Welcome to the May 2026 edition of RegRally Insights: EMI license & PI license Regulation, where we track the latest supervisory actions, licensing developments, and regulatory interpretations shaping the payment services and electronic money landscape across the EU.
This month’s update reflects continued tightening of supervisory expectations, particularly regarding the safeguarding of client funds, ICT resilience, AML/CFT controls, and the operational readiness of licensed institutions. National regulators, including Lietuvos bankas and Latvijas Banka, remain highly active not only in licensing new market entrants but also in enforcing governance and safeguarding standards through sanctions, suspensions, and targeted supervisory measures.
At the same time, regulatory innovation continues to accelerate. Latvia is expanding access routes through specialised banking licences, instant verification services are becoming embedded across the EU payments ecosystem, and supervisory dialogue is becoming more structured and direct. Alongside this, EU-level legal interpretation—from PSD2 perimeter questions to consumer credit restrictions—continues to reshape how firms must structure products and assess regulatory scope.
For EMIs, PIs, and fintechs, the key message is clear: growth opportunities remain strong, but they are increasingly matched by stricter expectations on operational substance, infrastructure resilience, and precise regulatory classification of services.
Quick Navigation
- Three New Licensed Financial Institutions in Latvia
- Specialised Credit Institution Licence in Latvia
- Latvijas Banka – Instant Verification Service
- Administrative settlement with UAB Walletto
- Lietuvos bankas – FMSC / Countercyclical Capital Buffer
- Temporary suspension of AlphaPay UAB
- Dedicated Supervisory Contacts for EMIs and PIs
- Advocate General opinion on PSD2 scope
- CJEU limits charging interest on credit-related costs
Three New Licensed Financial Institutions Enter the Latvian Market in April
Three new licensed entities entered the Latvian financial market in April:
- NorthernTech SIA received an EMI licence authorising payment transaction execution and payment instrument issuance;
- SIA pinyya invest received a licence for investment and ancillary investment services;
- SIA Catego received a payment institution licence for account information services.
New licensed players signal continued market growth. Firms considering entry into the Latvian market or seeking partners in the payment/EMI space should note the expanded competitive landscape.
If you are considering obtaining a licence in Latvia, contact the ECOVIS Team – we advise and provide assistance throughout the entire licensing process.
Specialised Credit Institution Licence Introduced in Latvia with Lower Capital Threshold
Amendments to the Credit Institution Law (in force 6 January 2026) introduced the specialised credit institution licence with a reduced initial capital of €1M (vs €5M for regular banks).
On 9 April, at the Fintech Breakfast “A New Banking Licence for Fintechs in Latvia, Vol. 2,” Agnese Alaine, Head of the Licensing and Sanctions Department, introduced the regulatory framework and licensing process for a special credit institution.
Eligible models: (a) cooperative/territorial banks with limited customer base; (b) fully digital banks/neobanks; (c) innovative financial services providers.
Key licensing requirements:
- capital adequacy calculation must cover risk-weighted assets for 3 years AND cumulated expected losses for 3 years (the higher of the two applies);
- exit strategy mandatory as part of licensing documentation;
- 4-step process (introductory meeting → pre-licensing → ECB joint review → official application;
- up to 3 months + possible 1-year extension).
Common pitfalls flagged by Latvijas Banka: unrealistic financial projections, insufficient AML risk assessment, inadequate IT cost forecasting, incomplete management F&P information, and underestimation of ECB involvement timelines. Supervisory message: “Everything can be improved except lack of capital and reputation.”
FinTech companies and financial market players considering entry into the Latvian banking sector should assess the specialised bank licence as a lower-capital alternative to a full banking licence. Digital-only and innovative service models are explicitly in scope. Applicants should pay close attention to capital adequacy methodology, AML risk alignment with the business plan, and realistic financial projections.
Contact the ECOVIS Team – we advise and provide assistance on licence selection and throughout the entire licensing procedure.
Source: bank.lv (PDF) | How to obtain authorisation
Latvijas Banka – Instant Verification Service
Latvijas Banka published the first-month results of its Instant Verification Service (payee name/IBAN verification), mandatory across the EU since 9 October 2025 under the Instant Payments Regulation.
57.4M verification requests processed (Oct 2025 – Feb 2026). 68% of the Latvian population have noticed the feature; 50% report it has prevented an incorrect transfer. Latvijas Banka is one of two euro area central banks offering this service to PSPs.
Payment service providers that have not yet selected a verification service provider or reviewed their payee verification implementation should act now – the obligation has been in force since October 2025. Assess compliance of the current technical setup against the Instant Payments Regulation requirements.
Contact the ECOVIS Team if you need support with compliance assessment.
Source: bank.lv
Administrative settlement with UAB Walletto (EMI)
Following a targeted inspection, Lietuvos bankas imposed a €290,000 monetary sanction on UAB Walletto for AML/CFT internal control failures (customer due diligence, transaction monitoring) and deficiencies in client funds safeguarding. A public disclosure measure was also applied. Walletto must submit a remediation plan and evidence of corrective action.
EMIs and payment institutions should review the adequacy of their AML/CFT internal controls, particularly in CDD, transaction monitoring, and client funds safeguarding. This case confirms supervisory focus on these areas. We recommend conducting an internal gap analysis.
Contact the ECOVIS Team for support with AML/CFT compliance reviews.
Source: lb.lt
Lietuvos bankas – FMSC / Countercyclical Capital Buffer
Lietuvos bankas decided to maintain the countercyclical capital buffer (CCyB) at 1% for banks (in force since 1 Oct 2023). Moderate cyclic risk observed; rapid growth in household and corporate lending, with housing prices up 11% YoY in January 2026. Moderate imbalances in residential and commercial real estate (office segment). A 2% sectoral systemic risk buffer continues to apply to housing loan portfolios exceeding €50M.
Credit institutions operating in Lithuania should note the maintained CCyB and continued supervisory focus on real estate lending and household credit growth. No immediate capital impact – buffer remains unchanged. Monitor for quarterly updates.
Source: lb.lt
Temporary suspension of AlphaPay UAB (formerly NovaPay UAB) payment institution licence
Grounds: failure to safeguard client funds, loss of access to essential ICT operational infrastructure, and inadequate organisational structure and competencies. Funds in client accounts restricted. AlphaPay must submit full financial and operational information by 30 April 2026 and remediate all violations by 31 May 2026.
Payment institutions and EMIs should treat this as a signal of supervisory expectations regarding ICT resilience, organisational adequacy, and client funds protection. Entities that rely on AlphaPay for services should assess the continuity risk. All PIs should review their own safeguarding arrangements and their access to ICT infrastructure.
Contact the ECOVIS Team if you have exposure or need a compliance review.
Source: lb.lt
Lithuanian Bank Introduces Dedicated Supervisory Contacts for EMIs and Payment Institutions
Lietuvos bankas is implementing dedicated supervisory contact persons for selected electronic money and payment institutions to strengthen regulatory dialogue, improve communication efficiency, and ensure more consistent supervisory expectations. The initiative builds on similar models already used in banking and insurance sectors and is expected to be expanded further following initial implementation results. Affected institutions are encouraged to engage proactively with their assigned supervisors, while others should monitor potential future inclusion.
Contact the ECOVIS Team if you need support preparing for or managing supervisory communications.
Source: lb.lt
Advocate General opinion broadens PSD2 scope for SEPA direct debit intermediation models
A PSP that transmits SEPA direct debit instructions, collects funds, and manages restricted IBAN accounts may itself qualify as providing a regulated direct debit service under PSD2, even if another PSP executes the actual debit. Such activity is not automatically classified as payment initiation or payment acquiring. While non-binding, the opinion signals potential regulatory reclassification risk, requiring PSPs and fintechs offering merchant collection or recurring payment solutions to reassess licensing coverage and regulatory perimeter exposure.
Source: infocuria.curia.europa.eu
CJEU limits charging interest on financed credit-related costs under Consumer Credit Directive
The Court of Justice of the EU clarified that, under Directive 2008/48/EC, interest may only be applied to the actual credit principal made available to the borrower. Lenders are not permitted to charge interest on financed credit-related costs such as insurance premiums or other ancillary fees included in the total cost of credit. This interpretation requires credit institutions and consumer lenders to reassess APR calculations and contractual structures to ensure compliance, as incorporating non-credit components into the interest base may breach EU consumer credit rules.
Source: infocuria.curia.europa.eu
Inga Karulaitytė-Kvainauskienė is an attorney-at-law, Partner, and Head of Banking, Finance & FinTech. She is a top-tier expert in FinTech and digital finance regulation in Lithuania and the Baltics. With more than 20 years of experience, she is ranked in FinTech Legal by Chambers and Partners FinTech (2020–2026) and ranked as a Highly Regarded lawyer in Banking and Finance by IFLR1000, Chambers and Partners, and The Legal 500 (2019–2026).
Inga is a Certified Anti-Money Laundering Specialist (CAMS), a Certified Global Sanctions Risk Management Specialist, a certified board member (Corporate Governance Certificate by BICG), and a Certified Internal Auditor.
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