This chapter analyses the structure of financial regulation, focusing on the Ministry of Finance of the Czech Republic which is responsible for drafting legislation to regulate the capital market, and the Czech National Bank (CNB) which is the financial market supervisory authority. Historically the CNB had a technology-neutral approach to supervision but in 2019, it established a FinTech contact point to help resolve unclear regulatory issues. The CNB has been facing elevated demand for authorisation for payment service providers, expressing in parallel, dissatisfaction with the quality of applications submitted. The licensed number of payment service providers has been in fact declining. The CNB is expected to start supervising crowdfunding activity following Regulation 2020/1503 of the EU after completion of the national legislation process. The future implementation of the Regulation of Markets in Crypto Assets (MiCA) is expected to further expand CNB’s supervisory scope.
The FinTech Ecosystem in the Czech Republic
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2. The structure of financial regulation and supervision in the Czech Republic
Abstract
2.1. The Ministry of Finance of the Czech Republic: the regulatory authority for financial markets
The MFCR is responsible for developing the financial market policy and drafting legislation governing the financial market. The MFCR is the central government authority responsible for the financial market, the regulation of the issuance of electronic money and the protection of consumer interests in the financial market, with the exception of the supervision of the financial market which lies within the scope of the CNB's competence. In addition, the MFCR is responsible for the contribution to building savings and state contribution to supplementary pension insurance etc. The MFCR performs regular capital market analyses and ensures the Czech membership in the international financial institutions and bodies of the European Union in the capital market area (MFCR, 2022[1]).The MFCR has many additional roles on top of its responsibilities with regard to the financial market in the areas of fiscal policy, taxes etc.1
In terms of organisational structure, Section 07 of the MFCR is responsible for financial markets, with responsibilities divided among three departments: Department 27 - Financial Markets I, Department 35 - Financial Markets II and Department 36 – Financial Markets III (MFCR, 2022[2]). The specific responsibilities of each of the departments are outlined below.
Department 27 is involved in formulating policy proposals for issues related to the systemically important financial intermediaries, financial stability and resolution. It carries out legislative activities in the banking sector, building societies / home-purchase savings, cooperative savings, financial market oversight and financial stability and ensures its harmonization with EU law, and represents the Czech Republic in European Commission and EU Council working groups and committees in relation to legislative bills within the area of its competence. Department 35 formulates policy proposals in the area of capital markets, payment services, cash circulation, currency exchange, market infrastructure, insurance sector and private pension savings products. As part of its mandate, Department 35 formulates strategic proposals, impact and comparative studies, proposals for substantive solutions, proposals for substantive intents of bills including evaluations of new or amended regulation’s impacts and ensures that these are consulted within internal and external consulting procedure. Department 36 operates in the field of consumer protection in financial services (including promoting financial education), consumer credit and intermediation and the build-up of savings. It drafts methodologies for the performance of supervision and the related guidelines for enforcing fulfilment of obligations and administrative sanctions. It formulates proposals, determines the purpose, defines the assignment of and changes to information systems that are managed and operated by the Ministry for the purposes of supervision, processing of applications for state support for building savings and state contributions to supplementary pension insurance and supplementary pension savings and their returns and changes in the data on participants. Within the scope of its competence, it prepares strategic proposals, impact and comparative studies, proposals for substantive solutions, proposals for substantive intentions of laws and draft legal regulations, including regulatory impact assessments, and ensures their discussion in internal and external consultation proceedings ( (MFCR, 2022[2]) and bilateral meetings of OECD team with MFCR officials).
2.1.1. Financial education
The MFCR is the responsible authority for promoting financial education in the Czech Republic. It is responsible for creating the policy and concept of financial education and preparing strategic proposals; managing the Working Group for Financial Education, comprising representatives of other Ministries; providing regular measurements of the level of financial literacy of the adult population and acting as a professional consultant in the implementation of financial education in educational programs for schools. The CNB is an independent professional consultant to the Working Group for Financial Education and acquaints the public with the basic principles of the functioning of the economy, money circulation, financial markets and supports or runs financial education activities (MFCR, 2022[3]).
In 2019, the MFCR published an extensive report assessing the level of financial literacy in the Czech Republic, by different sectors. The report highlighted low level of financial instruments uptake (demand) by the domestic SME sector (MFCR, 2019[4]). Following the policy and action recommendations included in the report, the MFCR introduced in 2021 a website called “Capital Guide”2, designed for SMEs to make them more familiar with financing tools. The website was developed in cooperation with the European Commission and co-funded by the European Union’s Structural Reform Support Programme. The website includes examples of various local FinTech financing solutions such as crowdfunding, equity and lending platforms.
In 2020, the MFCR conducted a survey on the level of financial literacy among Czech adults (MFCR, 2020[5]) and in the same year published a National Strategy on Financial Education (MFCR, 2020[6]) (for more on the survey and the National Strategy see Chapter 4).
National Strategy for the Development of the Capital Market
Also in 2019, the MFCR introduced the National Strategy for the Development of the Capital Market in the Czech Republic 2019 –23. In this Strategy, approved by the Czech Government in 2019, it is stated that the Czech capital markets fail to sufficiently fulfil the function of efficient allocation of unutilised savings towards enterprises who need funding and that the banking system prevails. The Strategy for market development called, among others, for more diversity in the SME financing offering with alternatives to bank financing and subsidies from the European Union, as well as greater support for innovation in finance (MFCR, 2019[7]).
With regard to the regulatory approach, the Strategy stresses the need to remove unnecessary regulatory burdens and costs, except for those that draw from the requirements of EU law. In addition, regulatory stability was highlighted as important. When adopting regulatory changes affecting the capital market, the following basic principles were noted: consultation of changes with regulated entities, description and argumentation for changes, proportionality of changes targeted to market failures, and minimization of other changes unless explicitly required by regulated entities. The abolition of existing regulation should not be avoided a priori, and adoption through accelerated legislative process has to be avoided (MFCR, 2019[7]).
2.2. Czech National Bank: the unified financial markets supervisory authority
The Czech National Bank (CNB) is the sole unified supervisory authority for the financial markets in the Czech Republic.3 The CNB therefore supervises the banking sector, the capital market, the insurance industry, pension funds, credit unions, bureaux-de-change and non-bank payment provider. In cooperation with the MFCR, which is responsible for the preparation of laws in the financial market area, the CNB participates in the preparation of primary legislation and lays down secondary rules in the form of decrees and measures of a general nature; it authorises, regulates, supervises and, issues penalties for non-compliance with these rules (CNB, 2022[8]). It is worth noting that the CNB has no official mandate with regard to fostering competition in the financial sector.
The current mandate of the CNB as sole unified supervisory authority was established in February 2006, when the Czech Parliament passed the Financial Market Supervision Integration Act.4 On 1 April 2006, under this Act, the CNB took over all the activities of the Czech Securities Commission (CSC), the Finance Ministry's Office of the State Supervision in Insurance and Pension Funds (ÚDPP) and the Office for Supervision of Credit Unions (ÚDDZ), which all ceased to exist as of that date.
According to CNB officials, the CNB Board approves CNB’s decisions and policies. All proposals for the Board are formally circulated to all relevant departments before submission to the Board for comments and amendments. If consensus cannot be found neither on the level of executive directors, nor by Board member responsible for oversight of respective departments, disagreements are highlighted and left for the Board to be decided.
The CNB shall take a position on proposals presented to the Government for consideration that concern the fields of its competence (this is detailed in the Rules of Procedure of the Government - Art II.5, and in the Legislative Rules6), and that it shall act in an advisory capacity vis-a-vis the Government in matters of monetary and macroprudential policy and the financial market (Art. 10) (as set forth by Act No. 6/1993 Coll.). The Minister of Finance or another nominated member of the Government may attend the meetings of the CNB Board in an advisory capacity and may submit motions for discussion, while the Governor of the CNB, or a Deputy Governor nominated by him, may attend the meetings of the Government in an advisory capacity (Art. 11).
The CNB, together with the MFCR, shall prepare and submit to the Government draft legislation on the currency and the circulation of money, and draft legislation concerning the status, competence, organisation and activities of the CNB, save for financial market supervision, the payment system and electronic money issuance.7 The CNB shall also cooperate with the MFCR in preparing draft legislation in the areas of financial markets, payment system, electronic money issuance, foreign exchange management and the adoption of the single currency, the euro, in the Czech Republic. The details of this cooperation are set out formally in a memorandum from 2006.8
At the European level, the CNB is involved in the three European financial market supervisory authorities established on 1 January 2011, namely the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), as well as the European Systemic Risk Board (ESRB for macro-prudential policy relating mainly to systemic risks). At the international level as the supervisory authority, it is involved in the International Organization of Securities Commissions (IOSCO), the International Association of Insurance Supervisors (IAIS), the International Organisation of Pension Supervisors (IOPS), the International Monetary Fund (IMF), the Bank for International Settlements (BIS), and the European Central Bank (ECB) (CNB, 2022[9]).
2.2.1. The CNB’s internal structure
The set-up of financial market supervisory activities involves several departments within the CNB. The “gate keepers” are the Licensing and Enforcement Department which carries out licensing, approval and authorisation activities (i.e. first-instance proceedings and decision-making on license, permit and approval applications). After a successful authorisation, this department continues to be of relevance to market participants as it also conducts enforcement activities including first-instance proceedings and decision-making on licence, permit and approval revocation and on the cancellation of registration. In addition, the Licensing and Enforcement Department supervises public offerings of investment securities, supervising compliance with the duties of issuers of listed securities, and supervising regulated market operators, settlement systems with settlement finality of central counterparties, multilateral trading systems and central depositories (CNB, 2022[10]).
The functions of supervision are separated between two departments – Financial Market Supervision Department and Financial Market Supervision Department II. The first department is responsible for the supervision of large institutions, whose activity is likely to affect financial stability (credit institutions, insurance and reinsurance corporations, pension management companies, the central depository, central counterparties and non-financial contracting parties of OTC derivatives, operators of settlement systems with settlement finality and operators of investment instrument markets, as well as foreign entities similar to this list in respect of their activities in the Czech Republic). The second department is responsible for the supervision of the smaller entities, in particular entities offering payment services and electronic money, financial intermediaries, all consumer credit provision (i.e. including by banks). The responsibilities of supervision include off-site and on-site prudential, consumer protection and AML/CFT supervision (CNB, 2022[10]). Decision-making in supervisory work is separated from the CNB Board’s decision-making. In this sense, the CNB Board does not interfere in the decision-making process at the supervisory level. The CNB Board is regularly informed about supervisory activities, primarily with the aim of assessing the effectiveness of the work of the first-instance authority (CNB, 2022[9]).
The CNB separates the drafting of regulations, any decision-making around licensing, enforcement proceedings and activities relating to resolution and macro-prudential policy (financial stability) from the direct performance of supervisory activity. The main components of the functional organisation of supervision are prudential supervision, business conduct supervision and AML/CFT supervision. These activities must be coordinated to prevent conflicts arising between their different approaches and to ensure that they support other activities and thereby contribute to meeting the CNB’s supervisory objectives (CNB, 2022[9]). According to CNB officials, cooperation between CNB departments is promoted through formal and informal committees or working groups, as well as through ad hoc cooperation, where appropriate (considering the confidentiality of supervisory information) and as necessary.
The procedures for submitting applications for permission or approval to the CNB are governed by the relevant sector-specific laws and by decrees issued by the CNB to implement the individual laws. The laws are prepared by the MFCR and, in some cases, the Ministry of Justice. The decrees issued by the CNB stipulate the specific requisites of applications, the specimen forms on which applications should be submitted, and the annexes that must be attached to applications (CNB, 2022[11]).
2.2.2. The CNB’s supervisory approach
The CNB seeks to apply a single approach to individual financial market entities. To this end, it organises its supervisory activities not on a sectoral but on a functional basis. The CNB’s objective in the area of supervision, as defined by law, is to ensure financial stability and the safe and sound operation of the financial system in the Czech Republic, contributing to achieving its primary objective - price stability. The main components of the functional organisation of supervision are prudential supervision, conduct of business supervision and also AML/CFT supervision.
a. Supervisory activity
In all its supervisory activities, the CNB applies a risk-based approach based on a risk assessment system (RAS). This means that it allocates the largest proportion of its resources to areas that are systemically the most important or the most risky (CNB, 2022[9]). The structure of the supervision unit in the CNB reflects the importance of safeguarding financial stability as the primary objective: At the decision of the CNB Board, the organisation of the CNB’s supervisory work was updated as of 1 March 2017 and supervision is currently performed by the Financial Market Supervision Department and the Financial Market Supervision Department II. The Financial Market Supervision Department conducts off-site and on-site supervision of credit institutions, insurance and reinsurance corporations and pension funds, three sectors that are defined systemically important by the CNB. The Financial Market Supervision Department II conducts off-site and on-site supervision of payment and electronic money institutions, investment, insurance and credit intermediaries, bureaux de change, non-bank investment firms, management companies, non-bank consumer credit and others, sectors not defined as systemically important9 (CNB, 2022[9]). With regards to regulatory manpower, the structure of the supervision function implies that while the Supervision Department oversees several dozens of institutions, the Supervision Department II oversees thousands of entities.
The nature of supervision and its conduct differ between systemically important institutions and those that are not defined as such: The CNB meets the senior managers of systemically important institutions on a regular basis and communicates with middle managers on an ongoing basis. The CNB focuses its supervisory attention mainly on sectors and institutions which are systemically important or have the potential to be systemically important due to the size of the impact of their potential failure (CNB, 2022[9]). In its supervisory work, the CNB’s supervisory unit takes into account the conclusions and recommendations of the financial stability unit, which are contained primarily in the Financial Stability Report.
The CNB is responsible for macro prudential supervision of the financial system10. The unit at the CNB responsible for financial stability and macroprudential policy comes under the broader remit of financial market supervision. Legally binding instruments are available to be applied to entities regulated and supervised by the CNB. The CNB mostly applies macro prudential tools to the banking sector though macroprudential policy also covers non-banking components of the financial system. The CNB assesses the activities and position of non-bank financial institutions on an ongoing basis and, where necessary, responds to changes in systemic risk and resilience (CNB, 2020[12]) (for more extensive description of CNB’s actions and available tools with regard to macroprudential policy see Annex B).
Supervising non-systemically important institutions: the case of non-bank consumer lending providers
Traditionally the CNB has opposed to acting as supervisor for non-systemically important institutions; in 2014, when consultations on a new national Act on Credit for Consumers were taking place, “strong disagreement was expressed [by the CNB to the Ministry of Finance consultation paper] with the extension of the scope of the Act to business loans and with the CNB becoming a supervisory authority for the provision and distribution of credit for consumers, as non-bank loans are not relevant to systemic stability and the central bank’s mandate. The CNB has also long been against extending the applicability of prudential regulation to non-bank loan providers. It should therefore not license or supervise the distribution of non-bank loans.” According to the CNB, non-bank consumer lending providers are not entities which accept deposits or manage the funds of third parties and whose failure has serious consequences for clients, investors or financial stability (CNB, 2015[13]). In 2015, the CNB restated its disagreement with the integration of supervision of non-bank consumer credit providers and intermediaries into the CNB stating that “there is no link to the CNB’s statutory objectives, there is a risk of monetary financing without compensation of the CNB’s supervisory costs, such integration brings no positive effects, and there are no grounds for prudential supervision of such entities” (CNB, 2016[14]). Eventually, the MFCR insisted the CNB be designated as the supervisory authority for non-bank consumer credit providers, and it has been their supervisor since the Act on Consumer Credit11 went into effect in end of 2016. Currently, the CNB claims that “in some cases, these are companies (consumer credit providers) which are assessed as systemically important” (CNB, 2022[9]). At the end of 2020, the CNB supervised 85 non-bank consumer credit providers (CNB, 2021[15]).
Supervision is broken down according to whether it takes the form of on-site or off-site surveillance. With continuous supervision, applicable to systemically important institutions, the main emphasis is placed on off-site supervisory activities. On-site surveillance focuses on prudential, conduct of business and AML/CFT inspections. On-site presence of supervisors in banks, insurance companies and credit unions is considered an important component of the conduct of supervision, whereas in non-systemically important sectors supervision relies more heavily on off-site surveillance, regular reporting and complaints from the public (CNB, 2022[9]). Closer inspection might occur for important institutions in non-systemically important sectors, but otherwise inspection in non-systemically important sectors is based on a reactive approach (CNB, 2022[9]).
The CNB considers complaints from the public as an important source of information about the approach of supervised entities to clients, especially in the case of credit and payment institutions, bureaux de change and insurance companies. Findings obtained when investigating submissions made by the public are used as a basis for thematic surveys in the sector concerned and to identify supervised entities to be included in the on-site inspection. Naturally, given the dominance of the banking sector in the provision of financial services, it is the sector with the highest amount of complaints, followed by insurance firms and non-bank credit providers
Figure 2.1. Submissions from the public to the CNB, by sectors
The CNB measures the effectiveness of its work not only by evaluating its results with respect to its objectives, but also by measuring the costs that it and supervised entities incur. The CNB supervisory unit decides about the allocation of its capacity, chooses relevant supervisory procedures and instruments, and communicates its requirements to supervised institutions and other supervisory authorities based on the results of risk assessments.
b. Supervision in the area of business conduct
The objective of business conduct supervision is to contribute to increasing the transparency of the financial market and to resolving any systemic shortcomings in the areas of conduct of business and professional care. Business conduct supervision primarily involves the protection of retail clients’ or consumers’ interests. An identical supervisory approach is applied to all institutions to a similar extent and complexity of activities based on the principle of proportionality (CNB, 2022[9]). Act No. 36/2008 Coll., which amended and extended Act No. 634/1992 on Consumer Protection, promulgated on 12 February 2008 has fundamentally affected the CNB and entrusted it with the supervision of compliance with consumer protection rules by regulated financial market entities (CNB, 2009[16]). Following the act, the CNB was entrusted with supervising compliance with the prohibition of unfair commercial practices, the prohibition of discrimination against consumers and with obligations regarding the provision of proper pricing information in respect with entities subject to its supervision12 (CNB, 2009[16]). Consumer protection is usually performed subsidiarily to the rules set out in the relevant sectoral legal regulations (CNB, 2022[9]). The CNB follows sectoral product oversight governance rules (e.g. EBA’s Guidelines on product oversight and governance arrangements for retail banking products13).
In addition, the CNB oversees compliance with the obligations stipulated by the Civil Code, in force since 2014, for concluding contracts on financial services concluded at a distance by telephone, fax, e-mail or the Internet. The Civil Code sets out in detail the scope of information that must be provided to the consumer before concluding the contract (MFCR, 2022[17]).
Supervised institutions have no disclosure duty in the area of consumer protection. The supervisory authority obtains information on possible breaches of the relevant legal rules from complaints filed either by consumers or by consumer protection associations under Article 26 of the Consumer Protection Act and from its own activities (CNB, 2010[18]). As the public financial market supervisory authority, the CNB is not entitled to intervene in private legal relationships between supervised institutions and consumers and is therefore not an out-of-court dispute settlement authority. This means that its consumer protection activities differ markedly from those of, say, the Financial Arbitrator (CNB, 2010[18]). Consequently, it sometimes happens that consumers after being informed of this fact do not cooperate sufficiently with the CNB during the investigation of their complaints, since for them the CNB’s supervisory activities will not lead to a decision in their favour, including the expected compensation (CNB, 2010[18]).
The Financial Arbitrator (FA) is the body handling the out-of-court resolution of disputes between consumers and financial institutions. Its remit has gradually expanded, and since its scope of competence was last extended in 2022, it is now authorised to resolve consumer disputes across almost the entire financial market. In particular, the FA competence covers consumer disputes related to payment services, non-payment accounts and passbooks, electronic money, consumer loans, including mortgages and building savings loans, investment services and life insurance. On the other hand, the FA does not have jurisdiction over disputes arising from financial services such as non-life insurance, and shareholder and bondholder disputes (MFCR, 2022[19]).
c. Anti-Money Laundering and Counter-Terrorism financing (AML/CFT) compliance
The aim of supervision in the area of AML/CFT carried by the CNB is to contribute to enhancing internal control mechanisms in relevant entities by assessing the system of internal principles for this area and conducting thematic sector-wide surveys. On an individual basis, it involves performing off-site supervision of relevant entities in the AML/CFT area identified in complaints from the public. In on-site inspections, the CNB focuses on checking compliance with the AML/CFT legislation with the aim of verifying the functioning and effectiveness of the system of AML/CFT measures of and to determine whether the measures are sufficiently robust and effective to prevent exploitation for money laundering and terrorist financing (CNB, 2022[9]). These inspection take place with cooperation with the Financial Analytical Office, the responsible agency for AML/CFT compliance in the Czech Republic (see Section 2.3).
In 2020, Act No. 527/2020 was adopted as an amendment to Act No. 253/2008 Coll., on Certain Measures against Money Laundering and Terrorist Financing, and Act No. 300/2016 Coll., on the Central Register of Accounts. The amendment o of the Act No. 37/2021 Coll., on the Register of Beneficial Owners was also finalised. The aim of the proposals is to transpose an amendment of the Anti-Money Laundering Directive and incorporate the recommendations of the MONEYVAL Committee.14 The amendment introduces, for example, an explicit duty to carry out intensified vetting of clients in higher-risk situations, an increase in the maximum penalties applicable, an extension of the data recorded in the Central Register of Accounts, and a clarified definition of beneficial owner. The changes apply to all “obliged entities”, i.e. almost all financial market undertakings (CNB, 2021[15]).
d. Financial literacy
The CNB has participated in several projects in recent years aimed at raising financial and economic literacy in the Czech Republic, with a focus on school pupils. In particular, it has made publicly available several teaching materials for school teachers. The latest initiative of the CNB was the creation of the CNB Visitor Centre (CNB, 2022[20]).
2.2.3. The CNB’s approach towards innovation in finance
The CNB has historically maintained its approach toward innovation in finance, and that is of technology neutral supervision. The CNB states that business activity in the financial market is governed by sector-specific Acts,15 which also lay down conditions for the performance of individual activities, including their authorisation and registration requirements. All providers of relevant products and services must comply with those conditions regardless of the innovative aspects of those activities, according to the CNB. If an innovative activity or service does not meet the criteria of a regulated activity, the entity offering it is subject to neither supervision nor registration by the CNB.16 As such, the CNB does not keep a register of FinTech companies, but includes regulated FinTech entities performing a regulated activity under its register (CNB, 2018[21]).
Crypto-assets
When it comes to crypto-assets, the CNB does not currently consider them as money or funds as defined in Act on Payments and instead classifies them as intangibles. The law arguably permits Czech banks to offer crypto-related services as long as they comply with AML regulations though there is an indirect limitation regarding trade of tokens. The Czech Republic has, however, implemented a stricter legal model than AMLD5 requiring that every crypto-related firm be regulated by the Czech government, not only exchanges and wallets as the EU regulation stipulates. Gains on crypto-asset investments are taxed at rates between 15% and 19% (Thomson Reuters, 2022[22]). A trading license is required to conduct business in the area of crypto-assets and that can be obtained from the Trade Licensing Office.
FinTech contact point at the CNB
Nonetheless, in November 2019, the CNB established a FinTech contact point. The contact point aims at helping resolve unclear regulatory issues - including licensing and supervisory ones - so as to facilitate compliance with the duties imposed on enquirers by financial market regulations. Opinions of the CNB provided via the contact point do not substitute for authorisations or approvals granted in licensing proceedings and are not binding in any way (CNB, 2022[23]). The FinTech contact point is currently operated by a team of 2 CNB staff members and receives/handles on average approx. 2-3 requests per month The capacity of the FinTech contact point is further limited by the very broad agenda of the financial innovations team, as all innovation and digitalisation issues go through this same team.
In the future it is expected that more financial activities carried out by FinTechs will become regulated across the EU, starting with crypto asset providers following the imminent agreement on the Regulation of Markets in Crypto Assets (MiCA) and the DLT pilot regime (see Section 3.1 for more details on on-going and expected regulatory initiatives at the EU), which will increase the demand for authorisation by the CNB even further. Future inquiries related to forthcoming regulation are expected to be more standard qualified questions that require a different, much more resource intensive effort to be resolved. Such processes are also expected to be much lengthier (up to three months) than replying to a FinTech query received through the Contact Point.
2.2.4. Supervision in the area of payment services providers
In 2010, the CNB’s supervisory responsibilities were extended to include non-bank payment services providers and non-bank electronic money issuers.17 The newly regulated entities comprised payment institutions, electronic money institutions, small-scale payment services providers and small-scale electronic money issuers.18
The current Act on Payments19 is the national legislation from 2017 implementing the Directive on Payment Services in the Internal Market (PSD2). The Act introduced numerous new duties for existing holders of authorisation to provide payment services and provided for the establishment of new types of entities. Entities which were originally subject to simple registration (i.e. small-scale payment service providers and small-scale electronic money issuers) were now authorised in licensing proceedings, similarly to payment institutions and electronic money institutions (CNB, 2019[24]).
Small-scale payment service provider licence might be applicable if the average monthly amount of payment transactions it has executed in the previous 12 months does not exceed EUR 3 million and if services are offered in the Czech Republic (MFCR, 2017[25]). A similar option exists for licences for issuing electronic money. However, in essence, the geographical limitation is hard to follow through and customers can be foreign residents. The small scale licence allows providers to offer limited payment services under less burdensome operating conditions; whilst a payment institution is required, among others, to have initial capital, organizational capacity and professional experienced directors, small-scale payment providers are exempt from these requirements, and instead need only to have a security and operating risk management system and a system for handling user complaints in place (MFCR, 2017[25])20.
The new payment services that were introduced by the Act on Payments include indirect submission of a payment order (payment initiation service (PIS)) and provision of information on a payment account (account information service (AIS)). In addition to payment institutions, a new type of entity – a payment account information administrator – able to provide information on a payment account – was introduced (CNB, 2019[24]) and (MFCR, 2017[25]).
Payment institutions and electronic money institutions had to adapt their governance systems to the new requirements, in particular their operational and security risk management systems, their complaints systems, their business resumption and continuity procedures and their procedures for submitting, monitoring and recording sensitive payment data (including classification of and access to sensitive data). Payment institutions and electronic money institutions also had to demonstrate that part of their payment services business was pursued in the Czech Republic. During the transition stage to full compliance with the new requirements, CNB supervisory assessments identified frequent deficiencies in operational and security risk management systems and related business resumption and continuity procedures. The main shortcomings detected in the course of off-site surveillance related to the calculation of payment institutions’ eligible capital, breaches of the statutory cap on the monthly average amount of payment transactions for small-scale payment service providers, and discrepancies in data on the value and investment structure of funds entrusted by users to payment service providers in order for the latter to execute payment transaction (CNB, 2019[24]).
The CNB regards the supervision of payment and electronic money institutions as an integral part of maintaining the stability of the financial system in the Czech Republic. This means in particular supporting the sound development, market discipline and competitiveness of the supervised institutions, preventing systemic crises and strengthening public confidence in the financial system (CNB, 2022[26]).
The supervision of payment institutions includes decisions on licence, permit and registration applications and prior approvals pursuant to special legal rules; inspection of adherence to the conditions stipulated in licences and authorisations; inspection of adherence to laws, insofar as the CNB has the power to conduct such inspections under the law or special legal rules; inspection of adherence to the decrees and provisions issued by the CNB; collection of information needed to perform supervision and its enforcement, and verification of whether it is true, complete and up-to-date; the imposition of remedial measures and penalties; and proceedings regarding administrative offences (CNB, 2022[26]).
The CNB has been facing elevated demand for authorisation for the various payment entities since 2018 ( (CNB, 2020[27]; 2021[15]). In parallel, the CNB has been expressing dissatisfaction with the quality of applications submitted: “Compared with other sectors, the quality of applications here is often low. The CNB thus has to call on the applicants repeatedly and in detail to bring their internal regulations into conformity with their business plan and the legislation. Applicants were also often unable to submit an account agreement with a credit institution or a promise to enter into an agreement demonstrating in the licensing proceedings that the funds entrusted for the performance of payment transactions were protected” (CNB, 2020[27]). In the following year the CNB mentioned that applicants in the payments sector had difficulties describing their business plans for the purpose of authorisation (CNB, 2021[15]).
Since the enactment of the Act on Payments, the number of non-bank payment service providers, both small and “regular”, has been declining according to CNB statistics. In particular, the amount of small payment service providers, which did not require a licence prior to 2018, has sharply declined (Figure 2.2).
Figure 2.2. Summary of regulated and registered payment and electronic money institutions in the Czech Republic
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Source: CNB (2022[28]), Regulated institutions and registered financial market entities lists, https://apl.cnb.cz/apljerrsdad/JERRS.WEB07.INTRO_PAGE?p_lang=en.
In addition, the incidence of suspended proceedings or rejected applications in the payments sector has been higher than in other financial market sectors (CNB, 2021[15]). In 2020, decisions were taken on 47 applications (seven permits were issued, 32 proceedings were discontinued and eight applications were rejected). Overall approval ratios have been quite low in the payment sector in the past several years (Figure 2.3). In addition to low approval rate of new licences, enforcement measures against payment providers have also been substantial; in 2020, the CNB revoked licenses in 13 cases due to enforcement proceedings under the Act on Payments (CNB, 2021[15]). In 2019 licences were revoked in 22 cases (three small-scale electronic money issuers, 18 small-scale payment service providers and one payment institution). A large proportion of the licence revocations were the result of failure to demonstrate compliance with the conditions for operation under the new Act on Payments (CNB, 2020[27]).
Figure 2.3. Licencing approval rates by the CNB in the payments sector
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Note: Percentages in this graph do not refer to the overall number of applications processed by CNB in observed years, but only to the subset of terminated cases. Approval rates are the amount of licences granted during a calendar year, and these rates are complementary to refused and withdrawn applications. (*) Data for 2022 is until 31/05/2022. The category of electronic money institutions is not displayed due to low amount of applications.
Source: CNB officials.
Timelines for licence approvals for payment institutions and for small payment institutions are the longest compared with other types of licenses issued by the CNB, 25 and 18.3 months on average, respectively, in 2021. For comparison, average length of proceedings completed in 2021 for credit institutions and non-bank consumer lenders was 13.1 and 14.1 months respectively. In addition, the application rate for these types of licences, and small-scale payment institution licence in particular, has been high in recent years.
As regards AML/CFT compliance in the payments system, the CNB assessed that a large number of non-bank payment service providers were risky from this perspective in 2020 (CNB, 2021[15]).
As the Act on Payments allows for an exemption for small payment services providers and small e-money issuers, they can only provide their services within the Czech Republic. The CNB has identified this group of entities as having exploited the domestic legislative environment for their foreign business activities, without often having at least minimum ties with the Czech market neither from ownership not from clientele perspectives (CNB, 2021[15]). On-site examinations identified recurring inconsistencies between the business plan submitted in the licensing proceedings and the entity’s actual activities and shortcomings arising from the formal regulation of processes and activities in internal rules, which do not correspond to the actual functioning of these entities. These are mainly shortcomings in the protection of clients’ funds, compliance with AML/CFT duties and compliance with the reporting duty to the CNB and the information duty to payments service users. The CNB plans to continue to focus on the problematic aspects of this sector in its future supervisory work. Supervision will also focus on monitoring the application of strong customer authentication in electronic card transactions and of exemptions from this duty by payment institutions, electronic money institutions and bank card payments (CNB, 2021[15]).
2.2.5. The Czech Standard for Open Banking, Account Information Service Providers and Bank ID
Following the implementation of the Act on Payments21 (the local PSD2 legislation) and the requirement that banks provide other qualified payment-service providers (PSPs) connectivity to access customer account data and to initiate payments, an industry-initiated Standard for Open Banking was developed in the Czech Republic (see Section 1.3.1). The Czech Standard for Open Banking was developed by the local banking association, and the recent version, 5.0, became valid in 2022. The standard is voluntary, and it is up to each bank to consider joining it (Czech Banking Association, 2022[29]).
One of the most prominent use cases to have evolved from the implementation of the Standard for Open Banking was the Bank ID (project SONIA) implementation (see Section 1.3.1). The Bank ID is an interface that allows for digital verification of identity. Users of the interface can log in to the portals of various companies and state administration. Once a user logs in to the banking environment she can instruct the bank to send her data to the company or office participating in the arrangements. Seven banks currently provide this service, and it is free of charge for users (Bank ID, 2022[30]). Although in terms of level of service this seems to be an improvement for consumers, this might also be valuable for banks to collect data on their customers as to their commercial habits and to verify the data collected within the identification process in public registries, and even though direct information on the activity of users within the commercial or governmental site is not visible to the validating bank. Furthermore, it also enabled banks to verify the data collected within the identification process in public registries (Basic Public Administration Registers).
The launch of the Bank ID required some legislative amendments. The CNB worked with the MFCR, the Ministry of the Interior and the Financial Analytical Office on amendments to the Act on Banks and the Act on Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism during 2019 and 2020. Besides banking identity, the amendment contains some other changes, for example allowing banks to access data in public administration information systems using their own information systems, and expanding and adjusting this existing right for insurance companies. The amendments were adopted in 2020 (CNB, 2020[27]; 2021[15]; FAU, 2021[31]).22
To bring about true “open banking” competition, the PSD2 directive allows access by third party providers (TPPs) to customer data held by credit institutions, and the provision of payment initiation services (PIS) and account information services (AIS). The function and licence requirements for an AIS providers (AISP) operating in the Czech market are laid down in the Act on Payments (MFCR, 2017[25]). Despite the important role of this function in the context of open banking, as of 31 August 2022, only three entities have been authorised by CNB as AISPs under the Act on Payments (2018) (CNB, 2022[28])23. This figure has been constant since mid-2019. Apart from three pure AISPs there are four PIS providers (PISPs) who are also AISPs24 – Akcenta, GoPay, Roger and ZNPay. For comparison, as of March 2022, 97 AISPs operate in the UK, growing quickly from 20 providers only two years earlier (Open Banking UK, 2022[32]).
2.2.6. Supervision of non-bank credit providers
Non-bank providers of business credit are not subject to CNB authorisation, or any other financial supervision in the Czech Republic. The Consumer Credit Act (No. 257/2016 Coll.) applies only to all consumer credit provided by businesses to consumers and entrusts the CNB with supervision of all consumer credit providers and intermediaries, including the conduct of licensing proceedings, during which compliance with the conditions for granting a licence is examined. The Act specifies in detail the information duties to consumers and some other rights and duties in the area of consumer credit which improve the consumer’s position (e.g. the possibility of early loan repayment, the assessment of creditworthiness, restrictions on penalties for overdue loan repayments and restrictions on the exercise of the right of pledge) (CNB, 2017[33]).
2018 saw the end of the transition period enabling non-bank consumer credit providers to apply for a proper license and fulfil the requirements of the Consumer Credit Act thus allowing them to continue their activity. Of the 108 entities that had previously been carrying on business under a trade license, 84 applicants were granted non-bank consumer credit provider licenses. A total of 24 applicants were refused due to failure to comply with the licensing conditions or withdrawal of the application. By the end of 2018, the CNB had also granted three new non-bank provider licenses to entities which previously had not pursued this activity (CNB, 2019[24]).
Before the Consumer Credit Act took effect, the sector of non-bank providers of consumer credit amounted to almost 60,000 trading entities. It consisted of a large group of entities operating across the entire range of services, from companies engaged in the provision of consumer credit secured by property, through leasing and traditional consumer credit, to companies providing micro-loans which were not subject to consumer credit regulation (CNB, 2022[9]). Since the transition period was completed, there are about 85 non-bank credit providers in the Czech Republic (CNB, 2022[28]). Besides consumer credit providers, the segment related to non-bank credit provision includes companies authorised to test the professional expertise of all persons negotiating and assessing consumer credit (”accredited persons”) . The currently active and authorised non-bank consumer credit providers have been active for a long time, have standardised procedures for the supply and provision of consumer credit and some have a licence for the pursuit of business of a payment institution (CNB, 2022[9]).
Crowdfunding
Regulation of the EU 2020/1503 (The Crowding Regulation) introduces a new category of crowdfunding service providers, the conditions for the provision of crowdfunding services, and regulates the rules of the crowdfunding platform provider's dealings with customers, i.e. investors and project owners. It distinguishes between two types of crowdfunding - loan-based crowdfunding and investment crowdfunding, i.e. the placement of transferable securities and admitted instruments for crowdfunding purposes (European Union, 2020[34]). The Regulation provides for a transitional period with respect to crowdfunding services provided in accordance with national law expected to end on 10 November 2023 (European Commission, 2022[35]).
If the main investment service provided by the crowdfunding service provider is the acceptance and transmission of orders concerning investment instruments, and the placement of investment instruments and admitted instruments for crowdfunding purposes, without any obligation to subscribe for them, the crowdfunding service provider will need a permit to operate from the CNB. It will not need a licence to operate as a securities broker under the Act No. 256/2004 Coll., on Capital Market Business, which is significantly more administratively demanding to obtain (Bird & Bird, 2022[36]). According to CNB officials, some crowdfunding platforms have been already regulated as payment service providers.
2.2.7. Supervision of investment firms, investment funds and management companies
Under the acts governing activities of capital market participants,25 the CNB is authorised to issue decrees specifying more detailed conditions for entry to the capital market, prudential rules, rules of conduct towards investors and clients, and market transparency rules (CNB, 2022[37]). The CNB is also charged with development of the capital market, investor protection and encouraging investor awareness26 (The World Bank, 2017[38]).
The regulations in the investment services area apply to bank and non-bank investment firms (including branches from non-EEA countries), investment intermediaries and tied agents of investment firms and investment intermediaries. To a limited extent these regulations also apply to branches of investment firms from EEA countries (CNB, 2022[39]).
The CNB registered 39 entities holding an investment firm licence (as of 2020), of which 16 were banks and 23 were non-banks. CNB supervision of non-bank investment firms focused on checking compliance with the requirements of the transposition of the MiFID II into Czech law in 2018 (CNB, 2021[15]).
Given persisting problems with the activity of foreign entities providing investment services mainly for high-risk investment instruments, an amendment to the Act on Capital Market Business in 2020 stipulated that foreign investment firms may offer investment services in the Czech Republic only temporary or occasionally without establishing a Czech branch, with the exception of the provision of investment services to professional clients, to whom they can continue to provide services permanently without establishing a branch. Permanent provision of investment services by foreign investment firms to retail clients in the Czech Republic is still possible only through a branch or a tied agent (CNB, 2020[27]).
The CNB registered 37 management companies, two branches of foreign management companies, one primary administrator, 6 depositories, 185 investment funds with legal and 234 mutual funds at the end of 2020 (CNB, 2021[15]). Supervision of management companies and investment funds is concentrated mainly on funds with a potentially significant systemic impact, i.e. primarily collective investment funds managing funds from the public. Inspection work is focused on compliance with the rules of conduct of business for fund management and the configuration of governance systems (CNB, 2019[24]).
In its off-site surveillance of investment fund managers and their administrators, the CNB supervises above all their capital quality, the configuration of governance systems and other prerequisites for doing business. The CNB monitors the situation in the investment funds managed or administered by them mainly in terms of compliance with the conduct of business rules in portfolio management. The CNB regards investor relations, and especially whether the information an investor is to obtain is complete, accurate and up-to-date, as a very important area. CNB supervision is also concentrated on relations with depositaries and distributors, which are a significant component of the fund infrastructure. The depositary function is an essential security element in the investment fund area; depositaries are also very useful as regards compliance with the duties arising from the AML/CFT legislation (CNB, 2019[24]).
2.2.8. Insurance, investment and consumer credit intermediaries (financial product distribution)
The financial product distribution segment is characterised by a high number of entities subject to CNB supervision. The insurance intermediaries sector is the largest segment of the Czech financial market in terms of the number of entities supervised (CNB, 2022[9]). The insurance sector is strongly dependent on the activity of insurance intermediaries, whilst such dependence is less present in the investment sector (CNB, 2022[9]). Off-site supervision of distributers is usually reactive and focuses mainly on compliance with the rules of conduct towards clients in the provision of services and on the configuration and functioning of the governance system. Many investment intermediaries have been authorised to intermediate contracts on supplementary pension savings, which has extended the regulated and supervised activities of individual intermediaries. Several hundred intermediaries are authorised to operate in each of the retail distributing sectors (CNB, 2021[15]).
2.3. The Financial Analytical Office (FAÚ)
The Financial Analytical Office (FAU) is an administrative office, subordinated to the MFCR, with nationwide jurisdiction serving as the financial intelligence unit of the Czech Republic. The Office was established on 1 January 2017 on the basis of the national Act No. 368/2016 Coll.. amending Act No. 253/2008 Sb. on the Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism. The position of the Office is described in more detail in section 29c of Act No. 253/2008 Coll. (FAU, 2022[40])
The local AML Act27 was most recently amended in 2020 by Act 527/2020 Sb. The main impetus for this legislation was the adoption of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 201828 (hereinafter referred to as the ‘5th AML Directive’). The amendment was further intended to reflect both the requirements of the 5th AML Directive and the recommendations of the MONEYVAL Committee set out in the Report from the Fifth Round of the Mutual Evaluation of the Czech Republic on the prevention of money laundering and the fight against terrorist financing (FAU, 2020[41]). Changes affecting all obliged entities have been made to the provisions concerning the customer due diligence, namely the introduction of the enhanced customer due diligence and the extension of possibilities of using remote identification to a wider range of obligated entities.
The amendment to the AML Act changed certain parameters of related processes and pushed online identification a bit further. If the FAU finds malpractice in connection with one of the inspected entities, in addition to the actual correction of the problematic situation, financial sanctions will arise as well; the amount of financial sanctions that can now be imposed is many times higher than before, when the upper limit of sanctions reached CZK 10 m: with the amendment, it is now possible to impose a fine of up to CZK 130 m or more, depending on the net annual turnover or the amount of the unjustifiably gained profit (Deloitte, 2021[42]).
Following latest legislative changes, the Czech Republic has achieved full compliance with six of the forty FATF recommendations constituting the international AML/CFT standard according to the second Enhanced Follow-up Report & Technical Compliance Re-Rating. Minor deficiencies remain in the implementation of twenty-nine Recommendations where it has been found “largely compliant”. Five Recommendation (targeted financial sanctions, virtual assets, cash couriers and maintenance of statistics) remain “partially complaint”. The Czech Republic has no “non-compliant” ratings (MONEYVAL, 2021[43]).
Supervisory activities of the Financial Analytical Office are exercised by the Supervisory Department of the Legal Division (a department consisting of 7 posts, including HOD) in accordance with Section 35 of the AML Act. The main supervisory activities are the checking of compliance of obliged entities and the conduct of offence proceedings. An important part of the activities of the supervisory staff is also the evaluation of the Systems of Internal Procedures of obliged entities, which must be sent to the FAU in accordance with Section 21 of the AML Act (FAU, 2021[31]).
The inspection plan for 2020 included financial institutions (bank, credit union, small-scale payment service provider, exchange office, insurance company) as well as obliged entities providing non-financial services (FAU, 2021[31]). Similarly, in 2019, account the inspection plan included, in particular, banks, payment institutions, small-scale payment service providers, small-scale e-money issuers. Inspection plans are drawn in cooperation with other supervisory bodies, the CNB in particular, and this cooperation includes in addition joint inspections and meeting of employees from both authorities at managerial and working level. Common offences in 2020 involved payment institutions which were punished for failing to comply with prevention obligations (specifically for failing to deliver their system of internal procedures to the FAU within the statutory deadline). The most frequent offence across all financial institutions examined was the failure to comply with the customer due diligence obligations (FAU, 2021[31]).
Occasionally, the FAU perform systemic inspections which include a larger number of obliged entities of the same type. In 2019 the FAU selected for this purpose virtual assets services providers, because, since 1 January 2017, they have become obliged entities (FAU, 2020[41]).
2.4. Non-Financial relevant Regulators
2.4.1. The Office for Personal Data Protection (ÚOOÚ/DPA)
The supervisory authority for data protection designated by the Personal Data Processing Act of 201929 is the Office for Personal Data Protection (DPA, as for Data protection Authority or Úřad pro Ochranu Osobních Údajů – ÚOOÚ – in Czech)). It is an independent central authority of the state administration. It creates room for a new role of the Czech DPA - freedom of information. Sections 5 to 15 of the Act are the Czech specific implementation of the EU General Data Protection Regulation (GDPR). The national Act has a part dealing with processing that does not fall within EU law, for example, where it is related to immigration. Title III of the Personal Data Processing Act sets out the requirements for the processing of personal data for criminal ‘law enforcement purposes’. Title IV of the Act defines the National security framework, which is outside the scope of EU law. Title V covers the Czech DPA and its duties, functions and powers plus Title VI - the enforcement provisions (DPA, 2022[44]).30
Specific for financial services, Article 12, applicable by banks, provides for their exemption from the obligation to communicate a personal data breach to the data subject pursuant to the GDPR Articles 33 and 34 (according to DPA officials).31
There is no formal or informal cooperation framework between the CNB and the DPA, neither on authorisation nor supervision.
The highest-rated risk from a data protection perspective relating to FinTechs in the Czech Republic as was raised by DPA is the lack or insufficient transparency towards data subjects. The DPA highlighted the shortcomings of FinTechs having the role of data controllers not meeting their responsibilities under the GDPR when often contracting with third parties. Due to high cost, FinTechs occasionally fail to fulfil their obligation pursuant to the GDPR Article 14 and to provide to the data subject the legally required information. Mitigating the risk of insufficient supervision over third party activities from the controller (FinTech) part over some components, or the whole process of personal data processing, can be demanding and costly in case of certain projects.
2.4.2. Local Cybersecurity Authority (NÚKIB)
The National Cyber and Information Security Agency (NÚKIB) is an independent central administrative body for cyber security, including the protection of classified information in information and communication systems and cryptographic protection. It was established in 2017 on the basis of Act No. 205/2017 Coll.. Act No 181/2014 Coll. on Cyber Security, which is a horizontal legislation relevant for all regulated sectors including financial sector. Only selected financial institutions are regulated by the Act, and in particular those fulfilling the criteria for identification of the critical infrastructure or the operator of essential services.
The CNB and NUKIB overlap in responsibilities with regard to financial entities and the two agencies coordinate the supervisory activities as they cooperate directly. In May 2022, a memorandum of understanding was signed (CNB, 2022[45]), and there is a general legal obligation to coordinate supervisory activities and to minimise the negative impact of such activities on audited entities. With regard to the expected approval of the Digital Operational Resilience Act (DORA), it is expected that NÚKIB will be involved in incident reporting, handling activities, as well acting as a coordinator in all sectors in the country, according to NUKIB officials.
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Notes
← 1. The mandate of the MFCR in the area of capital market regulation is laid out by Section 4 (1) of Act no. 2/1969 Coll., on the Establishment of Ministries and Other Central Government Authorities of the Czech Republic.
← 3. in accordance with Act No. 6/1993 Coll., on the CNB
← 4. Act No. 57/2006 Coll.,
← 5. https://www.vlada.cz/en/jednani-vlady/jednaci-rad-vlady/rules-of-procedure-of-the-government-20989/
← 6. https://www-vlada-cz.translate.goog/cz/ppov/lrv/dokumenty/legislativni-pravidla-vlady-91209/?_x_tr_sl=cs&_x_tr_tl=en&_x_tr_hl=cs&_x_tr_pto=wapp
← 7. Art. 37 of Act No. 6/1993 Coll.
← 8. https://www.mfcr.cz/cs/aktualne/tiskove-zpravy/2006/2006-05-11-tiskova-zprava-5926-5926 (in Czech)
← 9. With the exception of insurance intermediation who’s systemic importance consists in its impact on the stability of the insurance market
← 10. The CNB’s mandate for conducting macroprudential policy is laid down in Act No. 6/1993 Coll., on the Czech National Bank
← 11. Act No. 257/2016 Coll.
← 12. On the basis of an amendment to Act No. 634/1992 Coll., on the Consumer Protection Act, and an amendment to Act No. 6/1993 Coll. on the Czech National Bank.
← 13. https://www.eba.europa.eu/guidelines-on-product-oversight-and-governance-arrangements-for-retail-banking-products
← 14. Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, a permanent monitoring body of the Council of Europe
← 15. Act No. 21/1992 Coll., on Banks, Act No. 277/2009 Coll., on Insurance, Act No. 256/2004 Coll., on Capital Market Undertakings, Act No. 370/2017 Coll., on Payments and Act No. 257/2016 Coll., on Consumer Credit, for example.
← 16. Ibid.
← 17. This was the result of the adoption of the Payment System Act (No. 284/2009 Coll.,), transposing Directive 2007/64/EC (PSD I) on payment services in the internal market, which took effect in the Czech legislation on 1 November 2009.
← 18. The transition period for entities that provided payment services or issued electronic money based on previous authorisations (e.g. entities with foreign exchange licences, credit card credit providers, entities carrying on the business of company savings banks, and mobile operators) ended on 30 April 2011.
← 19. Act No. 370/2017 Coll., that took effect on 13 January 2018.
← 20. If the payment institution licence is to apply to indirect payment order service or payment account information service, the applying entity is required in addition to have an insurance contract or a comparable guarantee in place. In contrast, small PSPs cannot provide open banking services (AIS / PIS).
← 21. Act No. 370/2017 Coll.,
← 22. Act No. 49/2020 Coll., which the CNB helped to prepare, amended Act No. 21/1992 Coll., on Banks, and Act No. 253/2008 Coll., on Certain Measures against Money Laundering and Terrorist Financing.
← 23. Apart from three pure AISPs there are four PISPs who are also AISPs – Akcenta, GoPay, Roger and ZNPay.
← 24. Akcenta, GoPay, Roger and ZNPay. Except for ZNPay, all have been licenced before the Act on Payments (2018).
← 25. The activities of capital market participants are governed mainly by Act No. 256/2004 Coll., on Capital Market Business, as amended, and Act No. 240/2013 Coll., on Management Companies and Investment Funds, as amended.
← 26. Article 2 of the Act on Supervision of Capital Market, Act No. 15/1998 Coll.
← 27. Act No. 253/2008 Coll. on Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism.
← 28. Which amended Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing and amended Regulation (EU) No 648/2012 of the European Parliament and of the Council and repealed Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC and amended Directives 2009/138/EC and 2013/36/EU.
← 29. No. 110/2019 Coll. – implementing the EU General Data Protection Regulation (GDPR) framework (Directive 2016/680) in the Czech Republic.
← 30. The Czech DPA is vested with additional powers related to special issues and anchored in special laws. The basic procedural acts are the Supervisory Procedure Act (No. 255/2012 Coll.) and the Administrative Code (Act No. 500/2004 Coll.). Sec. 11 of the Basic Registers Act (No. 111/2009 Coll.) provides that the Czech DPA generates source identifiers of physical persons and item-related identifiers of physical persons, maintains lists thereof, and ensures transfers of a physical person’s item-related identifier within one administrative dossier to item-related identifier of this physical person under another dossier on the basis of a legal request (DPA, 2022[44]).
← 31. Additional aspects of the legal framework applicable to the processing of personal data of financial services customers in the Czech Republic is represented by the following pieces of legislation: Act No. 89/2012 Coll., the Civil Code, Act No. 634/1992 Coll., on consumer protection, Act No. 253/2008 Coll., on AML/CFT, Act No. 21/1992 Coll., on banks, Act No. 6/1993 Coll., on the Czech National Bank, Act No. 370/2017 Coll., the payment services act and Act No. 250/2017 Coll., on electronic identification.