EMI license
The Electronic Money Institution license
At Tangle, we specialize in bridging the gap between your digital finance ambitions and reality. Our focus is on empowering your business through the acquisition of Electronic Money Institution (EMI) licenses, a crucial step in today’s fast-paced financial sector.
Whether you’re an emerging fintech startup or an established financial entity looking to expand your digital offerings, Tangle is here to ensure that your path to securing an EMI license is as smooth and efficient as possible. Join us in exploring the potential of electronic money and how it can elevate your business in the global financial marketplace.
Aspect | Details |
---|---|
Regulatory Authority | Financial Supervision Authority (FSA) |
Initial Capital Requirement | €350,000 |
Application Fees | €1,000 |
Licensing Process Duration | 3-6 months |
Key Compliance Focus | AML, Operational Resilience, Data Protection |
Market Entry and Expansion | Passporting rights within EEA |
Requirements for Obtaining an EMI License
Obtaining an EMI license is a stringent process, governed by various regulatory bodies depending on the region. The following is a general outline of the requirements:
1. Capital Requirements:
- Initial Capital: A minimum level of starting capital is required, the amount of which varies by jurisdiction.
- Ongoing Capital: Maintaining a certain level of capital to ensure operational stability.
2. Business Plan and Model:
- Detailed Business Plan: A comprehensive plan outlining the business model, target market, and revenue streams.
- Risk Assessment: Analysis of potential risks and how the business plans to mitigate them.
3. Management and Governance:
- Qualified Management: A team with adequate experience and knowledge in financial services.
- Sound Governance: Robust internal policies and procedures to ensure compliance and operational integrity.
4. Compliance with Regulatory Standards:
- AML Policies: Strong anti-money laundering measures and procedures.
- Customer Funds Protection: Ensuring customer funds are protected and segregated from company’s own funds.
5. Technical Infrastructure:
- Secure Technology: Robust and secure technological infrastructure to handle transactions safely.
- Data Protection: Compliance with data protection regulations to safeguard customer information.
6. Audit and Reporting:
- Regular Audits: Regular internal and external audits to ensure compliance with regulatory standards.
- Transparent Reporting: Periodic reporting to the regulatory authorities on various operational aspects.
EMI regulations
Electronic Money Institutions (EMIs) operate under specific regulatory frameworks that define their operational permissions and compliance requirements. These regulations are designed to ensure the stability, security, and integrity of financial services provided by EMIs. Here’s a table outlining the key aspects of the regulatory frameworks and operational permissions for EMIs:
Aspect | Description for EMI Licenses |
---|---|
Governing Regulations | Primarily regulated under the Electronic Money Directive (EMD) in the European Union and similar regulations in other jurisdictions. |
Issuance of E-Money | Authorized to issue electronic money, which involves creating a digital equivalent of cash for various electronic transactions. |
Operational Permissions |
|
Capital Requirements | Must meet higher initial and ongoing capital requirements compared to traditional payment institutions to ensure solvency and protect consumer funds. |
Consumer Protection |
|
Compliance Obligations |
|
Operational Infrastructure | Required to have robust technological infrastructure for secure and efficient handling of electronic money transactions. |
Risk Management | Must have comprehensive risk management policies in place, including operational risk, liquidity risk, and fraud risk. |
Auditing and Reporting | Subject to regular internal and external audits. Mandatory periodic reporting to regulatory bodies on various operational and financial aspects. |
The regulatory framework for Electronic Money Institutions (EMIs) primarily revolves around the Electronic Money Directive (Directive 2009/110/EC) in the European Union, which has significantly shaped the operations and supervisory standards for EMIs. This Directive was established to regulate electronic payment systems within the EU, aiming to foster secure electronic money services and promote effective competition among market participants.
The Directive lays out specific definitions and provisions for e-money, which is essentially electronically stored monetary value issued upon receipt of funds for making payment transactions. This definition is intended to be technically neutral, covering a wide range of electronic money products including those stored on payment devices or managed remotely via servers.
Under the Directive, EMIs are subject to a robust prudential supervisory regime. This regime aligns closely with the risks faced by these institutions and is coherent with the supervisory regime applied to payment institutions under Directive 2007/64/EC. The Directive mandates that the provisions related to payment institutions be applicable to EMIs, with certain adaptations to account for the specific nature of e-money.
The Electronic Money Regulations 2011 further define and enforce the directive’s provisions within the UK. These regulations detail the operational requirements for EMIs, including prohibitions, contract terminations, monitoring, enforcement, reporting requirements, and compliance aspects like safeguarding electronic money and governance arrangements. They also specify the initial capital and ongoing funds requirements, ensuring that EMIs maintain a level of solvency that protects consumer funds. Additionally, these regulations describe various methods for calculating the own funds of an EMI and provide guidelines on items that qualify as capital.
Сomparison of EMI licenses across various countries
Criteria | UK | Belgium | Cyprus | Czech Republic | Estonia | Germany | Lithuania | Luxembourg | Netherlands |
---|---|---|---|---|---|---|---|---|---|
Regulatory Authority | Financial Conduct Authority (FCA) | National Bank of Belgium (NBB) | Central Bank of Cyprus (CBC) | Czech National Bank (CNB) | Financial Supervision Authority (FSA) | Federal Financial Supervisory Authority (BaFin) | Bank of Lithuania | Commission de Surveillance du Secteur Financier (CSSF) | De Nederlandsche Bank (DNB) |
Initial Capital Requirement | Usually £350,000 | €350,000 | €350,000 | CZK 20 million (Approx. €800,000) | €350,000 | €350,000 | €350,000 | €350,000 | €125,000 |
Application Fees | £5,000 | €4,500 | €5,000 | €1,850 | €1,000 | €11,900 | €1,463 | €15,000 | €6,800 |
Licensing Process Duration | 3-6 months | 3-6 months | 3-6 months | 3-6 months | 3-6 months | 6-12 months | 3-6 months | 6-12 months | 3-6 months |
Key Compliance Focus | AML, CTF, Consumer Protection | AML, Financial Stability, Consumer Protection | AML, CTF, Market Conduct | AML, Operational Risk Management | AML, Operational Resilience, Data Protection | AML, Market Conduct, Financial Stability | AML, Operational Resilience | AML, Market Conduct, Financial Stability | AML, CTF, Consumer Protection |
Market Entry and Expansion | Passporting rights within EEA | Limited passporting within EEA | Passporting rights within EEA | Limited passporting within EEA | Passporting rights within EEA | Limited passporting within EEA | Passporting rights within EEA | Limited passporting within EEA | Passporting rights within EEA |
*This table provides a general overview, and specific details can vary. The regulatory environment and requirements are subject to change, and it’s important to consult up-to-date sources or our regulatory experts for the most current information.
The EMI license in each country is governed by the European Union’s regulatory framework, but each country’s financial authority can have specific additional requirements and interpretations. The key focus areas in compliance also tend to be similar, with a strong emphasis on Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and consumer protection. Passporting rights, which allow for the provision of services across the EEA, are a significant aspect of the EMI license, but some countries may have limitations or additional requirements for exercising these rights.
E-money license cost
The cost of obtaining an Electronic Money Institution (EMI) license varies significantly across different countries. These costs include not only the application fees but also other related expenses such as capital requirements, staffing, legal and consultancy fees, and operational costs. Here is a summary of the application fees for EMI licenses in various countries:
Country | Application Fee for EMI License |
---|---|
Belgium | €4,500 |
Cyprus | €5,000 |
Czech Republic | €1,850 |
Estonia | €1,000 |
Germany | €11,900 |
Lithuania | €1,463 |
Luxembourg | €15,000 |
Netherlands | €6,800 |
United Kingdom | £5,000 |
Among the countries listed, Luxembourg has the highest application fee for an EMI license at €15,000.
Beyond these application fees, there are additional costs to consider. These include:
- the initial share capital (which is often a significant amount)
- funds available to finance the company’s first years of operation
- staffing costs
- costs related to the preparation of documentation and compliance.
For example, in Ireland, the staffing costs alone during the licensing process can range from €200,000 to €300,000, and after obtaining the license, these costs can increase to at least €600,000 annually.
How to get EMI license?
Acquiring an Electronic Money Institution (EMI) license can be approached in two primary ways.
Method 1: Applying for a New EMI License
This traditional method involves several steps:
- Regulatory Understanding: Gain a comprehensive understanding of the regulatory requirements in the desired jurisdiction.
- Company Establishment: Establish a legal entity in the jurisdiction where the license is sought.
- Business Plan Development: Prepare an in-depth business plan outlining your proposed services, target market, and financial projections.
- Capital Requirements: Ensure the availability of the required minimum capital as per regulatory standards.
- Policy Development: Draft key policies, including risk management, AML/CFT, CDD, and data protection.
- IT Infrastructure: Develop a secure IT framework for handling electronic money transactions.
- Qualified Team Recruitment: Hire a management team with relevant financial services and compliance experience.
- Application Process: Submit the EMI license application with all necessary documents to the regulatory authority.
- Assessment and Feedback: Cooperate with the regulatory body during the assessment process and address any queries.
- License Issuance: On successful evaluation, receive the EMI license.
- Maintain Compliance: Adhere to ongoing regulatory requirements including audits and reporting.
Method 2: EMI license for sale – Purchasing a Company with an Existing EMI License
An alternative to the traditional application process is to acquire a company that already holds an EMI license. This method involves:
- Market Research: Conduct thorough research to identify available EMI-licensed companies for sale.
- Due Diligence: Perform comprehensive due diligence on the target company to assess its financial health, compliance record, and operational capabilities.
- Negotiation and Purchase: Engage in negotiations for the purchase of the company. This step usually involves legal and financial advisors.
- Transfer and Integration: Once purchased, transfer the company’s ownership and integrate its operations into your business model.
- Regulatory Notification: Notify the relevant regulatory body about the change in ownership and management, adhering to any required procedures.
- Operational Transition: Manage the transition of operations, ensuring continuous compliance with EMI regulations.
Both methods have their unique advantages and considerations. Applying for a new license offers a fresh start with tailored operations, while purchasing an existing license can be faster and may come with an established client base and operational framework.
At Tangle, we are committed to helping you navigate these options to find the best fit for your business needs. We offer expert guidance throughout both processes, ensuring a smooth and compliant entry into the world of digital finance. To explore these options further and determine which path is right for you, contact us through the form on our website. Our team is ready to assist you in unlocking the potential of electronic money services.
FAQ
An EMI license allows a company to issue electronic money, which is a digital equivalent of cash stored on an electronic device or remotely at a server. This form of currency can be used for various transactions, including online purchases and money transfers.
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