory authority to remove this agent from the public list of payment institutions. The supervisory authority must remove the agent from the public list of payment institutions within five business days of receipt of the payment institution’s request.

7. The supervisory authority shall have the right to remove an agent of a payment institution from the public list of payment institutions where the agent does not meet the requirements laid down in point 2 or 3 of paragraph 5 of this Article or a decision to enter the agent in the public list of payment institutions was taken on the basis of incorrect information provided. The supervisory authority must notify the payment institution without delay of the removal of its agent from the public list of payment institutions.

8. A payment institution must notify the supervisory authority without delay of any changes in the data and/or information referred to in paragraph 1 of this Article. Where an agent of a payment institution is not a payment service provider, in the event of changes in the managers of the payment institution’s agent, the payment institution must indicate the identities of the agent’s managers (the forename, surname, personal number (where the person has no personal number – the date and place of birth) and confirm that they meet the requirements of Article 9(5) of this Law.

9. A detailed procedure for the submission and examination of an application referred to in paragraph 1 of this Article and detailed requirements for the content and format of the submitted documents referred to in paragraph 1 of this Article shall be set out by the supervisory authority.

Article 19. Requirements for a payment institution outsourcing its operational functions to a third party

1. A payment institution intending to outsource the operational functions of payment service business to a third party must inform the supervisory authority accordingly no later than one month in advance.

2. Important operational functions of a payment institution, including functions relating to information technology systems, may not be outsourced to a third party where their outsourcing would significantly impair the quality of the payment institution’s internal control and the ability of the supervisory authority to monitor the payment institution’s compliance with all obligations laid down by this Law and/or other legal acts of the supervisory authority applicable to its business. For the purposes of this Law, important operational functions shall be the functions in the event of non-fulfilment or improper fulfilment of which the payment institution would no longer meet the requirements set out for the issue of its licence or other requirements of this Law and/or legal acts of the supervisory authority applicable to the payment institution’s business, or the stability and sound activities of the payment institution, or the continuity of payment services provided by it would be impaired.

3. A payment institution outsourcing its important operational functions to a third party must meet the following conditions:

1) the outsourcing may not result in the delegation by managers of the payment institution of their responsibility;

2) the relationship of the payment institution towards its payment service users may not be altered and their obligations under this Law and the Law on Payments must be met;

3) the duty of the payment institution to comply with the requirements of Chapters II, III and IV of this Law may not be modified or reduced.

4. A payment institution must communicate to the supervisory authority without delay any changes regarding the outsourced operational functions of payment service business and the third parties to whom they have been outsourced.

5. The procedure for outsourcing the operational functions of payment service business shall be laid down by the supervisory authority.

Article 20. Requirements for professional indemnity insurance or other comparable guarantee when a payment institution provides an account information service and/or a payment initiation service

1. A payment institution providing a payment initiation service shall be required to hold either a professional indemnity insurance or other comparable guarantee against liability resulting from non-fulfilment or improper fulfilment of its obligations referred to in Articles 38, 51, 52 and 53 of the Law on Payments.

2. A payment institution providing an account information service shall be required to hold either a professional indemnity insurance or other comparable guarantee against its liability vis-à-vis an account servicing payment service provider or a payment service user resulting from non-authorised or fraudulent access to or non-authorised or fraudulent use of payment account information.

3. A professional indemnity insurance contract or a contract for other comparable guarantee referred to in paragraphs 1 and 2 of this Article must be concluded by an insurance undertaking or a credit institution of the Republic of Lithuania (including a branch of an insurance undertaking or a credit institution of a foreign state operating in the Republic of Lithuania) or by an insurance undertaking or a credit institution of another Member State covering the territories of those Member States in which the payment institution offers the service during the entire period of its activities. The amount of the professional indemnity insurance or other comparable guarantee must not be lower than the amount calculated in observance of requirements of the guidelines issued by the European Banking Authority as specified in Article 5(4) of Directive (EU) 2015/2366.

4. Upon the expiry of a professional indemnity insurance contract or a contract for other comparable guarantee, a payment institution providing an account information service and/or a payment initiation service must, within five business days of the expiry date, submit to the supervisory authority in accordance with the procedure laid down thereby the changed documents and data substantiating the minimum rate of the amount of professional indemnity insurance or other comparable guarantee.

Article 21. Additional duties of a payment institution

1. Provision of payment services by establishing a branch or through an agent and outsourcing of all or part of important operational functions shall not release a payment institution from compliance with this Law.

2. A payment institution outsourcing all or part of important payment services to third parties must take all necessary steps to ensure compliance with this Law.

3. A payment institution must ensure that the branches and agents acting on its behalf inform payment service users that payment services are provided through a branch of the payment institution or through an agent.

4. Article 55 of the Law on Banks shall apply mutatis mutandis to the protection of secrecy of a payment institution.

Article 22. Accounting, financial statements and other reports and audit of a payment institution

1. A payment institution must keep accounts in accordance with the Accounting Law of the Republic of Lithuania.

2. A payment institution must draw up sets of interim financial statements and annual financial statements. The financial year of the payment institution shall correspond to the calendar year.

3. The formats, procedure of preparation and submission of reports for supervisory purposes shall be laid down by legal acts of the supervisory authority.

4. A payment institution which provides the payment services referred to in points 1 to 6 of Article 5 of the Law on Payments and which is subject to mandatory audit of financial statements must submit to the supervisory authority audited financial statements and a report on audit of financial statements that must disclose separate accounting information on the correctness of segregation of payment service business and other business carried out and observations regarding internal control mechanisms put in place by the payment institution to ensure compliance with the requirements for safeguarding of funds of payment service users set out in Article 17 of this Law.

5. Requirements for audit of a set of financial statements of a payment institution, the auditor and the audit firm, their duties and responsibility shall be set out in the Law on Financial Institutions, the Law on Companies and the Law on the Audit of Financial Statements

6. A payment institution which is a financial undertaking must ensure the performance of internal audit functions. The payment institution may outsource these functions to a third party. Provisions of Article 19 of this Law shall not apply to the outsourcing of internal audit functions. Detailed requirements for performance of internal audit functions shall be set out by the supervisory authority.

Article 23. Examination of complaints (requests) and storage of information

1. Complaints (requests) of payment service users concerning services provided by payment institutions (hereinafter: a ‘complaint’) must be examined by the payment institutions in accordance with the procedure laid down by the supervisory authority. A payment institution must examine a written complaint of a payment service user and, no later than within 15 business days of receipt of the complaint, provide on paper or, if so agreed between the payment service user and the payment institution, on another durable medium a detailed, reasoned and documented reply to the complaint. In exceptional cases, where the reply cannot be provided within 15 business days for reasons beyond the control of the payment institution, it shall be required to send a holding reply, explicitly indicating the reasons for the delay in replying to the complaint and specifying the deadline by which the payment service user will receive the final reply. In any event, the deadline for receiving the final reply may not exceed 35 business days. The payment institution shall examine payment service users’ complaints free of charge.

2. Complaints regarding payment services provided in the Republic of Lithuania shall be examined in the Lithuanian language or in another language if so agreed between a payment institution and a payment service user.

3. A payment institution must store data on the implementation of provisions of this Law for at least five years, unless the Law on Prevention of Money Laundering and Terrorist Financing and other legal acts establish longer retention periods for such data.

CHAPTER VII

SUPERVISION OF PAYMENT INSTITUTIONS AND LIABILITY FOR INFRINGEMENTS OF THIS LAW

Article 24. Supervisory authority

1. The supervisory authority shall carry out supervision of the payment institutions that hold a licence issued in accordance with the procedure laid down by this Law, including their branches in other Member States.

2. Supervision shall be carried out in accordance with the Law of the Republic of Lithuania on the Bank of Lithuania, this Law, the Law on Financial Institutions and other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority.

3. Supervision of payment institutions of other Member States providing services in the Republic of Lithuania without establishing a branch or through an agent and supervision of branches established in the Republic of Lithuania by payment institutions of other Member States shall be carried out in compliance with provisions of Article 30 of this Law.

4. Supervision of licensed payment institutions shall not imply that the supervisory authority shall also supervise the payment institutions’ business provided for in points 2 and 3 of Article 4(2) of this Law.

Article 25. Repealed as of 1 August 2018.

Article 26. Protection of information received for supervisory purposes

Provisions of Article 43 of the Law on Banks shall apply mutatis mutandis to the protection of information received for the purpose of supervision of payment institutions.

Article 27. Duties and rights of the supervisory authority

1. In addition to other duties and rights specified in this Law and other legal acts, the supervisory authority shall have the right:

1) where the decisions taken by bodies of a payment institution pose a threat to the stability and soundness of activities of the payment institution, to refer to court to declare such decisions void according to the procedure laid down by law;

2) where the payment institution’s non-payment services activities impair or are likely to impair either the financial soundness of the payment institution or the ability to monitor the payment institution’s compliance with all requirements set out by this Law, to require the establishment of a separate legal person for the payment services business;

3) to conclude agreements on the carrying out of an inspection of the payment institution with audit firms or third parties holding appropriate qualifications in order to determine the value of the payment institution’s assets, the financial situation of the payment institution, to assess the risks taken or inspect other areas of the payment institution’s business. Where after carrying out the inspection it is stated that the payment institution has provided to the supervisory authority incorrect information or other committed infringements of legal acts are identified, the costs of organisation of the inspection incurred by the supervisory authority shall be compensated by the payment institution. The persons referred to in this point who act on the basis of agreements concluded with the supervisory authority shall have the rights granted to the staff of the supervisory authority pursuant to points 1, 3, 11 and 12 of Article 42¹(5) of the Law on the Bank of Lithuania;

4) to request that an audit firm auditing the payment institution’s financial statements be changed, where the audit firm or the auditor does not meet (comply with) statutory requirements.

2. Where the supervisory authority identifies or has grounds for suspecting any infringements of legal acts the supervision of compliance wherewith is assigned to its remit or any shortcomings in the activities of a payment institution or where there is a threat to the stability and soundness of the activities of the payment institution or interests of the public and/or payment service users, the supervisory authority shall give to the payment institution the following mandatory instructions:

1) to eliminate the infringements of legal acts the supervision of compliance wherewith is assigned to the supervisory authority or the shortcomings in the activities of the payment institution within the time limits set by the supervisory authority;

2) not to conclude certain transactions or to reduce their extent, including transactions on the outsourcing of operational functions to third parties;

3) to carry out an audit of its interim financial statements within the time limit set by the supervisory authority;

4) to prepare and implement, within the time limits set by the supervisory authority, an acceptable plan of measures for the restructuring of activities of the payment institution and/or the elimination of the identified infringements and/or shortcomings;

5) to convene a general meeting of shareholders, a meeting of the supervisory board or the board (where they are formed) of the payment institution and to discuss at such meetings the issues proposed by the supervisory authority;

6) to invite the managers of the payment institution to visit the supervisory authority and to provide explanations. The supervisory authority may publish a notice of such an instruction;

7) to restore the state which had existed before the infringement of legal acts;

8) to provide to the supervisory authority additional information or to provide more frequently information necessary for the performance of supervisory functions;

9) to make public additional information;

10) to carry out other actions or to refrain from carrying out certain actions in order to eliminate the infringements of the legal acts or the shortcomings in the activities of the payment institution or to ensure the sound and stable activities of the payment institution.

3. Where the supervisory authority identifies any infringements of legal acts or shortcomings in the activities of a payment institution or a threat to the stability and soundness of the activities of the payment institution, the supervisory authority shall have the right to temporarily establish individual or additional prudential requirements for the payment institution.

4. Payment institutions must fulfil the mandatory instructions specified in paragraphs 2 and 3 of this Article within the time limits set by the supervisory authority and inform the supervisory authority about that in writing immediately, and in any event no later than on the following business day after the fulfilment of an instruction.

5. In accordance with the procedure laid down by the supervisory authority, its staff shall have the right to participate in the work of bodies of a payment institution, namely, to attend meetings or sittings in the capacity of observers or to otherwise monitor the payment institution’s activities.

Article 28. Repealed as of 1 August 2018.

Article 29. Inspections organised by the supervisory authority

1. The supervisory authority shall organise and carry out inspections to monitor compliance with requirements of this Law and other legal acts the supervision of compliance wherewith is assigned to its remit.

2. Inspections of payment institutions, their branches, agents and third parties to whom operational functions are outsourced, including branches, agents and third parties to whom the performance of operational functions is outsourced in another Member State shall be carried out by the staff of the supervisory authority.

3. Requirements for the inspections organised by the supervisory authority shall be set out in Article 42¹ of the Law on the Bank of Lithuania. When carrying out an inspection, the staff of the supervisory authority shall have the rights provided for in the Law on the Bank of Lithuania and this Law.

4. On instruction of the supervisory authority of another Member State, the supervisory authority shall, upon giving a prior notice to the supervisory authority of another Member State and acting in compliance with provisions of this Article, have the right to inspect in the Republic of Lithuania a branch of a payment institution of another Member State, its agent and a third party to whom operational functions have been outsourced. The supervisory authority of another Member State must notify the supervisory authority of its intention to inspect in the Republic of Lithuania the branch of the payment institution of another Member State, its agent and the third party to whom operational functions have been outsourced.

5. In performing its functions relating to application of provisions of the Law on Prevention of Money Laundering and Terrorist Financing and Regulation (EU) No 2015/847 and acting in compliance with provisions of this Article, the supervisory authority shall have the right, on its own initiative, to inspect in the Republic of Lithuania a branch of a payment institution of another Member State, its agent and a third party to whom operational functions have been outsourced.

6. The supervisory authority must notify the supervisory authority of another Member State of the intention to inspect in another Member State a branch of a payment institution, its agent and a third party to whom operational functions have been outsourced. The supervisory authority may delegate to the supervisory authority of another Member State the task of inspecting in another Member State the branch of the payment institution, its agent or the third party to whom operational functions have been outsourced.

Article 30. Supervision of payment institutions of other Member States operating in the Republic of Lithuania

1. Supervision of the payment institutions of other Member States providing services in the Republic of Lithuania without establishing a branch and supervision of the branches established in the Republic of Lithuania by the payment institutions of other Member States and their agents shall be exercised by the supervisory authority of another Member State; however, this shall not restrict the right of the supervisory authority to exercise their supervision in accordance with provisions of this Article.

2. Where the supervisory authority ascertains that a payment institution of another Member State providing payment services in the Republic of Lithuania without establishing a branch or a branch established in the Republic of Lithuania by a payment institution of another Member State or its agent does not comply with provisions of this Law, the Law on Payments and legal acts of the supervisory authority implementing them, the supervisory authority shall inform the supervisory authority of another Member State without delay and request to take all possible action to eliminate existing or potential infringements.

3. Where the supervisory authority of another Member State fails to take action or its action, in the opinion of the supervisory authority of the Republic of Lithuania, is insufficient to ensure compliance with provisions of this Law, the Law on Payments and legal acts of the supervisory authority implementing them or where, disregarding the action taken by the supervisory authority of another Member State, a payment institution of another Member State providing payment services in the Republic of Lithuania without establishing a branch or a branch established in the Republic of Lithuania by a payment institution of another Member State or its agent does not put an end to non-compliance with the provisions this Law, the Law on Payments and the legal acts of the supervisory authority implementing them, the supervisory authority shall have the right, subject to giving a prior notice to the supervisory authority of another Member State, to impose sanctions laid down by this Law.

4. In an emergency situation, where immediate action is necessary to address a serious threat to the collective interests of payment service users in the Republic of Lithuania, the supervisory authority shall, in parallel to the cross-border cooperation between supervisory authorities, also have the right to impose sanctions laid down by this Law derogating from provisions of paragraphs 2 and 3 of this Article.

5. Sanctions imposed under paragraph 4 of this Article must be appropriate and proportionate to their purpose to protect against a serious threat to the collective interests of payment service users in the Republic of Lithuania; however, they may not result in a preference of payment service users of a payment institution of another Member State in the Republic of Lithuania over payment service users of a payment institution of another Member State in other Member States. Such measures must be temporary and must be terminated when the serious threats identified are addressed, including with the assistance of or in cooperation with the supervisory authorities of another Member State or with the European Banking Authority as provided for in Article 31(1) of his Law.

6. The supervisory authority shall inform the supervisory authorities of another Member State and those of any other Member States concerned, the European Commission and the European Banking Authority without undue delay of sanctions imposed under paragraph 4 and of this Article.

7. In order to monitor compliance with provisions of the Law on Payments and legal acts of the supervisory authority implementing them as well as for information and/or statistical purposes, the supervisory authority shall have the right to require that a payment institution of another Member State having a branch or providing payment services through an agent in the Republic of Lithuania report to the supervisory authority periodically on payment service business conducted by the branch or the agent in the Republic of Lithuania. Provisions of Article 65 of the Law on Banks shall apply mutatis mutandis to the protection of such information. The supervisory authority shall, taking account of a delegated act adopted by the European Commission as provided for in Article 29(6) of Directive (EU) 2015/2366, determine the composition, formats, procedure of preparation and submission of such reports.

8. Where conditions provided for in Article 29(5) of Directive (EU) 2015/2366 exist, the supervisory authority shall have the right to require that a payment institution of another Member State providing payment services in the Republic of Lithuania through an agent under the right of establishment to appoint a contact point in the Republic of Lithuania to ensure adequate communication and information reporting on compliance with provisions of the Law on Payments and legal acts of the supervisory authority implementing them and to facilitate supervision by the supervisory authority and those of another Member State of payment institutions of other Member States providing payment services through agents, including by providing supervisory authorities with documents and information on their request.

Article 31. Cooperation with the European Central Bank, the European Commission, the European Banking Authority, national central banks and supervisory authorities of other Member States

1. In performing the functions assigned to it under this Law, the supervisory authority shall cooperate with the supervisory authorities of other Member States, the European Central Bank, the European Banking Authority, national central banks of other Member States, supervisory authorities of other payment service providers.

2. The supervisory authority shall inform the European Commission of the number of payment institutions holding a payment institution licence for restricted activities and, on an annual basis, of the total value of payment transactions executed by them as of 31 December of each calendar year.

Article 32. Settlement of disagreements between competent authorities of different Member States

1. Where the supervisory authority considers that, in a particular matter, cross-border cooperation with supervisory authorities of another Member State referred to in Articles 11, 12, 29, 30 and 31 of this Law does not comply with the relevant conditions set out in those provisions, it may refer the matter to the European Banking Authority and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.

2. The supervisory authority shall defer its decisions pending resolution under Article 19 of Regulation (EU) No 1093/2010

Article 33. Sanctions

1. The supervisory authority shall impose the following sanctions upon persons:

1) make public information regarding an infringement of this Law and other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority and the person who has committed it;

2) issue a warning regarding an infringement of this Law and other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority and instruct to put an end to the infringement within a set time limit;

3) impose the fines specified by this Law;

4) apply a temporarily ban on the provision of one or more payment services;

5) apply a temporary or permanent ban on activities of one or more branches or agents of a payment institution. Where the supervisory authority takes a decision on a temporary ban of activities of a branch or an agent, the branch or the agent shall not have the right to provide payment services, and where a decision is taken on a permanent ban of activities of a branch or an agent, the branch or the agent shall be removed from the public list of payment institutions, and the payment institution must, without delay, take a decision on the termination of the activities of such a branch or agent;

6) temporarily suspend from office the manager/managers of a payment institution or of its agent or suspend from office the manager/managers of the payment institution or of its agent and require that he/they be removed from office and/or a contract concluded with him/them be terminated or he/they be divested of his/their powers;

7) temporarily suspend/restrict the voting right of a shareholder of a payment institution;

8) appoint a temporary representative for supervision of the payment institution’s activities (hereinafter: a ‘representative for supervision of activities’);

9) temporarily restrict the right to dispose of the funds in accounts opened with credit institutions, payment institutions and electronic money institutions and of other assets;

10) withdraw or suspend the issued licence.

2. The supervisory authority shall impose the following sanctions upon a payment institution of another Member State providing payment services in the Republic of Lithuania without establishing a branch, through an agent or a branch established in the Republic of Lithuania:

1) issue a warning regarding an infringement of this Law and other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority;

2) restrict the right of the branch established by the payment institution of another Member State or its agent to dispose of the funds in accounts opened with credit institutions, payment institutions and electronic money institutions and of other assets;

3) apply a temporary or permanent ban on the provision of one or more payment services in the Republic of Lithuania;

4) apply penalties provided for by this Law.

3. The supervisory authority must take a decision to impose sanctions provided for in points 2 and 3 of paragraph 2 of this Article upon a payment institution of another Member State providing payment services in the Republic of Lithuania without establishing a branch, through an agent or a branch established in the Republic of Lithuania where the supervisory authority of that Member State requests so.

4. Repealed as of 1 August 2018.

Article 34. Grounds and procedure for imposing sanctions

1. The supervisory authority shall impose the sanctions specified by this Law in the presence of any of the following grounds:

1) payment services are provided without the right granted in accordance with the procedure laid down by this Law, or when such a right is restricted under this Law, or other actions or activities prohibited under this Law is carried out;

2) a payment institution has obtained a licence or any other authorisation under this Law on the basis of false statements or by any other irregular means;

3) information specified by this Law or other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority or requested by the supervisory authority is not provided within set time limits or information provided is incorrect, incomplete or inaccurate;

4) the mandatory instructions given by the supervisory authority under Article 27(2) and (3) of this Law are not fulfilled or are fulfilled improperly;

5) the requirements set out for the issuance of a payment institution licence are no longer met;

6) one or more persons appointed to or holding the posts of managers of a payment institution do not meet the repute, propriety, qualification and experience requirements set out by this Law;

7) inspections carried out by the supervisory authority or its authorised persons are hindered;

8) other infringements of this Law or other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority are committed or there is a threat that due to the activities or financial condition of a payment institution the interests of the public and/or payment service users may be infringed or the functioning of the system of payment institutions of the Republic of Lithuania may be disrupted.

2. The procedure for imposing sanctions shall be laid down by the Law on the Bank of Lithuania.

Article 35. Fines

1. The supervisory authority shall impose fines:

1) upon legal persons – up to 10 % of the total annual turnover;

2) upon managers of a legal person and other natural persons – up to EUR 50 000.

2. The total annual turnover of a legal person on the basis of which the amount of the imposed fine is set shall be determined according to data of the most recently drawn-up (signed) annual financial statements. Where the legal person belongs to a parent undertaking within the meaning of Article 2(22) of the Law of the Republic of Lithuania on the Supplementary Supervision of Entities in a Financial Conglomerate, the total annual turnover on the basis of which the amount of the fine is set shall be the turnover specified in the most recently drawn-up (signed) annual consolidated financial statements of the principal parent undertaking.

3. Where the infringements listed in Article 34(1) of this Law result in generating illegal income or other pecuniary advantage, avoiding losses or causing damage, and the size of such income or other pecuniary advantage, avoided losses or caused damage, if measurable, exceeds the amounts of fines referred to in paragraphs 1 or 4 of this Article, the supervisory authority shall impose a fine of up to a double amount of the illegally generated income, other pecuniary advantage, avoided losses or caused damage.

4. Where it is difficult or impossible to determine the total annual turnover of a legal person or where the total annual turnover of the legal person is smaller than EUR 1 000 000, the supervisory authority shall impose upon the legal person a fine in the amount of up to EUR 100 000 instead of the fine referred to in point 1 of paragraph 1 of this Article.

5. In the cases referred to in Article 34(1)(4) of this Law, the supervisory authority shall impose for each day of the non-fulfilment or improper fulfilment of a mandatory instruction a fine in the amount of up to 1 % of the total annual turnover, and where it is difficult or impossible to determine the total annual turnover – up to EUR 1 500.

6. Fines shall be calculated in accordance with the procedure laid down in Article 43³ of the Law on the Bank of Lithuania.

Article 36. Suspension from office of the manager/managers of a payment institution

1. As of the serving upon a payment institution of the supervisory authority’s decision to suspend from office the manager/managers of the payment institution, the person who has been suspended from office shall not have the right to perform his functions and all the decisions taken by him/them following the serving of such a decision of the supervisory authority upon the payment institution shall be null and void.

2. Where the supervisory authority takes a decision to suspend from office the manager/managers of a payment institution and requires that he/they be removed from office and/or a contract concluded with him/them be terminated or he/they be divested of his/their powers, the body of the payment institution which has such rights must, within the time limit laid down in the decision of the supervisory authority, remove such a person/persons from office and/or terminate the contract concluded with him/them or divest him/them of his/their powers.

3. A notice of a decision taken on suspension from office of the manager/managers of a payment institution shall be given to the payment institution and the Register of Legal Entities and shall also be published on the website of the supervisory authority.

4. Provisions of paragraphs 1, 2 and 3 of this Article shall apply mutatis mutandis to suspension from office of an agent’s manager.

Article 37. Representative for supervision of activities

1. In urgent cases, when possessing data about a threat to the safe and sound activities of a payment institution, the supervisory authority shall have the right to appoint a representative for the supervision of activities of the payment institution for the purpose of protection of the funds of payment service users or the funds received from another payment service provider and transferred to the payment institution.

2. A legal or natural person may be appointed a representative for supervision of activities. A natural person or the manager of a legal person appointed as a representative for supervision of activities shall be mutatis mutandis subject to the requirements of good repute, qualification and experience set out in Article 9(3) of this Law. Where a natural person is appointed as a representative for the supervision of activities, an assistant of a representative for supervision of activities may also be appointed. Salaries of the representative for supervision of activities and his assistant, taking account of their scope of activities, qualifications and duration of the activities, shall be determined by the supervisory authority. The salaries shall be paid from the funds of a payment institution. A member of the staff of the supervisory authority may not be appointed as a representative for supervision of activities and his assistant.

3. The board and managers of a payment institution must obtain consent of a representative for supervision of activities concerning each decision relating to the activities of the payment institution. All decisions of the board and managers of the payment institution taken without the consent of the representative for supervision of activities after the entry into force of a decision to appoint the representative for supervision of activities shall be null and void.

4. A representative for supervision of activities shall disagree with the decisions taken by the board and managers of a payment institution where they, in his opinion, are not in conformity with the legal acts regulating the safe and sound activities of payment institutions or constitute a threat to the stability and soundness of activities of the payment institution for other reasons. In performing his functions, the representative for supervision of activities shall be mutatis mutandis subject to provisions of points 1, 3, 11 and 12 of Article 42¹(5) of this Law. The representative for supervision of activities must provide the supervisory authority with information specified by it.

5. A notice of a decision taken to appoint a representative for supervision of activities or to remove him from office shall be given not later than on the next business day after the taking of the decision to a payment institution and to the Register of Legal Entities, also published on the website of the supervisory authority.

6. A representative for supervision of activities shall be removed from office when:

1) it is established that a payment institution is capable of operating in a stable and sound manner or, in the opinion of the supervisory authority, application of such a measure is no longer expedient for other reasons;

2) a licence issued to a payment institution is withdrawn.

Article 38. Temporary restriction on the right to dispose of funds and other assets

1. Where the supervisory authority imposes the sanctions referred to in Article 33(1)(9) and Article 33(2)(2) of this Law, a person who is subject to a sanction shall not have the right to dispose of funds in his accounts opened with credit institutions, payment institutions and electronic money institutions and of other assets specified in the decision of the supervisory authority.

2. A decision of the supervisory authority to temporarily restrict the right to dispose of the funds held with the credit institutions, payment institutions and electronic money institutions established in the Republic of Lithuania and of other assets located in the territory of the Republic of Lithuania shall be considered as a property seizure act and shall be registered in the Register of Property Seizure Acts in the cases and in accordance with the procedure laid down by legal acts. The decision must include the data required to register the decision of the supervisory authority in the Register of Property Seizure Acts. In the cases specified by the legal acts governing the Register of Property Seizure Acts, the decision of the supervisory authority may be temporarily registered in the Register of Property Seizure Acts.

Article 39. Repealed as of 1 August 2018.

CHAPTER VIII

TERMINATION AND BANKRUPTCY OF A PAYMENT INSTITUTION

Article 40. Reorganisation and winding up of a payment institution

1. A payment institution may be reorganised or wound up by a decision of the general meeting of its shareholders solely upon obtaining of a prior authorisation of the supervisory authority. The procedure for submitting and examining applications for authorisation to reorganise or to wind up a payment institution and the list of documents and information to be provided together with an application shall be determined by the supervisory authority. A decision on authorisation to reorganise or wind up a payment institution shall be taken within three months of submission of the application for authorisation to the supervisory authority pursuant to provisions of Article 43¹ of the Law on the Bank of Lithuania.

2. Where a decision on reorganisation or winding up of a payment institution is taken by a court, it must, prior to taking such a decision, obtain a conclusion of the supervisory authority regarding the impact of such a decision on the stability and soundness of the entire system of payment institutions.

3. An authorisation to reorganise a payment institution shall be refused where:

1) the submitted documents do not meet the requirements of laws or legal acts of the supervisory authority, not all data specified in legal acts or additionally requested have been provided or they are inaccurate;

2) after reorganisation of the payment institution its rights and obligations related to the provision of payment services will pass on to a legal person who is not authorised to provide payment services in the Republic of Lithuania;

3) it can be concluded that property interests of payment service users will be infringed or a threat can arise to the stability and soundness of the payment institution and the entire system of payment institutions.

4. Where a new payment institution is established after reorganisation of the payment institution, it must to obtain a licence in accordance with the procedure laid down by this Law.

5. An authorisation to wind up a payment institution shall be refused where:

1) the submitted documents to not meet the requirements of laws or legal acts of the supervisory authority, not all data specified in legal acts or additionally requested have been provided or they are inaccurate;

2) it can be concluded that property interests of payment service users will be infringed or a threat can arise to the stability and soundness of the entire system of payment institutions.

6. Paragraphs 1 and 5 of this Article shall not apply where a decision to wind up a payment institution is taken in compliance with Article 8(8) of this Law.

Article 41. Specificities of bankruptcy proceedings of payment institutions

1. Bankruptcy procedures of payment institutions shall also be regulated by the Enterprise Bankruptcy Law of the Republic of Lithuania, unless this Law and the Law on Financial Institutions provide otherwise.

2. The bankruptcy procedure of a payment institution may be conducted only in court.

3. The supervisory authority shall have the right to file with a court a petition to initiate bankruptcy proceedings against a payment institution. Where the petition on initiating bankruptcy proceedings is filed with the court by third parties, the court must obtain a conclusion of the supervisory authority on the insolvency of the payment institution before taking a decision to initiate bankruptcy proceedings against the payment institution. The supervisory authority shall issue such a conclusion within five working days of receipt of the request to issue the conclusion.

4. The administrator of a payment institution shall repay the funds on which the recovery under Article 17 of this Law may not be levied according to obligations of the payment institution.

I promulgate this Law passed by the Seimas of the Republic of Lithuania.

PRESIDENT OF THE REPUBLIC DALIA GRYBAUSKAITĖ

Annex to

the Law of the Republic of Lithuania

on Payment Institutions

EUROPEAN UNION LEGAL ACTS IMPLEMENTED BY THIS LAW

1. Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ 2015 L 337, p. 35).