Central Bank of Cyprus introduces new licensing process for Payment and Electronic Money Institutions
The Central Bank of Cyprus (“CBC”) has introduced a revised licensing process for Payment Institutions (“PIs”) and Electronic Money Institutions (“EMIs”), effective from 3 August 2026.
The key change is the introduction of a mandatory Pre-Application Exploratory Stage before a prospective applicant proceeds with the formal licensing application.
The revised process reflects the CBC’s experience in licensing and supervising PIs and EMIs and is intended to provide prospective applicants with greater clarity regarding the CBC’s regulatory expectations, while enabling potential issues to be identified at an earlier stage.
The new licensing process
From 3 August 2026, prospective PIs and EMIs are required to follow two principal stages:
- Pre-Application Exploratory Stage
- Application Submission and Assessment
The CBC has also provided further guidance concerning post-authorisation notifications.
Pre-Application Exploratory Stage
The new Pre-Application Exploratory Stage enables the CBC to obtain an early understanding of the prospective applicant’s business model, ownership and group structure.
The process also provides applicants with information regarding the CBC’s expectations and requirements under the applicable regulatory framework, including the EBA Guidelines (EBA/GL/2017/09).
Importantly, it is intended to identify at an early stage issues that may affect a subsequent licensing application, particularly in relation to the good repute of the ultimate beneficial owners (“UBOs”).
The process broadly involves three steps.
1. Submission of the Pre-Application Document
The prospective applicant must submit the CBC’s prescribed Pre-Application Document, together with evidence of payment of a €5,000 non-refundable fee.
2. Preliminary assessment
The CBC will assess the information provided, including the reputation of the UBOs and, where applicable, the wider group, as well as the risk profile of the proposed business model.
Applying a risk-based approach, the CBC may also require an independent Enhanced Due Diligence Report concerning the UBOs and connected entities. Where the CBC obtains such a report directly from a third-party provider, the associated cost will be borne by the prospective applicant.
The preliminary assessment should be completed within 30 working days from submission of the Pre-Application Document, or 50 working days where an Enhanced Due Diligence Report is required.
3. Initial meeting
Following its preliminary assessment, the CBC will invite the UBOs and representatives of the prospective applicant, where applicable, to an initial meeting. The CBC will provide feedback on its preliminary conclusions and identify any concerns or areas that should be addressed before a formal application is submitted.
Completion of the Pre-Application Exploratory Stage does not constitute approval of any subsequent licensing application, as the full authorisation criteria are not assessed at this stage.
Formal application and assessment
Following completion of the exploratory stage, the prospective institution may proceed with its formal application for authorisation.
The CBC will then undertake its full assessment under the applicable Cyprus and EU regulatory framework, including matters relating to the applicant’s business model, ownership, governance, capital, safeguarding arrangements, AML/CFT framework, risk management, outsourcing and operational arrangements.
Applicants should therefore ensure that the information and documentation submitted present a coherent and credible operating model and are consistent with the manner in which the proposed institution intends to conduct its business.
Post-authorisation notifications
Obtaining a PI or EMI licence is the beginning, rather than the end, of the institution’s regulatory relationship with the CBC.
Following authorisation, certain changes affecting an institution’s ownership, management, business activities, organisational structure or operations may require notification to, engagement with or approval from the CBC, depending on the applicable regulatory requirements.
Licensed institutions should therefore have appropriate procedures in place to identify the regulatory implications of material changes before they are implemented.
What does the new process mean for applicants?
The revised process effectively front-loads regulatory scrutiny.
Prospective applicants should therefore undertake meaningful preparation before approaching the CBC, with particular attention to:
- ownership, UBOs and group structure;
- the proposed business model and regulated activities;
- governance and senior management;
- regulatory and compliance infrastructure; and
- any reputational or regulatory issues that could affect the application.
The new €5,000 fee, potential Enhanced Due Diligence costs and 30-to-50-working-day preliminary assessment period should also be incorporated into the overall licensing timetable and budget.
For businesses considering Cyprus as a base for European payment or electronic-money activities, early regulatory planning will therefore be increasingly important.
How Spencer West can assist
Spencer West Cyprus advises PIs, EMIs, fintech businesses and other financial-services firms on Cyprus and EU regulatory matters, including regulatory structuring, pre-application preparation, licensing applications, engagement with the CBC and ongoing regulatory requirements.
The introduction of the new process reinforces the importance of prospective applicants being regulator-ready before commencing the formal authorisation process.
For further information or assistance in relation to the PI and EMI licensing process in Cyprus, please do not hesitate to contact Theo Antoniou, Founding Partner at Spencer West Cyprus, at [email protected]
