New legal acts for EMIs and PIs

2020-10-21

The Bank of Lithuania has adopted amendments to legal acts for EMIs and PIs which will come into force on January 1, 2021. Changes were made in the following areas:

General management system requirements which cover clarity, reliability and implementation of functions established by legal acts

Organisational structure of the institution shall be deemed to be clear when detailed organisational chart of the institution is approved and includes each department, division or other similar structural unit as well as indicates the persons responsible for operations of each of such structural units. The descriptions of functions, responsibilities and accountability of the supervisory body, collegiate and single-person management body, each department, division or similar structural unit and each employee, and, where applicable, the descriptions of procedures for decision-making and cooperation with control staff are approved each division, subdivision or other structural unit is visible and all individuals and their functions, responsibilities and accountability are indicated.

In order to properly manage the risks of money laundering and terrorist financing, the institution has established in its internal documents and implemented the effective internal control and risk management procedures and measures in observance of the Guidance on the prevention of money laundering and/or terrorist financing for the financial market participants approved by resolution of the Board of the Bank of Lithuania.

Internal audits

Internal audit shall cover internal audit planning, conducting (collection, verification, evaluation of information), presentation of results, control over correction of weaknesses identified during internal audit and implementation of internal audit recommendations. The internal auditor shall report to the supervisory body at least once a year.

Internal control and risk management system

Institution’s risk management shall cover settlement, liquidity, operational, money laundering and terrorist financing, compliance, market, counterparty credit, customer relations and other types of balanced and not balanced, actual and probable risks which are arising or likely to arise when institution issue electronic money, provide payment services, invest the funds received from electronic money holders and / or payment service users or other payment service providers, providing other services or other activities.
Institution shall regularly evaluate the internal control and risk management system and ensure that deficiencies are eliminated.

Requirements for the safeguarding of funds received from electronic money holders and payment service users or other payment service providers

The management body of the institution shall ensure that the funds of electronic money holders and/or payment service users are safeguarded at least in one of the following ways:

– By segregating them from funds of other natural or legal persons who are not electronic money holders or payment service users
– By insuring them under the insurance contract

In implementing the requirement, the managing body of the institution must approve the internal documents establishing the process of safeguarding the funds of electronic money holders and/or payment service users, the accounting and internal control procedures of such funds. These internal documents shall be regularly revised at the periodicity chosen by the institution. If the institution chooses to apply both methods of safeguarding the funds , the internal documents must clearly specify to what funds and which method is applied.

Amendments cover the terms and conditions of the agreement for opening the funds safeguarding account or the agreement for opening the securities safeguarding
account, including annexes to these agreements. It also defines what constitutes a safe, liquid and low-risk asset in which client funds may be invested.
Source about “New legal acts for EMIs and PIs”: Bank of Lithuania

 

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