Translated by the Ministry of Finance
Consolidated version as of 1 January 2015
Law published in the Official Gazette Valstybės žinios. 2009, No 153-6887, ID code 1091010ISTA00XI-549
REPUBLIC OF LITHUANIA
LAW
ON PAYMENT INSTITUTIONS
10 December 2009 No XI-549
Vilnius
CHAPTER ONE
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 engaged in the provision of payment services in the Republic of Lithuania. Provisions of Article 12 of this Law shall apply mutatis mutandis to licensed credit unions.
Article 2. Definitions
1. The “close links” shall be interpreted as defined in the Law of the Republic of Lithuania on the Supplementary Supervision of Entities in a Financial Conglomerate.
2. The “another Member State” shall mean a Member State, with the exception of the Republic of Lithuania.
3. The “payment institution of another Member State” shall mean a legal person established in another Member State to which an authorisation to provide payment services in all Member States has been granted.
4. The “payment institution” shall mean a legal person to which a licence of a payment institution or a payment institution licence for restricted activity (hereinafter the concept “licence” shall be used when a reference is made to both a payment institution licence and a payment institution licence for restricted activity) has been issued.
5. The “branch of a payment institution” (hereinafter referred to as the “branch”) shall mean a structural division of a payment institution which has no legal personality, but which has its own registered office and performs some or all of the functions of the payment institution. All 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.
6. The “agent of a payment institution” (hereinafter referred to as the “agent”) shall mean a natural or legal person which acts on behalf of a payment institution in providing payment services.
8. The “public list of payment institutions” shall mean a publicly available list managed by the supervisory institution and including licensed payment institutions, their branches and agents as well as credit unions.
9. Other concepts used in this Law shall be interpreted as they are defined in the Law of the Republic of Lithuania on Financial Institutions (hereinafter referred to as the “Law on Financial Institutions”), the Law of the Republic of Lithuania on Payments (hereinafter referred to as the “Law on Payments”) and the Law of the Republic of Lithuania on Banks (hereinafter referred to as the “Law on Banks”).
Article 3. Name, Legal Form and Registered Office of a Payment Institution. Legal Acts Regulating the Activities of a Payment Institution
1. The words “payment institution” or other combinations of these words or derivatives thereof may be used in the Republic of Lithuania solely by the persons providing payment services under this Law in their name, for advertising or other purposes.
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 registered 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 adopted by the supervisory institution and its articles of association. The Law on Financial Institutions, the Law of the Republic of Lithuania on Companies and other laws shall apply to a payment institution to the extent this Law does 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 institution.
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
Amendments to the paragraph of this Article:
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
2) to operate payment systems in compliance with the requirements set forth in Article 8 of the Law on Payments;
3) in accordance with the procedure laid down by legal acts, to pursue business activities other than the provision of payment services, with the exception of the cases specified in paragraph 8 of Article 5 and paragraph 10 of Article 6 of this Law;
4) exchange currency (in cash).
Supplemented with the paragraph of this Article:
No. XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
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 indicated in paragraphs 4, 5 or 7 of Article 5 of the Law on Payments, only if the following conditions are met:
1) borrowed funds have been 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 10 of this Law must be repaid within a period not exceeding twelve months;
3) the payment institution may not grant credit from the funds received and held for the purpose of executing a payment transaction;
5. A payment institution shall 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 institution on the impact of these decisions on the stability and soundness of the payment institution and the whole system of payment institutions. The supervisory institution must provide this conclusion within 5 business days of receiving the request.
CHAPTER TWO
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 10 of this Law. The procedure for issuing and amending the payment institution licence shall be laid down by this Law and the legal acts of the supervisory institution.
2. A payment institution being established may be registered in the Register of Legal Entities, and where the payment institution licence is issued not to the payment institution being established, appropriate amendments may be made in the Register of Legal Entities solely upon issuance of the payment institution licence.
3. For the issuance of a payment institution licence, an application and the following documents as well as data shall be submitted to the supervisory institution:
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) the evidence that the initial capital does not fall below the amount specified in paragraph 2 of Article 13 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 15 of this Law;
6) a description of the governance arrangements and internal control mechanisms applied (intended to be applied), including administrative, risk management and accounting procedures, which demonstrates that these governance arrangements and internal control mechanisms are appropriate, sound and adequate as regards the risk assumed;
7) a description of the internal control mechanisms established (intended 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 (hereinafter referred to as the “Law on Prevention of Money Laundering and Terrorist Financing”) and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;
8) a description of the structural organisation, including the intended use of branches and agents or other entities to which activities will be outsourced, and a description of participation in payment systems;
9) the data on the identity of persons holding qualifying holdings in the authorised capital and/or voting rights of the payment institution, the size of their holdings in the authorised capital and/or voting rights, also evidence of the suitability of these persons taking into account the need to ensure the sound and prudent management of a payment institution;
10) the identity of directors, including the persons responsible for the management of the payment services activities of the payment institution, where the payment institution provides payment services and, at the same time, is engaged in other activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law, as well as evidence that they are of good repute and meet the requirements set forth for the qualification and experience in paragraph 3 of Article 8 of this Law;
4. The information indicated in subparagraphs 5, 6 and 8 of paragraph 3 of this Article must be accompanied by a description of the internal audit procedure 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.
5. The supervisory institution 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 26 of this Law.
6. The supervisory institution must consider the submitted documents and take a decision on the issuance of a payment institution licence and give a written notice thereof to the applicant not later than within 3 months of receipt of the application and having regard to provisions of paragraph 2 of Article 22 of this Law.
7. The supervisory institution shall refuse to issue a licence where:
1) the submitted documents do not meet the requirements set forth in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) the payment institution does not have a registered office in the Republic of Lithuania, the legal form, heads of the payment institution, the initial capital of the payment institution do not meet the requirements set forth by laws and the legal acts adopted by the supervisory institution;
3) there is a reason to doubt whether the persons holding a qualifying holding in the payment institution’s authorised capital and/or voting rights meet the requirements set forth in paragraph 1 of Article 9 of this Law;
4) close links exist between the payment institution and another person, which would prevent the effective exercise by the supervisory institution of supervision of the payment institution;
5) close links exist between the payment institution and a person from a foreign state whose legal acts governing the activities of this person or difficulties in ensuring compliance with the said legal acts may prevent the supervisory institution from effectively exercising the supervision of the payment institution;
6) taking into account the need to ensure the sound and prudent management of a payment institution, the payment institution does not have robust governance arrangements for its payment services business, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, the procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and internal control mechanisms, including sound administrative and accounting procedures. Those arrangements, risk management procedures and internal control mechanisms must be comprehensive and proportionate to the nature, scale and complexity of the payment services provided by the payment institution.
8. Where a payment institution intends to provide payment services and, at the same time, intends to engage or is engaged in other activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law, the supervisory institution may 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 payment institution or the ability of the supervisory institution to monitor the payment institution's compliance with all obligations laid down by this Law.
9. A payment institution holding a payment institution licence and intending to provide payment services other than provided for in the licence issued thereto must apply to the supervisory institution for supplementing the valid licence with the payment services which it intends to provide.
10. A payment institution holding a payment institution licence must, at all times, comply with the requirements set forth for the issuance of the payment institution licence. In the cases and according to the procedure set forth in this Law and the legal acts adopted by the supervisory institution, the payment institution must notify the supervisory institution of any changes in the data submitted to obtain the payment institution licence.
Article 6. Payment Institution Licence for Restricted Activity
1. A payment institution licence for restricted activity shall be valid solely within the Republic of Lithuania and shall not entitle to provision of payment services in other Member States under the terms and conditions specified in Article 10 of this Law. 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 activity 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 6 of this Article. A payment institution to which a payment institution licence for restricted activity has been issued shall not be subject to provisions of Articles 9, 13 and 14 of this Law. The procedure for issuing and amending a payment institution licence for restricted activity shall be laid down by this Law and the legal acts adopted by the supervisory institution
Amendments to the paragraph of this Article:
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
No XII-1311, 6 November 2014, published in the Register of Legal Acts (TAR), 18 November 2014, ID code 2014-17043
2. A payment institution licence for restricted activity shall be issued to a payment institution whose heads, including the persons responsible for management of the payment institution’s payment services business, where the payment institution provides payment services and, at the same time, is engaged in the activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law, meet the requirements set forth in paragraph 4 of Article 8 of this Law.
3. For the issuance of a payment institution licence for restricted activity, an application and the following documents as well as data shall be submitted to the supervisory institution:
2) a business plan indicating the type (types) of payment services envisaged and including a draft budget for the first three financial years providing a proof that the payment institution will be capable of sound operation and has in place appropriate internal control systems, procedures and resources;
3) the documents proving that the average of the preceding 12 months’ total amount of payment transactions executed 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
Amendments to the paragraph of this Article:
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
No XII-1311, 6 November 2014, published in the Register of Legal Acts (TAR), 18 November 2014, ID code 2014-17043
4) a description of the measures taken (to be taken) in line with requirements of Article 15 of this Law for safeguarding payment service users’ funds;
5) a description of the internal control mechanisms established (intended 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 (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;
7) the identity of directors, including the persons responsible for the management of the payments services activities of the payment institution, where the payment institution provides payment services and, at the same time, is engaged in other activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law, as well as evidence that they meet the requirements set forth in paragraph 4 of Article 8 of this Law.
4. A payment institution being established shall be registered in the Register of Legal Entities solely upon issuance of a payment institution licence for restricted activity, and where the payment institution licence for restricted activity has been issued to the legal person which has already been established, appropriate amendments in the Register of Legal Entities shall be made.
5. A payment institution to which a payment institution licence for restricted activity has been issued must supply information to the supervisory institution in relation to compliance with the requirements set forth in paragraphs 1 and 2 of this Article in accordance with the procedure laid down by the legal acts adopted by the supervisory institution.
6. Where a payment institution to which a payment institution licence for restricted activity has been issued no longer meets the requirements set forth in paragraph 1 of this Article, it must, within 30 calendar days, apply to the supervisory institution 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 activity has been issued fails to apply for the issuance of the payment institution licence within 30 calendar days or where the supervisory institution does not issue the payment institution licence within the time limits laid down in Article 5 of this Law, the payment institution licence for restricted activity shall be withdrawn.
7. The supervisory institution shall have the right to carry out an on-site inspection of preparedness to provide payment services of a payment institution applying for the issuance of a payment institution licence for restricted activity. The on-site inspection of preparedness to provide payment services shall mutatis mutandis be subject to provisions of Article 26 of this Law.
8. The supervisory institution must consider the submitted documents and take a decision on the issuance of a payment institution licence for restricted activity and give a written notice thereof to the applicant not later than within two months of receipt of the application and having regard to provisions of paragraph 2 of Article 22 of this Law
TAR (Register of Legal Acts) note. If before the effective date of the Law No XII-1034 (1 November 2014) the application, documents and data for obtaining a payment institution licence have been submitted to the supervisory institution, but, taking into account the provisions of this Law, the person who files the application is entitled to obtain a payment institution licence for restricted activity, such person shall have the right to choose the type of licence to be granted. In case where a person decides to obtain a payment institution licence for restricted activity, the person shall notify the supervisory institution within 14 days from the effective date of this Law. In such case, the time limit referred to in paragraph 8 of Article 6 of the Republic of Lithuania Law on Payment Institutions shall run from the day on which the supervision institution receives information on the person’s decision to obtain a payment institution licence for restricted activity.
Amendments to the paragraph of this Article:
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
9. The supervisory institution shall refuse to issue a payment institution licence for restricted activity where:
1) the submitted documents do not meet the requirements set forth in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) the payment institution does not have a registered office in the Republic of Lithuania, the legal form, heads of the payment institution do not meet the requirements set forth by laws and the legal acts adopted by the supervisory institution;
3) the payment institution does not meet the requirements set forth in paragraphs 1 and 2 of this Law;
4) taking into account the need to ensure the sound and prudent management of the payment institution, the payment institution does not have robust governance arrangements for its payment services business, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, and does not have internal control mechanisms, including sound administrative and accounting procedures. Those arrangements and internal control mechanisms must be comprehensive and proportionate to the nature, scale and complexity of the payment services provided by the payment institution.
10. Where a payment institution intends to provide payment services and, at the same time, intends to engage or is engaged in other activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law, the supervisory institution may refuse the issuance of a payment institution licence for restricted activity until the establishment of a separate legal entity for the payment services business, where the non-payment services activities wherein it is engaged impair or are likely to impair either the financial soundness of the payment institution or the ability of the supervisory institution to monitor the payment institution's compliance with all obligations laid down by this Law.
11. A payment institution holding a payment institution licence for restricted activity and intending to provide payment services other than provided for in the licence issued thereto must apply to the supervisory institution for supplementing the valid licence with the payment services which it intends to provide.
12. A payment institution holding a payment institution licence for restricted activity must, at all times, comply with the requirements set forth for the issuance of the payment institution licence for restricted activity. In the cases and according to the procedure set forth in this Law and the legal acts adopted by the supervisory institution, the payment institution must notify the supervisory institution of any changes in the data submitted to obtain the payment institution licence for restricted activity.
Article 7. Withdrawal of a Licence or Suspension of Validity Thereof
1. A licence shall be withdrawn in the cases specified in paragraph 1 and subparagraphs 1, 3-8 of paragraph 2 of Article 10 of the Law on Financial Institutions.
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 institution where:
1) the payment institution does not meet the requirements set forth for the issuance of the licence;
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. In the event of withdrawal of a licence on the grounds specified in subparagraph 3 of paragraph 2 of this Article or subparagraph 8 of paragraph 2 of Article 10 of the Law on Financial Institutions, a decision of the supervisory institution shall indicate the reasons for taking of the decision and a notice shall be given to a payment institution of the decision taken within 5 business days. In other cases, the licence shall be withdrawn in accordance with the procedure laid down by Articles 29 and 30 of this Law.
4. Validity of a licence shall be suspended on the grounds and in accordance with the procedure laid down by Articles 29 and 30 of this Law.
5. Upon withdrawal of a licence or suspension of validity thereof, 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.
6. Upon withdrawal of a licence and not later than within 2 months, bodies of a payment institution must take a decision on liquidation or reorganisation of the payment institution or take a decision on changing 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. Appropriate amendments must be made to the Register of Legal Entities.
CHAPTER THREE
MANAGEMENT OF A PAYMENT INSTITUTION
Article 8. Bodies and Heads of a Payment Institution
1. A payment institution must have the following bodies: the general meeting of shareholders, the head of the administration (head) (hereinafter referred to as the “head of the administration”) and, in the cases specified by legal acts, the supervisory board and the board.
2. Heads of a payment institution shall be:
4) the persons responsible for the management of the payment services activities of the payment institution (heads of structural divisions), where the payment institution provides payment services and, at the same time, is engaged in other activities indicated in subparagraph 3 of paragraph 2 of Article 4 of this Law;
3. The heads of a payment institution holding a payment institution licence must be of good repute and possess the qualification and experience necessary to properly perform their duties. The requirements for the qualification and experience of the heads of this payment institution shall be set by the legal acts adopted by the supervisory institution. Appraisal of the good repute of the heads of a payment institution holding a payment institution licence shall mutatis mutandis be subject to provisions of paragraphs 12 and 13 of Article 34 of the Law on Banks.
4. The heads of a payment institution holding a licence for restricted activity must meet the requirements of suitability as set forth by the legal acts adopted by the supervisory institution, including the requirement that none of them may have be convicted of a crime or misdemeanour relating to money laundering or terrorist financing, a serious or grave crime or a crime or misdemeanour against property, property rights and property interests, the economy and business practice, the financial system or of corresponding criminal acts under criminal laws of foreign states, irrespective of whether the conviction has expired and the requirements of preparedness must be met at least by one of the heads referred to in subparagraphs 1, 2 and 4 of paragraph 2 of this Article.
Amendments to the paragraph of this Article:
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
5. A payment institution must give a notice to the supervisory institution of the envisaged changes in heads of the payment institution and also supply the information specified by the supervisory institution and required for evaluating whether the heads meet the requirements set forth for them in paragraphs 3 or 4 of this Article. The newly elected (appointed) heads of the payment institution may assume office solely if the supervisory institution does not oppose their candidacies. The supervisory institution shall have the right to oppose the candidacies of the heads of the payment institution where they do not meet the requirements specified in paragraphs 3 or 4 of this Article.
6. Where the supervisory institution does not, within 30 calendar days from the receipt of a notice of the projected changes of heads and the entire required information, declare its opposition, it shall be considered that the supervisory institution does not oppose the candidacies of the heads to be elected (appointed).
Article 9. Qualifying Holding in a Payment Institution’s Authorised Capital and/or Voting Rights
1. The supervisory institution shall assess the suitability of the person acquiring a qualifying holding in a payment institution’s authorised capital and/or voting rights according to the following criteria:
2) the good repute of the acquirer as specified in paragraphs 12 and 13 of Article 34 of the Law on Banks;
CHAPTER FOUR
RIGHTS OF A PAYMENT INSTITUTION AND A PAYMENT INSTITUTION OF ANOTHER MEMBER STATE
Article 10. Right of a Payment Institution to Provide Payment Services in Other Member States
1. A payment institution shall have the right, in another Member State and in accordance with the procedure laid down by this Article, to establish a branch and to provide payment services through an agent or without establishing a branch.
2. Prior to establishing a branch in another Member State, a payment institution must give a notice thereof to the supervisory institution indicating its name, address and the Member State wherein it intends to establish the branch and also supply information on the organisational structure of the branch, the heads thereof and the kind of payment services the branch intends to provide, and where the payment services are to be provided through an agent, the name of the agent (name, surname), the registered office (address), contact data, the contact person of the payment institution and the kind of payment services which the payment institution intends to provide through the agent must be indicated.
3. The supervisory institution must forward the information supplied by a payment institution and indicated in paragraph 2 of this Article within one month from the receipt of the information to the supervisory institution of another Member State. The supervisory institution shall have the right to refuse the forwarding of the information to the supervisory institution of another Member State where the organisational structure, heads of a branch or the financial situation of the payment institution do not meet the requirements set by the supervisory institution for the envisaged activities. Reasons must be given for the refusal of the supervisory institution to forward the information, and a decision thereon must be taken within one month of the receipt of the information referred to paragraph 2 of this Article. The payment institution must be forthwith notified of the forwarding of the information or refusal to forward it to the supervisory institution of another Member State.
4. Where a payment institution has already established at least one branch in another Member State, the procedure set forth in this Article shall not be applied to the establishment of other branches thereof in that Member State.
5. A payment institution wishing to provide payment services in another Member State without establishing a branch must give a notice thereof to the supervisory institution. The notice must indicate the name of the payment institution providing the notice, the address thereof, the contact person and the payment services envisaged. The supervisory institution must, within one month, forward this information to the supervisory institution of another Member State or refuse to forward it where the financial situation of the payment institution does not meet the requirements set forth by the supervisory institution for the activities envisaged, and give a notice thereof to the payment institution.
6. A payment institution wishing to provide payment services in another Member State by engaging an agent must give a notice thereof to the supervisory institution. The supervisory institution must inform the supervisory institution of another Member State of its intention to enter the agent in the public list of payment institutions and take into account the opinion of the supervisory institution of another Member State.
7. Where the supervisory institution of another Member State informs that it has reasonable grounds to suspect that, in connection with the establishment of a branch or engagement of an agent by a payment institution, money laundering and/or terrorist financing has taken, is taking or will take place, or that the establishment of such branch or engagement of such agent could increase the risk of money laundering and/or terrorist financing, the supervisory institution shall have the right to refuse, on these grounds, to enter the branch or agent in the public list of payment institutions or to remove them from this list.
8. In exercising supervision and imposing sanctions on a branch established by a payment institution in another Member State, its agent or another entity to which activities are outsourced, the supervisory institution shall cooperate with the supervisory institution of another Member State.
9. The supervisory institution shall provide the supervisory institution of another Member State with requested information, in particular in the case of infringements or suspected infringements by a branch established by the payment institution in another Member State, its agent or another entity to which activities are outsourced and, on its own initiative, all other relevant information.
Article 11. 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 in the Republic of Lithuania, establish a branch, provide payment services through an agent or without establishing the branch in the accordance with the procedure laid down in this Article.
2. A payment institution of another Member State may, in the Republic of Lithuania, establish a branch and provide the payment services which it is entitled to provide under an authorisation granted by the supervisory institution of another Member State where the supervisory institution receives from the supervisory institution of another Member State a notice indicating the name and address of the payment institution and information on the organisational structure of the branch, the heads of the branch and the kind of payment services the branch intends to provide.
3. A payment institution of another Member State may commence provision of payment services in the Republic of Lithuania through an agent where the supervisory institution receives from the supervisory institution of another Member State a notice containing the name (name, surname) of the agent, the registered office (address) of the agent in the Republic of Lithuania, the contact data, the contact person of the payment institution and the kind of payment services the payment institution intends to provide through the agent.
4. Where a payment institution of another Member State referred to in paragraph 1 of this Article has already established at least one branch in the Republic of Lithuania, the procedure set forth by this Article shall not be applied to the establishment of other branches thereof.
5. A payment institution of another Member State may commence provision of payment services in the Republic of Lithuania without establishing a branch from the receipt, by the supervisory institution from the supervisory institution of another Member State, a notice indicating the payment services intended to be provided.
6. Where the supervisory institution has reasonable grounds to suspect that, in connection with the establishment of a branch or engagement 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 branch or engagement of such agent could increase the risk of money laundering and/or terrorist financing, it shall so inform the supervisory institution of another Member State,
7. The supervisory institution shall cooperate with the supervisory institution of another Member State exercising supervision of and imposing sanctions on a branch established by a payment institution of another Member State in the Republic of Lithuania, its agent or another entity to which activities are outsourced.
Article 12. Public List of Payment Institutions
1. The payment institutions holding a licence of the supervisory institution and registered in the Register of Legal Entities, their branches and agents operating both in the Republic of Lithuania and other Member States shall be entered in a public list of payment institutions, which shall identify the payment services for which the licence has been issued.
2. Payment institutions shall be entered in the public list of payment institutions within five business days of receiving a licence and entering in the Register of Legal Entities, their branches operating in the Republic of Lithuania – within five business days of submitting all required documents, and the branches of payment institutions operating in other Member States and agents – within one month of submitting all required documents.
3. The payment institutions holding a payment institution licence shall be entered in the public list of payment institutions separately from the payment institutions holding a payment institution licence for restricted activity.
4. A payment institution, its branch and agent shall have the right to provide payment services solely if they are entered in the public list of payment institutions.
5. The manager of the public list of payment institutions, namely, the supervisory institution, shall publish any entry in the list of a payment institution, its branch or agent, a change in the data or information thereon and shall update this information on a regular basis on the website of the supervisory institution.
Amendments to the paragraph of this Article:
NoXI-2332, 6 November 2012, Official Gazette Valstybės žinios, 2012, No 132-6660 (15 November 2012), ID code 1121010ISTA0XI-2332
CHAPTER FIVE
REQUIREMENTS FOR THE OWN FUNDS OF A PAYMENT INSTITUTION AND SAFEGUARDING REQUIREMENTS
Article 13. Initial Capital of a Payment Institution
1. The initial capital of a payment institution shall be comprised of the following items:
1) authorised capital (reduced by the value of bought-up own shares) excluding the value of preference shares;
4) retained earnings (less the amount of interim retained earnings of the current year or retained earnings of the last year in relation to which no decision of the annual general meeting of shareholders has been made yet if the audit firm has not audited the set of financial statements for the respective period and the supervisory institution has not been furnished with data evidencing that the amount of profit is correct and all expected taxes or dividends have been deducted) or losses;
Amendments to the paragraph of this Article:
No XI-1341, 21 April 2011, Official Gazette Valstybės žinios, 2011, No 52-2516 (2011-05-03), ID code1111010ISTA0XI-1341
2. A payment institution must hold initial capital:
1) where the payment institution intends to provide only the payment services listed in paragraph 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 the payment services listed in paragraph 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 listed in paragraphs 1-5 of Article 5 of the Law on Payments, its capital shall at no time be less than EUR 125,000.
Amendments to the paragraph of this Article:
No XII-1311, 6 November 2014, published in the Register of Legal Acts (TAR), 18 November 2014, ID code 2014-17043
Article 14. Own Funds of a Payment Institution
1. The own funds of a payment institution shall at no time be less than the larger of the following amounts:
2. 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 the provision of payment services.
3. The rules on the amount, calculation and application of own funds of a payment institution shall be established by the supervisory institution.
4. The supervisory institution may, based on an evaluation of the risk-management processes, risk loss data base and internal control mechanisms, establish an individual amount of own funds for a payment institution, which shall be up to 20 per cent lower or higher than the own funds requirement calculated in accordance with one of the methods as specified in the legal acts adopted by the supervisory institution.
Article 15. Safeguarding Requirements for Funds Received from the Payment Service Users or Through Another Payment Service Provider
1. A payment institution must safeguard the funds which have been received from the payment service users or through another payment service provider for the execution of payment transactions in accordance with one of the following methods:
1) by not commingling these funds at any time with the funds of any natural or legal person other than 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 operating in the Republic of Lithuania) or a credit institution of another Member State or invested in secure, liquid low-risk assets in accordance with the procedure laid down by the legal acts adopted by the supervisory institution. The payment institution must, while safeguarding the funds which have been received from the payment service users or through another payment service provider for the execution of payment transactions in accordance with the method specified in this subparagraph, take measures to ensure the protection of the rights of ownership of the payment service users, in particular in the event of insolvency. The payment service users and other payment service providers shall hold ownership of the funds transferred to the payment institution for the provision of payment services, and no execution may be levied according to arrears of the payment institution;
2) by covering these funds by an insurance policy or a guarantee, a warranty statement from an insurance company or a credit institution of the Republic of Lithuania (including a branch of a foreign insurance company or a credit institution operating 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 subparagraph 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 the 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 under 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 to the satisfaction of the supervisory institution.
CHAPTER SIX
OTHER REQUIREMENTS SET FORTH FOR A PAYMENT INSTITUTION
Article 16. Requirements for a Payment Institution Providing Payment Services through an Agent
1. When a payment institution intends to provide payment services through an agent, it must submit to the supervisory institution an application for inclusion of the agent in the public list of payment institutions and communicate the following information on the agent:
2) a description of the internal control mechanisms that will be used by the agent in order to comply with the obligations in relation to the Law on Prevention of Money Laundering and Terrorist Financing (where the agent is registered in the Republic of Lithuania), the laws of another Member State implementing Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (where the agent is registered in another Member State) and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;
2. Where payment services are to be provided through an agent who is a natural person, the requirements set forth by paragraph 1 of this Article shall apply mutatis mutandis.
3. Where the supervisory institution considers that the information provided through an agent is incorrect or incomplete, it shall have the right to undertake the action provided for in paragraph 5 of Article 5 of this Law and request to submit additional information as provided for in paragraph 5 of Article 22 of this Law.
4. The supervisory institution shall refuse to enter an agent in the public list of payment institutions where:
1) submitted documents do not meet the requirements set in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) members of the management bodies of the agent do not meet requirements of the preparedness and suitability according to the legal acts adopted by the supervisory institution;
5. In the cases when a payment institution no longer intends to provide payment services through an agent, it must request the supervisory institution to remove this agent from the public list of payment institutions. The supervisory institution must remove the agent from the public list of payment institutions within five business days of receiving a request from the payment institution.
6. The supervisory institution shall have the right to remove an agent of a payment institution from the public list of payment institutions where the agent of the payment institution does not meet the requirements set forth in this Article, provided a decision on entering the agent of the payment institution in the public list of payment institution has been taken on the basis of incorrect information and on other statutory grounds. The supervisory institution must forthwith notify the payment institution of removal of its agent from the public list of payment institutions.
Article 17. Requirements for a Payment Institution Outsourcing its Operational Functions
1. A payment institution intending to outsource the operational functions of the payment institution must accordingly inform the supervisory institution one month in advance.
2. Outsourcing of important operational functions of a payment institution may not be undertaken in such way as to impair materially the quality of the payment institution’s internal control and the ability of the supervisory institution to monitor the payment institution’s compliance with all obligations laid down in this Law and the legal acts adopted by the supervisory institution. For the purposes of this Law, an operational function shall be regarded as important if a defect or failure in its performance would materially impair the continuing compliance of a payment institution with the requirements of its licence or its other obligations under this Law and/or the legal acts adopted by the supervisory institution, or the stability and soundness of operation of the payment institution, or the continuity of the payment services provided by it.
3. When a payment institution outsources its important operational functions, the payment institution must comply with the following conditions:
1) the outsourcing may not result in the delegation by heads of the payment institution of its 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;
Article 18. Additional Obligations of a Payment Institution
1. Provision of payment services upon establishment of a branch or through an agent or outsourcing of a part of important operational functions shall not release the payment institution from compliance with the requirements set forth by this Law.
2. A payment institution outsourcing all or a part of important operational functions must take all necessary steps to ensure that the requirements of this Law are complied with.
Article 19. Accounting, Financial Statements and Audit of a Payment Institution
2. Payment institutions must draw up sets of interim financial statements and annual financial statements.
3. The content of the sets of a payment institution’s interim and annual financial statements, the forms of other reports, the procedure for drawing up and submitting the statements shall be specified by laws and the legal acts adopted by the supervisory institution.
4. The audit of a payment institution, requirements for the auditor and audit firm, their duties and liability shall be established by the Law on Financial Institutions, the Law on Companies and the Law on Audit.
5. The payment institutions which are subject to the mandatory audit of financial statements must, together with the audited financial statements, also submit to the supervisory institution an auditor’s report, which must contain a justification of separation of payment services and other activities.
Article 20. Keeping of Information
CHAPTER SEVEN
SUPERVISION OF PAYMENT INSTITUTIONS
Article 21. Supervisory Institution
1. The supervisory institution shall exercise supervision of the payment institutions holding a licence issued in accordance with the procedure laid down by this Law, including its branches in other Member States.
2. Supervision shall be exercised in compliance with this Law, the Law of the Republic of Lithuania on the Bank of Lithuania, the Law on Financial Institutions and legal acts adopted by the supervisory institution.
3. Supervision of the payment institutions of other Member States which provide services in the Republic of Lithuania without establishment of a branch, through an agent and supervision of the branches established in the Republic of Lithuania by the payment institutions of other Member States shall be exercised in compliance with provisions of Article 27 of this Law.
Article 22. Consideration of Applications for the Issuance of a Licence or for Carrying out of Other Actions and Decisions of the Supervisory Institution
1. Detailed rules and procedure for filing, considering applications for the issuance of the licences specified by this Law or carrying out of other actions established in Articles 5, 6, 8, 9, 16, 35 of this Law and other articles of this Law (hereinafter referred to in this Law as the “granting of an authorisation”) and granting thereof as well as detailed requirements for the documents submitted shall be determined by the legal acts adopted by the supervisory institution.
2. An application for the granting of an authorisation shall be considered and a decision thereon shall be taken within the time limits laid down in this Law or, where the time limits have not been laid down in this Law, within the time limits laid down by legal acts adopted by the supervisory institution. Where the documents submitted contain form or content shortcomings or not all documents required for the decision have been submitted, the supervisory institution shall require to eliminate the shortcomings and/or submit the missing documents. Moreover, the supervisory institution shall have the right to request additional documents and information required for the decision. Where the supervisory institution requests additional documents and information or the applicant submits additional documents or information at his own initiative, the time limit of consideration of the application and taking of the decision shall be calculated from the receipt of the additionally requested documents and information or the documents and information additionally submitted by the applicant.
3. The supervisory institution shall have the right to refuse the granting of an authorisation where there is a sufficient ground to believe that the granting of the authorisation will violate the property interests of payment service users or will pose a threat to the stability and soundness of a payment institution or the entire system of payment institutions, also on other statutory grounds.
4. The supervisory institution shall notify applicants of a decision taken on the granting of an authorisation within five business days of the taking of the decision. Reasons must be given whenever the supervisory institution refuses to grant an authorisation.
5. Upon the request of the supervisory institution, state and municipal institutions as well as other persons must forthwith provide the supervisory institution with the available information on founders, shareholders and heads of a payment institution, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted inspections and examinations as well as other information required by the supervisory institution for a decision on the issuance of an authorisation to the payment institution.
Article 23. Protection of the Information Obtained for Supervision Purposes
Article 24. Duties and Rights of the Supervisory Institution
1. In addition to other duties and rights laid down in this Law and other legal acts, the supervisory institution shall have the right:
1) to issue legal acts and recommendations on the activities and supervision of the payment institutions under its supervision;
2) for supervision purposes, to require and to obtain from the payment institution subject to supervision the entire information as well as documents about the establishment, shareholders, heads, management, activities, prudential treatment and financial situation of the payment institution, its branches and agents, other entities to which activities are outsourced and debtors;
3) to carry out an inspection of the payment institution, its branch and agent and another entity to which activities are outsourced, including a branch, agent and another entity to which activities are outsourced in another Member State;
4) to issue to the payment institution the instructions specified in paragraph 2 of this Article, and the payment institution must implement them within the time limit laid down by the supervisory institution and forthwith give written notice thereof to the supervisory institution;
5) where the decisions taken by bodies of the payment institution pose a threat to the stability and soundness of activities of the payment institution, to apply, according to the procedure set forth by laws, to court to declare them void;
6) 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 obligations laid down by this Law, to require the establishment of a separate legal entity for the payment services business;
7) to conclude agreements on the carrying out of an inspection of the payment institution with audit firms or other persons holding appropriate qualifications in order to determine the value of the payment institution’s assets, financial situation of the payment institution, to assess the risks taken or inspect other areas of the payment institution’s activities. Where, upon completion of the inspection, it is established that the payment institution has supplied incorrect information to the supervisory institution or where other infringements of legal acts are established, the expenses in connection with organisation of the inspection as incurred by the supervisory institution shall be covered by the payment institution. The persons acting in accordance with the agreements concluded with the supervisory institution and referred to in this subparagraph shall have the rights referred to in paragraphs 2 and 3 of Article 26 of this Law;
2. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of a payment institution or upon establishing where activities of the payment institution pose a threat to the stability and soundness of activities of the payment institution, shall have the right to issue to the payment institution the following written instructions:
1) to eliminate the infringements of the legal acts or shortcomings in the activities of the payment institution within the time limits laid down by the supervisory institution;
2) not to conclude certain transactions or to reduce the scope of such transactions, including transactions on the outsourcing of operational functions;
3) to carry out an audit of interim financial statements of the payment institution within the time limit laid down by the supervisory institution;
4) to prepare and implement, within the time limits laid down by the supervisory institution, an acceptable action plan for the restructuring of activities of the payment institution and/or the elimination of discovered infringements and/or shortcomings;
5) to convene the general meeting of the payment institution’s shareholders, a meeting of the supervisory board (where it has been formed) or of the board and to discuss thereat the issues proposed by the supervisory institution;
6) for the heads of the payment institution to appear before the supervisory institution and provide clarifications. The supervisory institution shall have the right to publicly announce its instruction for the heads of the payment institution to appear before the supervisory institution;
3. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of a payment institution or where activities of the payment institution pose a threat to the stability and soundness of activities of the payment institution, shall have the right to temporarily set for the payment institution individual prudential or additional prudential requirements. Such a decision of the supervisory institution must be substantiated and taken in accordance with the provisions of paragraph 2 of Article 30 of this Law.
4. The instructions referred to in paragraphs 2 and 3 of this Article may also be given by simultaneously imposing sanctions.
5. Employees of the supervisory institution shall, in accordance with the procedure laid down by the supervisory institution, have the right to participate in the work of bodies of a payment institution – to attend meetings or sittings in the capacity of observers or otherwise observe activities of the payment institution.
Article 25. Appeal against Decisions, Acts (Omissions) of the Supervisory Institution
1. The persons whose rights or interests protected under the law have been violated shall have the right to file an appeal to court against decisions, acts (omissions) of the supervisory institution according to the procedure set forth by laws.
Article 26. On-site Inspection of Payment Institutions
1. On-site inspections of payment institutions, their branches and agents and other entities to which activities are outsourced, including branches, agents and other entities to which activities are outsourced in another Member State, shall be carried out by employees of the supervisory institution. The supervisory institution may engage also other persons in the process of on-site inspecting a payment institution, its branch and agent and another entity to which activities are outsourced, including a branch, agent and another entity to which activities are outsourced in another Member State.
2. A payment institution, its branch and agent and another entity to which activities are outsourced, including a branch, agent and another entity to which activities are outsourced in another Member State must provide the following conditions for the carrying out of an on-site inspection:
1) to supply to the persons conducting the on-site inspection all the information and documents requested by them;
2) to provide an opportunity for the persons conducting the on-site inspection to make use of data of the payment institution’s information systems;
3. The persons conducting an on-site inspection shall have the right:
1) to have unimpeded access to the premises of a payment institution subject to the on-site inspection, its divisions, branches and agents and other entities to which activities are outsourced during the office hours of the payment institution, its branch and agent and another entity to which activities are outsourced, including the branches, agents and other entities to which activities are outsourced in another Member State;
2) to request and obtain the information and documents (originals or certified copies thereof) required to carry out the on-site inspection, oral or written clarifications of the heads and other employees of the payment institution;
3) to request copies of submitted documents or to make copies thereof themselves at the expense of the payment institution;
4. Upon completion of an on-site inspection, its results shall be provided to a payment institution in writing. The head of the payment institution’s administration and members of the board must familiarise themselves with the results of the on-site inspection by affixing their signature thereto.
5. Legal acts of the supervisory institution shall set forth a detailed procedure for conducting an on-site inspection and recording results of the inspection.
6. On the instruction of the supervisory institution of another Member State, the supervisory institution shall, upon giving prior notice to the supervisory institution of another Member State and acting in compliance with provisions of this Article, have the right to carry out, in the Republic of Lithuania, an on-site inspection of a branch of a payment institution of another Member State, its agent and another entity to which activities are outsourced. The supervisory institution of another Member State must notify the supervisory institution of its intention to carry out, in the Republic of Lithuania, an on-site inspection of the branch of the payment institution of another Member State, its agent and another entity to which activities are outsourced.
7. In performing its functions relating to application of provisions of the Law on Prevention of Money Laundering and Terrorist Financing and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds as well as acting in compliance with provisions of this Article, the supervisory institution shall have the right, on its own initiative, to carry out an on-site inspection of a branch of a payment institution of another Member State, its agent and another entity to which operational functions are outsourced in the Republic of Lithuania.
Article 27. Supervision of the Payment Institutions of Other Member States which Provide Services in the Republic of Lithuanian without Establishing a Branch and of the Branches Established in the Republic of Lithuania by the Payment Institutions of Other Member States
1. Supervision of the payment institutions of other Member States which provide 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 other Member States and their agents shall be exercised by the supervisory institution of another Member State. However, the rights of the supervisory institution to exercise supervision thereof in accordance with the provisions of this Article shall not be thereby restricted.
2. Where the supervisory institution discovers 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 does not comply with this Law, the legal acts adopted by the supervisory institution, the supervisory institution shall instruct the payment institution and/or the branch of the payment institution in writing to bring the infringements of the legal acts to an end within the time limit laid down by the supervisory institution.
3. Where the instructions issued pursuant to paragraph 2 of this Article are ignored, the supervisory institution shall notify thereof the supervisory institution of another Member State requesting to take all possible measures to bring the infringements to an end.
4. Where, disregarding actions of the supervisory institution of another Member State, a payment institution or a branch of the payment institution persists in not carrying out the requirements of legal acts of the Republic of Lithuania referred to in paragraph 2 of this Article, the supervisory institution shall, upon giving prior notice thereof to the supervisory institution of another Member State, have the right to impose the sanctions provided for by this Law.
Article 28. Cooperation with the European Central Bank, the Commission of the European Communities, the National Central Banks and Supervisory Institutions of Other Member States
1. In performing the functions assigned to it under this Law, the supervisory institution shall cooperate with the supervisory institutions of other Member States, the European Central Bank and the national central banks of other Member States, the supervisory institutions of other payment service providers.
2. The supervisory institution shall communicate to the Commission of the European Communities the number of the payment institutions which have been issued a payment institution licence for restricted activity and the 12 months’ amount of the payment transactions executed by them according to the data of 31 December of each calendar year.
Article 29. Sanctions
1. The supervisory institution shall have the right to impose the following sanctions on licensed payment institutions:
1) to warn of infringement of this Law and other legal acts implementing this Law or of a failure to carry out instructions of the supervisory institution;
4) to temporarily or permanently prohibit activities of one or several branches or agents of the payment institution. Where the supervisory institution takes a decision on the temporary prohibition of activities of a branch or agent, the branch or agent shall not have the right to provide payment services, and where a decision is taken to permanently prohibit activities of a branch or agent, the branch or agent shall be removed from the public list of payment institutions, and the payment institution must forthwith take a decision on the termination of the activities of such a branch or agent;
5) to temporarily suspend from office the head (heads) of the payment institution or to suspend from office the head (heads) of the payment institution and to 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;
6) to appoint a temporary representative for the supervision of the payment institution’s activities;
7) to temporarily restrict the right to dispose of the funds in accounts opened with credit institutions and of other assets;
2. The supervisory institution shall have the right to impose the following sanctions on a payment institution of another Member State providing payment services in the Republic of Lithuania through an agent or without establishing a branch or on a branch established by a payment institution of another Member State:
1) to warn of infringement of this Law and other legal acts regulating safe and sound activities of payment institutions;
2) to temporarily 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 and of other assets;
3. The supervisory institution must take a decision on the imposition of the sanctions referred to in subparagraphs 2 and 3 of paragraph 2 of this Article on a payment institution of another Member State providing payment services in the Republic of Lithuania through an agent or without establishing a branch or on a branch established by a payment institution of another Member State in the Republic of Lithuania if the supervisory institution of that Member State so requests.
5. When taking a decision on the imposition of a sanction and selecting a specific sanction (sanctions), the supervisory institution shall take account of the content, scope, recurrence of discovered infringements and shortcomings in activities, influence thereof on the interests of payment service users, the financial situation of a person who is subject to the sanction, the preparedness and possibilities of shareholders and heads of a payment institution to bring the infringements to an end and to eliminate the shortcomings, also consequences of the discovered infringements and shortcomings in the activities as well as of the sanction (sanctions) to be imposed for the stability and soundness of the person who is subject to the sanction and the system of payment institutions.
6. A decision of the supervisory institution on the imposition of a sanction on a payment institution shall come into force on the day following that of taking of the decision, except where this Law or the decision provides otherwise.
7. Reasons must be given for a decision of the supervisory institution on the imposition of a sanction.
8. A temporarily imposed sanction shall remain in force until the expiry of the time limit referred to in a decision of the supervisory institution on the imposition of the sanction. This time limit may be defined by a specific date, period or related to the rise of certain circumstances (disappearance of circumstances), except where the supervisory institution takes a decision on the lifting of the sanction before the expiry of the fixed time limit.
Article 30. Basic Principles of and Procedure for Imposing Sanctions
1. The supervisory institution shall have the right to impose the sanctions specified by this Law in the presence of any of the following grounds:
1) the information which is specified by this Law or legal acts of the supervisory institution or which has been requested is not supplied within the fixed time limits or incorrect information is supplied;
2) the instructions given by the supervisory institution in compliance with this Law are not carried out in the prescribed manner;
4) the requirements of the laws regulating the safe and sound activities of payment institutions as well as of the legal acts adopted by the supervisory institution are violated or activities or the financial situation of a payment institution constitute a threat to the public interest and/or interests of payment service users or impair the functioning of the system of payment institutions of the Republic of Lithuania.
2. The supervisory institution, prior to considering the imposition of a sanction, shall give notice, not later than ten calendar days prior to consideration of this issue, to a person subject to the sanction of the venue and time of the consideration of the issue and supply him with information on the discovered facts forming the basis for the imposition of the sanction or grant the head (heads) of a person subject to the sanction access to the said facts. The person who has received the notification shall have the right to provide written clarifications prior to the consideration of the issue. The issue of the imposition of the sanction shall be considered in the presence of the heads of a person who is subject to the sanction (the chairman of the board, the head of the administration or the head of a branch). A failure of the heads to appear or to provide clarifications shall not preclude the consideration of the imposition of the sanction. In cases of urgency, the supervisory institution shall have the right to resolve the issue on the imposition of the sanction disregarding the provisions of this paragraph.
3. A decision on the imposition of a sanction must be taken without delay, but not later than within three months of establishment of an infringement or a ground for imposition of the sanction. Sanctions may be imposed after the lapse of not more than two years from the day of the commission of an infringement, in the event of a continuous infringement – from the day of the commission of the last acts of the continuous infringement.
4. A decision on the imposition of a sanction shall, within five calendar days, be posted (delivered) to a person subject to the sanction. Information on the sanction imposed shall be announced in accordance with the procedure set forth by the legal acts adopted by the supervisory institution, however, the supervisory institution may take a decision not to announce such information publicly, where announcing thereof publicly may have a detrimental effect on the stability and soundness of a payment institution or the system of payment institutions of the Republic of Lithuania.
Article 31. Penalties
1. The supervisory institution shall have the right to impose the following penalties on a payment institution:
1) for a failure to supply within the fixed time limits the information or documents which are specified by this Law or legal acts of the supervisory institution or which have been requested or for the supply of incorrect information – up to 0.5 per cent of annual gross income from payment services;
2) for a failure to carry out the instructions given by the supervisory institution in accordance with this Law or for an improper carrying out thereof – up to 1 per cent of annual gross income from payment services or up to EUR 289 for each day of the failure to carry out an instruction or improper carrying out thereof;
Amendments to the paragraph of this Article:
No XII-1311, 6 November 2014, published in the Register of Legal Acts (TAR), 18 November 2014, ID code 2014-17043
3) for a failure to give notice of the envisaged changes in heads of the payment institution and for the carrying out of the actions which it has the right to carry out only upon obtaining of an authorisation of the supervisory institution without the consent of the supervisory institution – up to 1.5 per cent of annual gross income from payment services;
4) for the actions or activities prohibited by this Law or for the provision of payment services where such a right is restricted under this Law – up to 2 per cent of annual gross income from payment services;
2. The specific amount of a penalty to be imposed shall be determined by taking account of the nature of an infringement, duration thereof and previously imposed sanctions.
3. Penalties shall be paid into the State budget not later than within one month of receiving, by a payment institution, a decision of the supervisory institution on the imposition of a penalty. A penalty imposed in accordance with subparagraph 2 of paragraph 1 of this Article for each day of a failure to carry out or improper carrying out of an instruction must be paid into the State budget each day of the failure to carry out or improper carrying out of such an instruction. Where the penalty is not paid within the fixed time limits or, where the decision of the supervisory institution has been appealed against to court, within ten calendar days from the entry into force of the decision, it shall be recovered, by a decision of the supervisory institution, without suit (without an instruction of a payment institution subject to the penalty to debit funds) from the funds held in credit institutions by the payment institution subject to the penalty, or the decision of the supervisory institution shall be enforced according to the procedure set forth by the Code of Civil Procedure.
Article 32. Suspension of the Head (Heads) of a Payment Institution from Office
1. As of the delivery of a decision of the supervisory institution on suspension of the head (heads) of a payment institution from office to 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 delivery of such a decision of the supervisory institution to the payment institution shall be null and void.
2. Where the supervisory institution takes a decision on suspension of the head (heads) of a payment institution from office 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, a body of the payment institution which has such a right must, within the time limit laid down in the decision of the supervisory institution, 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 of the head (heads) of a payment institution from office shall be given to the payment institution and the Register of Legal Entities, also published on the website of the supervisory institution.
Amendments to the paragraph of this Article:
NoXI-2332, 6 November 2012, Official Gazette Valstybės žinios, 2012, No 132-6660 (15 November 2012), ID code 1121010ISTA0XI-2332
Article 33. Temporary Representative for the 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 institution shall have the right to appoint a temporary representative for the supervision of activities of the payment institution (hereinafter referred to as a “representative for the supervision of activities”) for the purpose of protection of the funds of payment service users or the funds obtained from another payment service provider and transferred to the payment institution.
2. A legal or natural person may be appointed a representative for the supervision of activities. A natural person or the head of a legal person appointed as a representative for the supervision of activities shall be subject mutatis mutandis to the requirements of good repute as well as qualification and experience as set forth in paragraph 3 of Article 8 of this Law. Where a natural person is appointed as a representative for the supervision of activities, an assistant of the representative for the supervision of activities may be appointed. Salaries of the representative for the 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 institution. The salaries shall be paid from the funds of a payment institution. An employee of the supervisory institution may not be appointed as a representative for the supervision of activities and his assistant.
3. The board and heads of a payment institution must obtain a consent of a representative for the supervision of activities concerning each decision relating to the activities of the payment institution. All decisions of the board and heads of the payment institution taken without the consent of the representative for the supervision of activities after the entry into force of a decision on appointment of the temporary representative for the supervision of activities shall be null and void.
4. A representative for the supervision of activities shall disagree with the decisions taken by the board and heads 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, a representative for the supervision of activities shall be subject mutatis mutandis to provisions of paragraphs 2 and 3 of Article 26 of this Law. A representative for the supervision of activities must supply to the supervisory institution the information specified by it.
5. A notice of a decision taken to appoint a representative for the supervision of activities or to remove from office him shall be given not later than the next business day after the taking of the decision to a payment institution and the Register of Legal Entities, also published on the website of the supervisory institution.
Amendments to the paragraph of this Article:
NoXI-2332, 6 November 2012, Official Gazette Valstybės žinios, 2012, No 132-6660 (15 November 2012), ID code 1121010ISTA0XI-2332
6. A representative for the 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 institution, application of such a measure is no longer expedient for other reasons;
Article 34. Temporary Restriction on the Right to Dispose of Funds and Other Assets
1. Where the supervisory institution imposes the sanctions referred to in subparagraph 7 of paragraph 1 and in subparagraph 2 of paragraph 2 of Article 29 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 and of other assets specified in the decision of the supervisory institution.
2. A decision of the supervisory institution to temporarily restrict the right to dispose of the funds held with the credit 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 of the supervisory institution must include the data required to register the decision of the supervisory institution in the Register of Property Seizure Acts. In the cases specified by the legal acts regulating the Register of Property Seizure Acts, the decision of the supervisory institution may be temporarily registered in the Register of Property Seizure Acts.
CHAPTER EIGHT
TERMINATION AND BANKRUPTCY OF A PAYMENT INSTITUTION
Article 35. 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 institution.
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 institution regarding the impact of such a decision on the stability and soundness of the entire system of payment institutions.
3. A payment institution may not be reorganised where its rights and duties relating to the provision of payment services are transferred to a legal person not authorised to provide payment services in the Republic of Lithuania. Where a new payment institution is established in the course of reorganisation of the payment institution, it must obtain a licence in accordance with the procedure laid down by this Law.
4. A payment institution may be wound up by a decision of the general meeting of shareholders solely after it discharges all obligations in respect of payment service users, other payment service providers and the licence issued to it is withdrawn.
Article 36. Peculiarities of the Bankruptcy Proceedings of Payment Institutions
2. The supervisory institution shall have the right to file with a court a petition to initiate bankruptcy proceedings against a payment institution. Where a petition on initiating bankruptcy proceedings is filed with the court by other persons in accordance with the procedure prescribed by laws, the court must obtain a conclusion of the supervisory institution on the insolvency of the payment institution, which the supervisory institution shall issue within 5 business days of receiving the request, before taking a decision to initiate bankruptcy proceedings against the payment institution.
CHAPTER NINE
FINAL PROVISIONS
Article 37. Application of Provisions of the Law to Legal Persons Engaged in the Provision of Payment Services
1. The legal persons engaged in the provision of payment services before 25 December 2007 in compliance with the valid legal acts of the Republic of Lithuania valid at that time and being under the obligation to obtain a payment institution licence upon entry into force of this Law under the conditions specified in Article 5 of this Law shall have the right to continue their activities in the Republic of Lithuania without obtaining the payment institution licence until 30 April 2011, provided they meet the requirements set forth by the Law on Payments, the Law on Prevention of Money Laundering and Terrorist Financing and other legal acts. Where these legal persons fail to obtain the payment institution licence by 30 April 2011, they shall be prohibited from providing payment services as stipulated in Article 7 of the Law on Payments.
2. The legal persons engaged in the provision of payment services before 25 December 2007 in compliance with the valid legal acts of the Republic of Lithuania valid at that time and being under the obligation to obtain a licence upon entry into force of this Law under the conditions specified in Article 5 or 6 of this Law as well as meeting the conditions specified in paragraphs 1 and 2 of Article 6 of this Law shall have the right to continue their activities in the Republic of Lithuania without obtaining a payment institution licence for restricted activity until 25 December 2010, provided they meet the requirements set forth by the Law on Payments, the Law on Prevention of Money Laundering and Terrorist Financing and other legal acts. Where these legal persons fail to obtain the payment institution licence for restricted activity by 25 December 2010, they shall be prohibited from providing payment services as stipulated in Article 7 of the Law on Payments.
Annex
to the Republic of Lithuania
Law on Payment Institutions
EUropean union LEGAL ACTs IMPLEMENTED BY THIS LAW
Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ 2007 L 319, p.1).
Amendments:
1.
Seimas of the Republic of Lithuania, Law
No XI-1341, 21 April 2011, Official Gazette Valstybės žinios, 2011, No 52-2516 (3 May 2011), ID code 1111010ISTA0XI-1341
Law Amending Article 13 of the Republic of Lithuania Law on Payment Institutions
2.
Seimas of the Republic of Lithuania, Law
No XI-2332, 6 November 2012, Official Gazette Valstybės žinios, 2012, No 132-6660 (15 November 2012, ID code 1121010ISTA0XI-2332
Law Amending Articles 12, 32 and 33 of the Republic of Lithuania Law on Payment Institutions
3.
Seimas of the Republic of Lithuania, Law
No XII-1034, 17 July 2014, published in the Register of Legal Acts (TAR), 4 August 2014, ID code 2014-10872
Law Amending Articles 4, 6 and 8 of the Republic of Lithuania Law on Payment Institutions No XI-549
4.
Seimas of the Republic of Lithuania, Law
No XII-1311, 6 November 2014, published in the Register of Legal Acts (TAR), 18 November 2014, ID code 2014-17043
Law Amending Articles 6, 13 and 31 of the Republic of Lithuania Law on Payment Institutions No XI-549