Regulation on Payment Services

REGULATION NUMBER: R2022/42

Published in the Gazette of the Government of Maldives

Office of the President of the Republic
Malé, Maldives
Phone: 3336211
Mobile: 7242885
Website: www.mv.gov.gazette
Volume: 51 Number: 53 Date: 10 Sha'ban 1443 – 13 March 2022 Friday

Regulation on Payment Services

Volume: 51 Number: 53 Regulation Number: R2022/42 Gazette of the Government of Maldives

MALDIVES MONETARY AUTHORITY
Malé
Maldives

REGULATION ON PAYMENT SERVICES

FIRST PART
INTRODUCTION

This Regulation is issued under the authority granted by Article 64 of Law No. 8/2021 (National Payment System Act) to establish rules for licensing the provision of payment services, regulating such services, defining related rules, and determining customer liabilities.

Article 1 (Definitions)
(a) This Regulation is issued under the authority granted by Article 64 of Law No. 8/2021 (National Payment System Act).
(b) This Regulation shall be known as the "Regulation on Payment Services".
(c) This Regulation shall come into force from the date of its publication in the Gazette of the Government of Maldives.

Article 2 (Commencement)
This Regulation shall not apply to payment services provided to customers under licenses issued by the Authority under the Banking Act of the Maldives. However, payment service providers holding licenses for electronic money issuance services shall comply with the rules specified in Articles 20 and 21 of this Regulation regarding the operation of customer accounts.

Article 3 (Application to Customers)
Unless otherwise defined in this Regulation, other terms and expressions shall be interpreted as follows:

Article 4 (Interpretation)
"Beneficial Owner" means a natural person who is the ultimate owner, directly or indirectly, of a major shareholding.
(a) "Note and Cash Deposit and Withdrawal Service" means the service specified in the Fourth Schedule of this Regulation.
(b) "Remittance Service" means the service as defined in Article 66 of the Act.
(c) "Banking Business" means the expression as defined in Article 116 of the Banking Act of the Maldives.
(d) "Banking-Non-Banking Financial Business" means the expression as defined in Article 2 of Law No. 6/81 (Maldives Monetary Authority Act 1981).
(e) "Customer Account" means the account opened by payment service providers under Article 20 of this Regulation.
(f) "Customer" means the holder of the Customer Account.
(g) "Customer Receipt" means the receipt obtained by the payment service provider from the customer or on behalf of the customer for processing payment transactions, providing payment services, or providing remittance services, which is in the possession of that party at the close of business on that day. (h) "Unimpaired Capital" means the amount of capital remaining after deducting accumulated losses from paid-up capital and reserves. This does not include any type of reserves designated by the Authority. (i) "Customer Security Credentials" means the information specifically provided by the payment service provider to the customer to verify the customer's identity for the customer's payment account service. (j) "Account Information Service" means the service specified in the Fourth Schedule of this Regulation. (k) "Electronic Money" means the expression as defined in Article 13 of the Act. (l) "Electronic Money Issuance Service" means the service specified in the Fourth Schedule of this Regulation. (m) "Electronic Fund Transfer" means the expression as defined in Article 66 of the Act. (n) "Electronic Fund Transfer Service" means the service specified in the Fourth Schedule of this Regulation. (o) "Authority" means the Maldives Monetary Authority established under Law No. 6/81 (Maldives Monetary Authority Act 1981). (p) "Financial Business" means Banking Business and Banking-Non-Banking Financial Business. (q) "Major Shareholder" means the expression as defined in Article 66 of the Act. (r) "Banking Act of the Maldives" means Law No. 24/2010 (Banking Act of the Maldives). (s) "License" means the license issued by the Authority under the Act for the provision of a payment service or payment services in the Maldives. (t) "Licensed Payment Service" means the payment service or services that a payment service provider is permitted to provide under the License. (u) "Act" means Law No. 8/2021 (National Payment System Act). (v) "Senior Management" means employees within the institution who are responsible for determining the policy of the institution and overseeing the major activities of the institution among various employees, including the Internal Audit Manager, the Risk Management Manager, and the Compliance Manager responsible for ensuring compliance with laws, regulations, and procedures. Such employees in each position shall be considered "Senior Management" members. In this regard, the Chief Executive Officer, General Manager, and Chief Financial Officer are included among those considered "Senior Management". (w) "Payee" means the party entitled to receive the funds involved in a payment transaction. (x) "Payer" means the party initiating or authorizing the transfer of funds. (y) "Payment Account" means an account used to execute payment transactions in the name of that party or multiple parties. Such an account, whether physical or electronic, shall be considered a Payment Account. Payment Accounts include Electronic Money Accounts, Customer
Accounts, Debit Cards, and Credit Card Vests. (z) "Payment Service" means the expression as defined in Article 10 of the Act. (aa) "Payment Service Provider" means the expression as defined in Article 66 of the Act. (ab) "Payment Transaction Processing Service" means the service specified in the Fourth Schedule of this Regulation. (ac) "Payment Instrument Issuance Service" means the service specified in the Fourth Schedule of this Regulation. (ad) "Payment Transaction Clearing Service" means the service specified in the Fourth Schedule of this Regulation. (ae) "Payment Initiation Service" means the service specified in the Fourth Schedule of this Regulation. (af) "Payment Account Service Provider" means a bank that opens and maintains a Payment Account for a customer, or a payment service provider. (ag) "Payment Transaction" means the issuance, transfer, or withdrawal of funds. Funds include Electronic Money.

SECOND PART
LICENSING REQUIREMENTS

Article 5 (Provision of Payment Services in the Maldives)
Payment services shall only be provided in the Maldives by parties holding a License or Permit issued by the Authority under the Act.

Article 6 (Exempted Parties for License Application)
Electronic money issuance service providers are exempt from obtaining a License as specified in the Act, provided they comply with the conditions specified in Article 7(b). However, such parties must comply with the conditions specified in Article 7(c). (a) Electronic money issuance services shall only be provided to specific parties defined by the issuer, and electronic money shall not be redeemable, provided that:
(1) Electronic money can only be used to purchase goods or services from a limited network of service providers directly associated with the issuer, or parties belonging to the same corporate group, or parties affiliated with the brand, trade mark, or logo; or (2) Electronic money can only be used for low-value goods or services; or (3) The parties exempted under Article 7(a) must comply with the following conditions:
(b) Electronic money issuers must notify the Authority:
(1) Information regarding the party as specified on the Authority's website; (2) Notify the Authority within 12 (twelve) working days from the end of each calendar month if the total value of payment transactions processed by the party in that month exceeds MVR 1,000,000/- (One Million); and notify the Authority in the following month if the total value in the previous month exceeded this amount; and (3) Provide any other information requested by the Authority and comply with any instructions issued by the Authority. (c) If the Authority determines that the exemption granted to parties under Article 7(a) is contrary to the conditions in Article 7(b), or contrary to any notification by the Authority, or against public interest, the exemption may be revoked. (d) Applications for Licenses under Article 19(b) of the Act shall be submitted to the Authority using the form specified on the Authority's website, along with the completed form and required documents.

Article 7 (Submission of License Application)
Upon receipt of the License application, the Authority shall verify compliance with the conditions and guidelines for License issuance specified in the Act and the Authority's guidelines.
(a) Licenses may only be issued to parties registered as companies under Law No. 10/96 (Companies Act of the Maldives). Such companies must be established for the purpose of providing payment services or conducting financial business.

Article 8 (Conditions for License Issuance)
Licenses may only be issued if the payment service provider establishes an office in the Maldives and operates from that location.
(a) Payment service providers must comply with the license conditions specified in Article 20(b) of the Act, as well as the following additional license conditions:

Article 9 (License Conditions)
(a) If the license does not specify a period shorter than 12 (twelve) working days to commence business, the business must commence within 12 (twelve) working days from the date of license issuance.
(b) The provider must comply with the capital thresholds determined by the Authority and other conditions necessary for the stable and secure operation of the business, as determined by the Authority.
(c) The business must be operated in accordance with the Business Plan included in the application submitted to the Authority for the License. If the business needs to be operated differently from the Business Plan for any reason, permission must be obtained from the Authority. (d) The business must be operated in a stable manner, in compliance with laws, regulations, procedures, and guidelines issued by the Authority. (e) The business must be operated, and the licensed payment services must only be provided, under the name specified by the Authority for the purpose of operating the business and providing services. (f) The business must not be involved in fraud, deception, theft, money laundering, terrorist financing, or any other crime, nor facilitate such crimes. (g) Appropriate internal controls and measures must be taken to safeguard funds collected from customers for payment transactions. (h) If the licensed payment service is provided through an agent or other party, the activities of such parties must be monitored, and it must be ensured that they only provide services for which they are authorized. (i) If a payment service provider wishes to add or remove licensed payment services, an application must be submitted to the Authority with the information specified on the Authority's website.

Article 10 (Application for Addition or Removal of Licensed Payment Services)
When applying for a License, the License Application Fee specified on the Authority's website must be paid to the Authority. The Application Fee is non-refundable regardless of the Authority's decision to issue or not issue the License.

Article 11 (Application Fee)
(a) When applying for the addition or removal of licensed payment services, the Application Fee specified on the Authority's website must be paid to the Authority. The Application Fee is non-refundable regardless of the Authority's decision to issue or not issue the Permit. (b) Payment service providers must pay the Annual Fee determined by the Authority and specified on the Authority's website for each licensed payment service, within the timeframe determined by the Authority.

Article 12 (Annual Fee)
If a payment service provider wishes to voluntarily dissolve the company or cease providing the licensed payment service, it must obtain permission from the Authority and notify the Authority upon the revocation of the License. In the case of License revocation, the conditions determined by the Authority regarding the License revocation must be complied with.

Article 13 (Voluntary Dissolution)

THIRD PART
CAPITAL THRESHOLDS, SECURITY DEPOSITS, AND SAFEGUARDING MEASURES

Article 14 (Capital Thresholds)
Every payment service provider licensed to provide the payment service specified in the Second Schedule of this Regulation must maintain a minimum capital amount specified in the Schedule at all times. This amount shall be maintained as Unimpaired Capital. This amount shall not be distributed or withdrawn as dividends to any party. (a) However, if the Authority determines a specific capital amount for specific payment service providers based on the volume, scale, and other aspects of the payment transactions they process, under Article 14(b) of the Act, such providers must maintain that specific amount as capital. (b) Every payment service provider licensed to provide the payment service specified in the Third Schedule of this Regulation must maintain a Security Deposit amount specified in the Schedule at all times for each service. The Security Deposit is a deposit maintained by the payment service provider to cover liabilities owed to customers. The Security Deposit shall be maintained as a Cash Deposit unless the Authority directs otherwise.

Article 15 (Security Deposit)
(a) If the payment service provider becomes insolvent, ceases operations, suspends the licensed payment service, or has the License revoked, the Security Deposit maintained under Article 15(a) shall be used by the Authority to pay funds owed to customers, including claims submitted by customers. If the Security Deposit is insufficient to cover all customer claims, the Authority may determine that a portion of the Security Deposit be used to pay some customer claims. (b) In the circumstances specified in Article 15(b), if no customer claims are submitted or if the Authority accepts that funds have been paid for all submitted claims, the remaining funds in the Security Deposit shall be returned to the payment service provider by the Authority. (c) In the circumstances specified in Article 15(b), the Authority shall determine the manner and timeframe for customers to submit claims against the Security Deposit maintained under Article 15(a). (d) Every payment service provider licensed to provide the payment services specified below must maintain a separate Customer Account for the purpose of depositing customer funds, opened in a bank licensed under the Banking Act of the Maldives:
(1) Payment Transaction Clearing Service;
(2) Remittance Service.

Article 16 (Segregation of Customer Funds)
(a) Every payment service provider specified in Article 16(a) must deposit customer funds into the Customer Account opened under Article 16(a) on the first working day following the day the funds were received. (b) Funds other than those specified below shall not be withdrawn from the Customer Account specified in Article 16(a):
(1) Funds deposited by the payment service provider to open or maintain the account; (2) Funds payable to the customer or beneficiary for payment transaction processing; (3) Fees or charges payable by the payment service provider to the customer for payment services provided, if the customer has been notified that such funds may be used; and (4) Other funds permitted by the Authority. (c) Funds other than those specified below shall not be deposited into the Customer Account specified in Article 16(a):
(1) Funds deposited by the payment service provider to open or maintain the account; (2) Customer funds required to be deposited into the account under Article 16(b); (3) Fees or charges payable by the payment service provider to the customer for payment services provided; and (4) Other funds permitted by the Authority. (d) Funds in the Customer Account specified in Article 16(a) shall not be used for any purpose other than paying funds to customers or beneficiaries, or paying other amounts required by the Authority. Nor shall they be used for offsetting debts. (e) If the payment service provider becomes insolvent, ceases operations, suspends the licensed payment service, or has the License revoked, the funds in the Customer Account specified in Article 16(a) shall first be used to pay funds owed to customers and beneficiaries for payment transaction processing. (f) Every payment service provider licensed to provide Remittance Services must comply with the following additional conditions:

Article 17 (Conditions for Fund Transfer)
(a) For International Outward Remittance, arrangements must be made for the beneficiary to receive the funds entrusted by the customer within 5 (five) working days from the date of entrustment; and (1) For Domestic Remittance and International Inward Remittance, arrangements must be made for the beneficiary to receive the funds within 2 (two) working days from the date of receipt; and (2) For Payment Transaction Clearing Services, arrangements must be made for the beneficiary to receive the funds within 1 (one) working day from the date of receipt.