The Central Bank of Cyprus (CBC) has introduced a revised licensing process for Electronic Money Institutions (EMIs) and Payment Institutions (PIs), effective from 3 August 2026. The principal change is the introduction of a mandatory pre-application exploratory stage before a formal licensing application can be submitted.
The CBC says the new stage is intended to improve applicants’ understanding of its licensing expectations and to identify potential concerns at an early stage, particularly in relation to the good repute of the ultimate beneficial owners and the wider group, where applicable.
A new step before the licensing application
Under the revised process, an entity intending to seek an EMI or PI licence must first complete a Pre-Application Document and submit specified information to the CBC. A non-refundable fee of €5,000 applies to this stage.
The CBC will conduct a preliminary assessment of the information provided. It may also require an Enhanced Due Diligence Report concerning the ultimate beneficial owners and connected entities, depending on the circumstances and its risk-based assessment.
The preliminary assessment is generally expected to be completed within 30 working days. Where enhanced due diligence is required, the period may extend to 50 working days.
The process concludes with an initial meeting involving the CBC and the relevant representatives and ultimate beneficial owners. The CBC will provide feedback on its preliminary conclusions and identify matters that should be addressed before a formal application is submitted.
Importantly, completion of this stage does not amount to approval or pre-approval of a future licence application. The CBC expressly notes that not all licensing criteria are examined during the exploratory stage.
Higher formal application fee
The fee payable when submitting the formal licensing application has increased from €5,000 to €10,000.
Accordingly, an applicant following the new process will face at least €15,000 in CBC fees across the pre-application and formal application stages, excluding any additional costs associated with enhanced due diligence or professional advisers.
The increased cost therefore accompanies a more structured engagement with the regulator before the formal application is filed.
Greater focus on due diligence and responsiveness
The CBC may require an enhanced due diligence report either during the pre-application exploratory stage or while assessing the formal licensing application. The report may be prepared by an appropriately experienced independent third party. In certain circumstances, the CBC may obtain the report itself through a third-party provider, with the cost borne by the interested entity.
The revised process also addresses applications that become inactive. Where an applicant does not respond to CBC comments or requests within the applicable period, the application may be deemed withdrawn.
These changes place greater importance on maintaining an organised application process and responding promptly to regulatory requests.
What this means for prospective applicants
For businesses considering establishing an EMI or PI in Cyprus, the revised process means that regulatory preparation begins before the formal application stage.
Applicants should expect the CBC to examine the proposed business model and relevant ownership structure at an early stage. The new process also provides an opportunity to identify potential concerns before significant resources are committed to a full licensing application.
The practical focus should therefore be on preparing the business model, ownership and governance information, and supporting documentation carefully from the outset. Particular attention should be given to matters capable of affecting the good-repute assessment.
The changes form part of the CBC’s wider licensing and supervisory strategy for the EMI and PI sector, which the CBC announced in December 2024.
Conclusion
The revised CBC framework represents a more structured front-end to the Cyprus EMI and PI licensing process. From 3 August 2026, prospective applicants must complete a pre-application exploratory stage and pay a non-refundable €5,000 fee before submitting the formal application, while the formal application fee has increased to €10,000.
For prospective applicants, the key practical message is that regulatory readiness and ownership due diligence need to be addressed at an earlier stage of the licensing process.
For more information, please contact Chrysses Demetriades at chrysses.demetriades@demetriades.com
Disclaimer: This article provides general information and does not constitute legal advice. The application of the law and regulatory requirements depends on the specific facts and circumstances of each case.
