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So, does passporting work for e-money? Well, yes and maybe. Locke Lord attorney Siobhan Moore ex- plains there are two types of passporting: cross-border passport- ing (providing services into a country remotely from another country; i.e., online) and services basis passporting (setting up an office
in a host country or working with third parties in the host country). Cross- border passporting,
in her opinion, works well in the majority of member states, but services basis passporting can be “sticky” when an e-money issuer uses a third-party agent that may be considered to be carrying out regulated activities. In the latter situation, Moore says a member state can give different views regarding how issuers can operate and
the type of passport permission they and their agents are required to hold.
Other sticky points for issuers that have passported to another country arise where the host country interprets the EU directives more strictly or imposes additional regulatory obligations for e-money issuers.
But relief may be on the way. Attorney Peter Howitt
of Ramparts Law tells Paybefore the inconsistency issue is starting to be addressed by the EU; for example, by using regulations rather than directives, which allow EU law to be applied without amendment and with fewer differences in interpretation. There are also moves to increase reliance on the home state regulator for pan- European compliance.
What about gibraltar’s legal & regulatory environMent?
Being part of the EU, Gibraltar is subject to all relevant EU laws. In addition, its domestic legal system is based on English law, which makes it attractive for international clients that seek clarity and certainty.
The FSC is responsible for regulating payments and e-money in Gibraltar, along with banking, fiduciary services, insurance and investments. Its regulatory activities are independent
of the U.K.’s Financial Conduct Authority, although Gibraltar applies the same level of regulatory standards as the U.K. and largely draws its laws, standards and approaches from the U.K.
Gibraltar addresses money laundering and terrorist fi- nancing risks through the 3rd EU Anti-Money Laundering Directive of 2005, which enshrines EU law in this area. Gibraltar takes a risk-based approach to money laundering compliance, which is the approach pioneered by the U.K. and endorsed by the EU in the proposed 4th Anti-Money Laundering Directive.
volume 7 • fall 2014
the FSC is CEO Samantha Barrass, an economist by background, who has worked in regulation for most of her career and joined the commission in February 2014.
“Our objective encompasses strong protection of the consumer and the public interest, and the
reputation of the financial services sector in Gibraltar,” Barrass tells Paybefore. “At the same time, we’re strong-minded about not cutting across innovation without good reason. Protecting safety and security of financial services is not inconsistent with innovation and developing new business.
“Our first step with any applicant for an e-money license is to sit down together to establish the key risks the applicant will need to manage
if it is authorized,” she adds.
Gibraltar’s e-money issuers are eager to praise their regulator and its open door policy.
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