Opinion of the European Central Bank of 16 April 2009 at the request of the Cypriot Ministry of Finance on draft provisions on payment services and systems (CON/2009/36)
Date: 2009-04-16
Institutions: European Central Bank
Subjects: Cyprus, banking supervision, central bank, financial institution, national law, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 April 2009 

at the request of the Cypriot Ministry of Finance on draft provisions on payment services and 

systems  

(CON/2009/36) 

Introduction and legal basis 

On  11  March  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Cypriot  Ministry  of 

Finance  for  an  opinion  on  draft  provisions  on  payment  services  and  systems  (hereinafter  the  ‘draft 

provisions’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and on the third and fifth indents of Article 2(1) of Council Decision 98/415/EC of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft provisions relate to the Central Bank of Cyprus (CBC) and to payment 

and settlement systems. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of 

the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose and contents of the draft provisions 

1.1  The  main  purpose  of  the  draft  provisions  is  to  transpose  into  Cypriot  legislation  Directive 

2007/64/EC  of  the  European  Parliament  and  of  the  Council  of  13 November  2007  on  payment 

services  in  the  internal  market  amending  Directives  97/7/EC,  2002/65/EC,  2005/60/EC  and 
2006/48/EC  and  repealing  Directive  97/5/EC2.  This  objective  is  to  be  achieved  mainly  through 

adopting (i) the Law on payment services (hereinafter the ‘Law’) and (ii) the CBC Directive laying 

down  the  licensing  and  prudential  supervision  requirements  applicable  to  domestic  payment 

institutions,  as  well  as  through  amendments  to  the  Law  on  the  prevention  and  suppression  of 
money laundering activities of 20073.  

1.2  As  stated  in  the  explanatory  memorandum  accompanying  the  consultation  request,  the  draft 

provisions  go  beyond  transposition  of  Directive  2007/64/EC.  In  particular,  the  Law  goes  beyond 

Article  2(1)  and  (2)  of  Directive  2007/64/EC  and  extends  the  national  scope  of  application  to 

(i) payment services where only one payment service provider (either that of the payer or that of 

the payee) is located in the Community, as well as (ii) to payment services provided in a currency 

1 
2 
3  

OJ L 189, 3.7.1998, p. 42.  
OJ L 319, 5.12.2007, p. 1. 
Law 188(I)/2007, Episimi Efimerida tis Dimokratias, Annex I(I), No 4154 of 31.12.2007. 

 
 
 
 
                                                 
other than the euro or the currency of a Member State outside the euro area (see Section 3 of the 

Law).  Moreover,  in  deviation  from  Article  52(2)  of  Directive  2007/64/EC,  the  Law  extends, 

subject  to  the  contracting  parties’  agreement  to  the  contrary,  the  scope  of  application  of 

Article 52(2) to payment transactions involving currency conversion (see Section 45 of the Law).  

1.3  On  the  basis  of  Article 1(2)  of  Council Decision  98/415/EC,  this opinion  only covers  those  draft 

provisions  that  directly  relate  to  payment  systems  and  the  CBC.  While  acknowledging  the 

importance of Directive 2007/64/EC for the establishment of the Single European Payments Area 

(SEPA), this opinion does not assess the overall transposition of the Directive in Cyprus.  

2. 

General observations  

The ECB welcomes the draft provisions that fulfil the regulatory conditions needed for the introduction of 

the SEPA. They will comprehensively govern the operation of the payment services market in Cyprus and 

ensure  close  cooperation  between  the  CBC  and  the  Ministry  of  Finance  in  transposing  Directive 

2007/64/EC.  

3. 

New tasks and sufficient human and material resources 

The  draft  provisions  will  entrust  the  CBC  with  new  payment  institution  authorisation  and  supervision 

tasks  (see,  in  particular,  Titles  III  and  X  of  the  Law,  read  in  conjunction  with  the  CBC  Directive). 

Significantly,  these  new  tasks  also  extend  to  the  assumption  by  the  CBC  of  supervisory  functions  in 

connection  with  the  prevention  and  suppression  of  money  laundering  by  payment  institutions  (see 

amended Section 59(1) of the Law on the prevention and suppression of money laundering activities of 

2007). In order for the CBC to be in a position to perform its new tasks in parallel with its Eurosystem-

related  tasks  and  other  tasks  assigned  to  the  CBC  by  national  law  it  is  essential  that  the  CBC  has 
sufficient human and material resources4. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 16 April 2009. 

[signed] 

The Vice-President of the ECB 

Lucas D. PAPADEMOS 

4  

See  also  paragraph  3.1  of  ECB  Opinion  CON/2009/27  of  24  March  2009  at  the  request  of  the  Slovenian  Ministry  of 
Finance on a draft law on payment services and systems. 

2