Conditions for Applying for Participation in Designated Payment Systems; Authorisation to Issue Statutory Instruments

(1) To safeguard the stability and integrity of payment systems, an institution that applies for participation in a payment system within the meaning of section 1(16) of the Banking Act, and that participates in such a system, has the following: 1. in the case of safeguarding under section 17(1), second sentence, no. 1, letter b, first or third variant, a) a description of the investment strategy that ensures that the assets selected are safe and liquid and involve low risk; b) the number and functions of the persons who have access to the trust account; c) a description of the management and account reconciliation process ensuring that the payment service user's funds are protected, in that user's interest, against claims of other creditors of the institution, in particular in the event of insolvency; d) an explicit statement by the institution that the requirements of section 17 are complied with; 2. in the case of safeguarding under section 17(1), second sentence, no. 2, a) a confirmation that the insurance or comparable guarantee of an insurance undertaking or credit institution comes from an undertaking that does not belong to the same group as the institution itself; b) details of the existing account reconciliation procedure to ensure that the insurance or comparable guarantee is sufficient to meet the institution's safeguarding obligations under section 17 at all times; c) the duration and conditions of any renewal of the safeguarding; 3. a description of the governance arrangements and internal control mechanisms of the applicant, including administrative, risk-management and accounting procedures, demonstrating that these governance arrangements, control mechanisms and procedures are proportionate, appropriate, sound and adequate, in particular: a) a statement of the risks identified by the institution, including the nature of the risks and the procedures the institution has put in place, or will put in place, to assess and prevent such risks; b) the various procedures for conducting regular and permanent controls, including details of the frequency of the controls and the staff allocated to them; c) the accounting procedures through which the institution will record and report its financial information; d) the name, together with a current curriculum vitae, of the person or persons responsible for the internal control functions, including the regular and permanent control function and the compliance control function; e) the names of auditors who are not statutory auditors within the meaning of Article 2, point 2 of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87), as last amended by Directive (EU) 2023/2864 (OJ L, 2023/2864, 20.12.2023); f) a description of how outsourced tasks are monitored and controlled so that the quality of the internal controls of the payment institution or e-money institution is not impaired; g) a description of how all agents, e-money agents and branches are monitored and controlled as part of the internal controls of the payment institution or e-money institution; h) where the applicant institution is a subsidiary of a regulated undertaking in another EU Member State, a description of the group's governance; 4. a winding-up plan adapted to the institution's size and business model, and 5. a description of the risk mitigation measures the institution would take in the event of the termination of its payment services, ensuring the execution of pending payment transactions and the termination of existing contracts. Section 10(5) applies correspondingly.
(2) On the institution's request, BaFin informs the institution, within three months of receipt of the documents under subsection (1) or, where the documents are incomplete, within three months of the submission of all necessary documents, of its determination as to whether the conditions for an application to participate under subsection (1), first sentence, are met.
(3) The Federal Ministry of Finance is authorised to issue, by statutory instrument not requiring the consent of the Bundesrat, in agreement with the Deutsche Bundesbank, more detailed provisions on the type, scope and form of the documents provided for under this provision. The Federal Ministry of Finance may transfer the authorisation, by statutory instrument, to BaFin, on condition that the statutory instrument is issued in agreement with the Deutsche Bundesbank. The leading associations of the institutions must be heard before the statutory instrument is issued.