RegRally Insights: EMI/PI Regulation

ECOVIS ProventusLaw welcomes you to the newest newsletter on EMI/PI Regulation, which is dedicated to everyone who wants to understand the latest trends and developments in EMI/PI regulation area, get tips from our experts, and deepen their knowledge.

Upcoming Regulatory Changes: EMIs and PIs Must Prepare for New Bank of Lithuania Requirements

The Bank of Lithuania has adopted Resolution No 03-33, amending the 2009 resolution on internal control, risk management, and safeguarding client funds for electronic money institutions (EMIs) and payment institutions (PIs). This introduces significant new obligations, particularly wind-down planning and organisational governance, with deadlines for April 2025 and January 2026.

Key Deadlines:

By 9 April 2025: Institutions must have an approved wind-down plan in place.
By 1 January 2026: Institutions must comply with broader requirements related to internal control, risk management, governance, and client fund safeguarding.

Wind-Down Plan Requirements (Effective 9 April 2025)

Each institution must prepare a plan for the termination of e-money issuance and/or payment services, approved by the collegial management body, covering:

Termination scenarios and stakeholder impact mitigation
Trigger indicators and monitoring methods
Lists of clients and notification procedures
Action plans, responsibilities, and timelines
Resource planning (financial and non-financial)
Stakeholder communication strategy
Regular plan review and reporting to the Bank of Lithuania

Key Requirements Starting 1 January 2026

1. Safeguarding of Clients’ Funds

Minimum two safeguarding accounts recommended
Reconciliation rules for multiple safeguarding methods
Investment rules:
- Assets must be safe, liquid, low-risk
- Max 70% of safeguarded funds may be allocated to investments

2. Governance & Control Functions

If no supervisory board exists, the management board assumes full responsibility
Each board member must oversee specific areas (e.g., AML, risk, internal audit)
Appoint senior officers for AML, risk, compliance, safeguarding, etc.

3. Organisational Structure & Risk Management

Define the roles of intermediaries and outsourced parties
Ensure effective internal communication and conflict-of-interest management
Implement monitoring and issue alert systems
Risk strategies must be board-approved and updated annually

4. Internal Audit

Must ensure correction of deficiencies
Major violations must be escalated to both supervisory and management bodies

Recommendations:

1. Initiate your wind-down plan preparation immediately to ensure timely compliance.

2. Review and revise internal documentation to align with the updated regulatory framework.

3. Evaluate current governance and risk structures for potential adjustments before the 2026 deadline.

ECOVIS ProventusLaw can help

Our law firm offers:

Full support in developing wind-down plans in line with Bank of Lithuania expectations
Review and revision of your internal control and risk management documentation
Advisory services on aligning governance and compliance structures with the new Resolution

Let us help you prepare confidently and effectively for these regulatory changes.

Lithuania’s EMI/PI Sector Sees Strong Growth, But Regulatory and Market Challenges Persist

In 2024, Lithuania’s electronic money and payment institution sector experienced robust growth, with a 25% rise in income from licensed activities (€622 million) and a 33% increase in payment transactions (€152 billion). However, the market remains highly concentrated, with the top 10 institutions accounting for over 60% of income and 66% of transaction volumes. Regulatory pressure also intensified, with 19 sanctions issued and multiple supervisory actions taken by the Bank of Lithuania.

Key Recommendations:

Strengthen regulatory compliance – Institutions must prioritise AML, KYC, and fraud risk management to avoid penalties and meet supervisory expectations.
Enhance market competitiveness—Small and mid-sized institutions should focus on innovation, strategic partnerships, and differentiated services to gain market share.
Improve profitability – Institutions with lower margins should assess operational efficiency, adjust pricing models, and consider offering value-added services.
Diversify fund placement—As deposits shift from central banks to credit institutions, firms should balance liquidity, risk, and safeguarding obligations.
Maintain sufficient capital buffers – Institutions near the regulatory minimum should raise their own funds ratios to cushion against potential losses and ensure long-term stability.

Lithuania Remains a Magnet for Foreign Fintechs: Over 150 Enquiries in 2024

In 2024, Lithuania continued to attract strong interest from international financial firms, with more than 150 foreign companies engaging with the Bank of Lithuania’s Newcomer Programme. The regulator issued 35 new authorisations during the year and maintained its focus on high-quality licensing and early prevention of irregularities.

Key Recommendations:

Foreign fintechs considering Lithuania should take advantage of the Newcomer Programme to understand regulatory expectations early on.
Ensure high-quality licence applications by demonstrating clear business models, strong governance, and AML/KYC readiness.
Explore diverse licensing opportunities – including banking, insurance, investment services, and crowdfunding.
Leverage support from the Centre for Financial Market Development to build strong local foundations and contribute to a healthy, competitive market.

Bank of Lithuania Reviews Supervision Fee Methodology for Fairer Cost Distribution

The Bank of Lithuania has finalised its review of the methodology for calculating supervision fees applicable to financial market participants. The revised approach aims to ensure that fee structures are proportionate to each business’s scale and complexity while setting maximum limits to promote fairness and transparency.

Market participants should review the updated methodology and assess how the changes might impact their cost structure. Transparency and participation in future consultations can help shape a fairer supervisory environment.

Eurosystem Supports SEPA-Wide Rollout of Verification of Payee (VoP) Services

The Eurosystem has endorsed two centralised VoP solutions—developed by Banco de Portugal and Latvijas Banka—to support payment service providers (PSPs) in meeting their obligations under the EU Instant Payments Regulation (Regulation 2024/886). These solutions will enable PSPs across the euro area to offer a VoP service by the deadline of 9 October 2025, helping reduce fraud and payment errors in SEPA credit and instant transfers.

Recommendations for Financial Institutions:

Assess compliance readiness: Review Regulation 2024/886 and map internal system changes required for VoP integration.
Select a solution: Evaluate the Eurosystem-backed VoP solutions to determine the most suitable option for technical and operational needs.
Act early: Begin integration planning and testing to ensure timely and smooth implementation before the mandatory deadline.

Bank of Lithuania Updates CENTROlink FAQ: Key Changes Ahead of April 2025

The Bank of Lithuania has released an updated Frequently Asked Questions (FAQ) document for financial institutions using CENTROlink, its payment system that provides access to SEPA. The update offers critical guidance on participation’s regulatory, technical, and operational aspects, especially as new rules take effect on April 9, 2025.

Key Topics Addressed:

Direct vs. Indirect Participation:
- Clarifies differences and requirements for transitioning to direct access.
- Addresses feasibility of indirect participation for smaller institutions.
Direct Participation Readiness:
- Covers legal obligations under PSD2, migration steps, and technical prerequisites.
New Regulatory Requirements (Effective April 9, 2025):
- Applies to both Lithuanian and foreign-licensed EMIs/PIs.
- Highlights new safeguarding rules and the implications for non-compliant institutions.
SEPA and TARGET Integration:
- Explains how CENTROlink participants can connect to TARGET and additional SEPA schemes.
UK-licensed institutions:
- Provide guidance for continued CENTROlink access post-Brexit.