The European Banking Authority has published an opinion on the nature of passport notifications for agents and distributors under the revised Payment Services Directive, the Electronic Money Directive and the Fourth Money Laundering Directive. The Opinion is addressed to national regulators in the EU of payment institutions and electronic money institutions but is also useful for PIs and EMIs providing services on a cross-border basis within the EU. The EBA has published the Opinion because it has identified that Member States have adopted different approaches to the treatment of the activities of PIs and EMIs through agents or distributors, and in particular, different approaches to categorizing the activities as being conducted by a branch or services passport. The issue is important because an activity conducted using a branch passport imposes more obligations on the principal than would occur under a services passport. The EBA Opinion aims to achieve supervisory convergence across the EU for the passport assessment. It sets out, based on recent EU case law and the EU Treaty provisions, three core criteria for national regulators to consider. The criteria are: (i) whether the agent or distributor has been authorized to carry out a specific task for the PI or EMI on either an occasional basis or a regular and continuous basis; (ii) the overall duration of the contractual relationship between the principal and the agent or distributor; and (iii) whether customers of the principal are able to take advantage of the services offered by it in the customers' member state. The EBA also states that the fact that an agent or distributor operates for more than one PI or EMI does not preclude the passport from being a branch passport.
Finally, the EBA's Opinion confirms that where a PI or EMI uses an agent or distributor to passport its services via a branch into another Member State, the PI or EMI must comply with the anti-money laundering and countering financing of terrorism requirements of that Member State. The Fourth Money Laundering Directive does not prescribe how PIs and EMIs are to comply with these requirements, and this will instead be set out in the national law of the host Member State.
View the Opinion.
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