Electronic Money Law 21/2011 of 26 July (Modified by Law 10/2014)

Electronic Money Law 21/2011, of July 26. Head of State "BOE" No. 179, of July 27, 2011 Reference: BOE-A-2011-12909

INDEX

Preamble ................................................................... 4 CHAPTER I. General Provisions ................................................. 7 Article 1. Object and Scope of Application............................................... 7 Article 2. Reservation of Activity. ................................................... 7 CHAPTER II. Legal Regime of Electronic Money Institutions............................. 8 Article 3. Definition and Reservation of Designation. ........................................ 8 Article 4. Authorization and Registration. .................................................. 8 Article 5. Revocation. ......................................................... 9 Article 6. Initial Capital. ........................................................ 10 Article 7. Own Funds. ..................................................... 10 Article 8. Activities. ......................................................... 11 Article 9. Guarantee Requirements. .................................................. 12 Article 10. Accounting and Audit. ................................................ 12 CHAPTER III. Cross-Border Activity of Electronic Money Institutions ....................... 13 Article 11. Opening of branches and free provision of services in a Member State of the European Union by Spanish electronic money institutions. ........................................ 13 Article 12. Opening of branches and free provision of services in Spain by electronic money institutions authorized in another Member State of the European Union. ......................... 13 Article 13. Activity of Spanish electronic money institutions in a non-member State of the European Union.................................................................. 14 CONSOLIDATED LEGISLATION Page 1

CHAPTER IV. Other Provisions Relating to Electronic Money Institutions ..................... 14 Article 14. Delegation of Operational Functions. .............................. 14 Article 15. Agents............................................................ 14 Article 16. Preservation of Documents.............................................. 14 Article 16 bis. Access to Accounts Opened at Credit Institutions. ............................. 14 CHAPTER V. Issuance and Redemption of Electronic Money ..................................... 15 Article 17. Issuance and Redemption. .................................................. 15 Article 18. Prohibition of Interest. ................................................ 15 Article 19. Complaint Procedures and Out-of-Court Dispute Resolution. ............ 16 CHAPTER VI. Supervisory and Sanctioning Regime for Electronic Money Institutions .............. 16 Article 20. Supervision. ........................................................ 16 Article 21. Regime for Significant Holdings. ..................................... 16 Article 22. Information and Professional Secrecy. .......................................... 17 Article 23. Sanctioning Regime. .................................................. 18 First Additional Provision. Application to Electronic Money Institutions of Certain Provisions of Royal Decree-Law 19/2018, of November 23, on Payment Services and Other Urgent Measures in Financial Matters. ................................................................ 18 Transitory Provisions ......................................................... 18 Transitory Provision. Transitional Regime for Electronic Money Institutions Authorized Pursuant to Article 21 of Law 44/2002, of November 22, on Reform Measures for the Financial System. ....... 18 Repealing Provisions ........................................................ 19 Repealing Provision. ........................................................ 19 Final Provisions ............................................................ 19 First Final Provision. Modification of Legislative Decree 1298/1986, of June 28, on Adapting Current Law in Matters of Credit Institutions to that of the European Communities. ..... 19 Second Final Provision. Modification of Law 24/1988, of July 28, on the Securities Market.......... 19 Third Final Provision. Modification of Law 26/1988, of July 29, on Discipline and Intervention of Credit Institutions. ......................................................... 21 Fourth Final Provision. Modification of Law 35/2003, of November 4, on Collective Investment Institutions. ................................................................ 22 Fifth Final Provision. Modification of the Consolidated Text of the Law on Civil Liability and Insurance in Motor Vehicle Circulation, approved by Legislative Decree 8/2004, of October 29. ..... 22 Sixth Final Provision. Modification of Law 25/2005, of November 24, Regulating Venture Capital Entities and Their Management Companies. .......................................... 22 Seventh Final Provision. Modification of Law 16/2009, of November 13, on Payment Services. ....... 22 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 2

Eighth Final Provision. Modification of Law 10/2010, of April 28, on the Prevention of Money Laundering and Terrorist Financing. .......................................... 23 Ninth Final Provision. Modification of Law 2/2011, of March 4, on Sustainable Economy. ......... 23 Tenth Final Provision. Competence Titles. ........................................ 23 Eleventh Final Provision. Incorporation of European Union Law. ....................... 23 Twelfth Final Provision. Authorization for Regulatory Development. ........................ 23 Thirteenth Final Provision. Entry into Force. ........................................ 24 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 3

CONSOLIDATED TEXT Last modification: November 24, 2018 JUAN CARLOS I KING OF SPAIN To all who see and understand this. Know: That the General Courts have approved and I come to sanction the following law. PREAMBLE I The appearance on the Community market of the first prepaid electronic instruments led to the adoption of Directive 2000/46/EC of September 18, 2000, on access to the activity of electronic money institutions and its exercise as well as the prudential supervision of such institutions. Its purpose of creating a clear and harmonized legal framework that strengthened the internal market and stimulated competition in the electronic money issuance sector, while guaranteeing an adequate level of prudential supervision, was incorporated into the first regulation of electronic money institutions in Spain. Directive 2000/46/EC was incorporated into our legal system through Article 21 of Law 44/2002, of November 22, on Reform Measures for the Financial System, and Royal Decree 322/2008, of February 29, on the legal regime of electronic money institutions, which develops it. Both responded to the main purpose of stimulating competition and opening the electronic money issuance sector to institutions other than banks, allowing the creation of a new type of entity, electronic money institutions. Since then, a series of developments have occurred, both in the regulatory aspect and in the evolution of the sector itself, which advise a modification of the regulatory framework for electronic money institutions and the issuance of electronic money. Ten years having passed since the approval of that first Community regulation, both the appropriateness of the model and the need to address some reforms that could improve its practical effectiveness and contribute more to the development of this market have been confirmed. Thus, it is advisable, first, to modify the characterization of electronic money and the activity of issuing it, so as to increase legal certainty in the development of this activity and ensure that the resulting legal framework is consistent with the new legal regime applicable to payment services. On the other hand, in light of the experience accumulated in these years, it is necessary to adjust certain prudential requirements or limitations on the activities of electronic money institutions, so that their legal regime becomes more proportionate. The review of these aspects was finally embodied in Directive 2009/110/EU of September 16, 2009, on access to the activity of electronic money institutions and its exercise, as well as on the prudential supervision of such institutions, which amends Directives 2005/60/EC and 2006/48/EC and repeals Directive 2000/46/EC, the transposition of which is the subject of this Law. Following what is provided in the Directive, there are three fundamental objectives that can be identified in this Law. First, it aims to increase the precision of the legal regime applicable to the issuance of electronic money, clarifying its definition and the scope of application of the rule. In this way, by increasing the legal certainty of market participants, access to the activity of issuing electronic money will be facilitated and competition in that sector will be stimulated. On the other hand, the rule seeks to design a more proportionate legal regime, so that certain requirements for electronic money institutions that, being too burdensome for entities, have proven inadequate in relation to the risks their activity may potentially generate, are eliminated. Thus, it is not necessary to maintain electronic money institutions as an additional category of credit institution, so they cease to have such status. Finally, the rule aims to guarantee consistency between the new legal regime for payment institutions and that applicable to electronic money institutions. II This Law is structured in six chapters. Chapter I contains the general provisions regulating the main aspects of the rule. The object of the Law is defined as the regulation of the professional issuance of electronic money, as well as the legal and prudential regime of electronic money institutions. As for the scope of application of the rule, it is delimited, on the one hand, by providing a legal definition of electronic money based on three criteria, so that any product meeting these three characteristics can be qualified as electronic money. On the other hand, it excludes from the scope of application of the rule monetary value stored in specific instruments, designed to meet specific needs and whose use is limited, either because the holder can only use it in the establishments of the issuer itself or in a limited network of providers of goods or services, or because it can only be used to purchase a limited range of goods or services. It must be considered that an instrument is used within a limited network if it can only be used to acquire goods and services in a specific establishment or chain of establishments, or for a limited series of goods and services, regardless of the geographic location of the point of sale. Such instruments could include shopping cards, fuel cards, membership cards, public transport cards, meal vouchers, or service vouchers (such as daycare service vouchers, social service vouchers, or service voucher schemes that subsidize the employment of personnel in charge of domestic work such as cleaning, ironing, or gardening), subject at times to a specific legal framework in fiscal or labor matters intended to promote the use of such instruments to achieve the objectives established in social legislation. However, in the event that an instrument with specific purposes becomes an instrument with more general purposes, it must be understood to be included within the scope of application of the Law. Likewise, instruments that can be used to purchase at establishments of affiliated merchants are not excluded from the scope of application of the Law since they are usually intended for a constantly growing network of service providers. It is worth noting that the Law establishes the reservation of activity to issue electronic money on a professional basis in favor of a series of entities, which are enumerated exhaustively as possible issuers. These are credit institutions and electronic money institutions, whose legal regime is established in Chapter II, in addition to the State Society of Post and Telegraphs, S.A., regarding the activities for which it is authorized by virtue of its specific legislation, the Bank of Spain when it does not act in its capacity as a monetary authority, and Public Administrations when they act in their capacity as public authorities. It is important to note that this reform of the legal framework applicable to electronic money institutions maintains a regime similar to that applicable to other financial entities. However, some novelties are introduced as a result of the adoption of the new regime for payment institutions, with which it must maintain logical consistency. Thus, pursuant to Chapter II, electronic money institutions are subject to an authorization and registration regime. To merit authorization, granted by the Ministry of Economy and Finance, a series of aspects must be demonstrated that provide guarantees that the entity will be subject to sound and prudent management. Within three months, after receipt of the application or the moment when the required documentation is completed, a resolution must be issued, understood to be denied if no express resolution has been notified after that maximum period. The meaning of administrative silence in this case responds to what is provided in Article 3.1 of Directive 2009/110/EC, pursuant to which authorization may only be granted when all requirements established by the Directive are met and if, after examining the application, the competent authorities have reached a favorable assessment. A novel aspect of the Law is the possibility, expressly provided for, for electronic money institutions to carry out other economic activities, in addition to the issuance of electronic money. These include the provision of payment services, the management of payment systems, and any other economic activities, in accordance with applicable legislation. However, a limitation on their activity is established that substantially distinguishes them from deposit-taking entities, which is the prohibition on collecting deposits or other refundable funds from the public. With the objective of designing a more proportionate legal regime, the limitations on investments in force under previous regulations are also eliminated. However, the need to adequately safeguard the funds received in exchange for issued electronic money persists, for which a guarantee regime equivalent to that of payment institutions is provided. Chapter III is dedicated to the regulation of the cross-border activity of electronic money institutions, providing for a communication regime to the Bank of Spain in the case of intra-Community activity and authorization when it extends to third countries. Chapter IV contemplates the possibility for electronic money institutions to delegate to third parties the performance of certain activities such as the provision of operational functions or the distribution and redemption of electronic money. However, the prohibition on issuing electronic money through agents is established. Chapter V addresses, generally for all issuers of electronic money, the regime for the issuance and redemption of this product, specifying it in three fundamental aspects. First, the obligation to issue electronic money at its nominal value is established. Likewise, the possibility is provided for the holder of electronic money to request and obtain, at any time and at its nominal value, the redemption of the electronic money they possess. Generally, the rule establishes that redemption must be carried out free of charges. However, a series of scenarios are provided for in which the issuer may pass on a charge, proportional and adequate to the costs incurred, for effecting the redemption. Thirdly, the granting of interest or any other benefit associated with the time during which the holder of electronic money maintains it is prohibited. Chapter VI finally details the powers corresponding to the Bank of Spain for the adequate exercise of the supervision of electronic money institutions, the regime for significant holdings in these entities, and the sanctioning regime applicable to them, which, fundamentally, follows what is provided in Law 26/1988, of July 29, on Discipline and Intervention of Credit Institutions. III A transitory provision derived from Directive 2009/110/EC has been introduced in this Law, which refers to those electronic money institutions that had obtained authorization pursuant to Article 21 of Law 44/2002, of November 22, on Reform Measures for the Financial System. It is not required that these entities request a new authorization, although it is required that they demonstrate compliance with the necessary requirements for the development of this activity in accordance with this Law. The Law additionally has a repealing provision, which contains a general clause and a specific one referred to Article 21 of Law 44/2002, of November 22, on Reform Measures for the Financial System. The Law concludes with thirteen final provisions. The first and third final provisions modify, respectively, Legislative Decree 1298/1986, of June 28, on Adapting Current Law in Matters of Credit Institutions to that of the European Communities, and Law 26/1988, of July 29, on Discipline and Intervention of Credit Institutions. These modifications adapt these norms to the loss, by electronic money institutions, of their status as credit institutions. On the other hand, the eighth final provision modifies Law 10/2010, of April 28, on the Prevention of Money Laundering and Terrorist Financing, with the object of expressly incorporating electronic money institutions as obligated subjects under that legislation. The Law is issued in accordance with the competence titles collected in Articles 149.1.6th, 11th, and 13th of the Spanish Constitution, as stated in the tenth final provision. Finally, the eleventh and twelfth final provisions contain, respectively, the reference to the incorporation of Community law and the authorization to the Government for its regulatory development. The Law is closed with the thirteenth final provision which establishes the date of its entry into force. CHAPTER I General Provisions Article 1. Object and Scope of Application.

1. The object of this Law is the regulation of the issuance of electronic money, including the legal regime of electronic money institutions and the prudential supervision of these institutions.
2. Electronic money is understood to be any monetary value stored by electronic or magnetic means that represents a claim on the issuer, which is issued upon receipt of funds for the purpose of carrying out payment transactions as defined in Article 2.5 of Law 16/2009, of November 13, on Payment Services, and which is accepted by a natural or legal person other than the issuer of electronic money.
3. This Law shall not apply to monetary value: a) stored in instruments that can be used to acquire goods or services only in the establishments of the issuer or, by virtue of a commercial agreement with the issuer, either in a limited network of service providers or for a limited set of goods or services, in accordance with the conditions established by regulation; b) used to carry out payment transactions exempt pursuant to Article 3.1) of Law 16/2009, of November 13, on Payment Services. Article 2. Reservation of Activity.
4. The following categories of electronic money issuers may issue electronic money: a) Credit institutions, referred to in Article 1.2 of Legislative Decree 1298/1986, of June 28, on Adapting Current Law in Matters of Credit Institutions to that of the European Communities, and any branch in Spain of a credit institution whose parent company is domiciled or authorized outside the European Union. b) Electronic money institutions authorized pursuant to Article 4 of this Law and any branch in Spain of an electronic money institution whose parent company is domiciled or authorized outside the European Union. c) The State Society of Post and Telegraphs, S.A., regarding the electronic money issuance activities for which it is authorized by virtue of its specific legislation. d) The Bank of Spain, when it does not act in its capacity as a monetary authority. e) The General Administration of the State, the Autonomous Communities, and Local Entities, when they act in their capacity as public authorities.
5. It is prohibited for any natural or legal person other than those included in the previous paragraph to issue, on a professional basis, electronic money as defined in Article 1.2 of this Law.
6. Natural or legal persons who infringe what is established in this article shall be sanctioned in accordance with what is provided in Article 29 of Law 26/1988, of July 29, on Discipline and Intervention of Credit Institutions, without prejudice to any other liabilities that may be enforceable. CHAPTER II Legal Regime of Electronic Money Institutions Article 3. Definition and Reservation of Designation.
7. The status of electronic money institutions shall have those legal persons other than those contemplated in Article 2.1.a) of this Law, to which authorization has been granted to issue electronic money pursuant to this chapter.
8. The designation "electronic money institution", as well as its abbreviation "EMI", shall be reserved for these entities, which may include them in their designation.