Licensing field for Fintech structures and payments: EMI license

A sharp leap in technologic development led to the emergence and rapid spread of electronic currency. It is understood as digital form value, stored on any technical tool. When we speak of “quasi-money,” we refer to assets with high liquidity that may be readily turned into cash, for the reason that they are released by organizations with good creditworthiness, which also contributes to an increased demand for such assets. Electronic Money Organization – EMI license – is an entity empowered to operate with quasi-money and digital currency emission and, in addition, to carry out payment transactions that are associated with it. To obtain the status of such a company, the organization must be verified by the regulatory authorities and obtain an EMI license. Getting such a permit can take up to half-year.

Services covered by this license

The organization, which became the holder of the EMI license, is endowed with all rights belong to standard payment establishments; therefore, it may offer services in online and offline mode.

The firm gets the opportunity to create sub-accounts for clients on the basis of their account so that an electronic wallet becomes available to them. In the future, customers may exchange cash for this money equivalent in electronic format and save it in their wallet.

Through electronic money chain, users get the opportunity interacting with traders. Thus, they may purchase certain goods by paying with virtual money. Later, electronic funds may be exchanged for regular currency.

Application submission and demands to be met by the organization

What distinguishes this company from PI in terms of demands is the size of initial capital. In this case, it is equal to 350 thousand euros. At the time when the organization goes through verification process, this amount ought to be retained in company’s account, which was created within the same jurisdiction to which EMI license will be issued.

EU states offer their own conditions for companies wishing to obtain this license. For example, in Latvia, in the event that a commercial structure issues 2 000 000 euros or less per 12 month, organization may carry out its activities based only on registration.

Limits on obtaining an EMI license are also imposed on management representatives. Most EU states require all organization’s managers and directors to undergo personal data verification. In addition, as stated in EU Directive, a firm has to have at least 2 directors. Of course, each jurisdiction has its own norms, in particular, plus to the standard requirements, some of the following may be put forward:

• compliance of the company with obligations regarding external audit and accounting;
• availability of a separate account for the client fund;
• fulfillment of secure procedures for customer verification;
• appropriate software and a strong technological base use;
• procedures for professional risks control, etc.

A company also can get a small EMI license by providing the following:

• interior mechanisms of the company and management procedures;
• business plan;
• payment services list;
• a description of the procedures for protecting customer funds;
• proof of the existence of an appropriate initial capital amount;
• organization’s managers, directors and agents list, who will need to be screened.

Of course, this is not the entire list, and for each jurisdiction it differs in one way or another.

Due to the formation of some ambiguity due to Brexit, most Fintech organizations are more inclined to obtain a permit not in the UK, but in Lithuania. As far as the Lithuanian central bank represented a procedure according to which applications can be submitted remotely, this jurisdiction has literally become epicenter for financial firms. Thus, thanks to this, innovators around the globe have even greater access to Lithuania.

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