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Buckingham Capital Consulting Ltd  |   One Kingdom Street, London, W2 6BD  |  Telephone: 0800 689 0501  |   Email: Info@buckinghamcapitalconsulting.co.uk

Registered in England and Wales registration number: 08744241

 

Copyright 2013 - 2020 Buckingham Capital Consulting Ltd

    How to obtain a UK E-money Electronic Money Institution license



    Below we discuss how to become an electronic money institution or an e-money firm. Across all EEA (European Economic Area) countries, the regulations are the same with regards to becoming an electronic money institution (EMI).

    The Electronic Money Regulations (EMR) was published in 2009 and implemented into UK law in 2011. This sets out the definitions, standards, capital requirements, and rules in relation to issuing e-money, such as prepaid cards and e-wallets.

    If you want to obtain an e-money license and offer e-money, such as prepaid cards or electronic wallets, used to pay for goods at a range of retailers, then you must apply and become either authorised or registered electronic money institution.

    In the UK, you can apply and become either an authorised electronic money institution or a small electronic money institution. Below, we will discuss the differences between the two options.

    1. Choose the license

    Option 1 - Become an Authorised Electronic Money Institution

    Under this option, when your business becomes authorised, it means that you can issue e-money and provide payment services in all EEA (European Economic Area) countries, even though your license is obtained a single EEA country e.g. the UK. For example, if you were to obtain an e-money license in the UK you can then provide your e-money and payment services to people in countries such as Germany, France, Italy and Ireland.

    Initial Capital Requirement: the initial capital required under this option is EUR 350,000. You need to show this money in a bank account with the submission of your application. You are not required to 'freeze' this money with a bank or the regulator. In fact, you can use this money as you wish - the key is to show to the regulator that you have a balance equalling to this amount.

    Other Requirements:

    - Rent a physical office in the UK

    Companies wishing to operate in the UK must demonstrate to the regulator that their mind and management team will be based in the UK. Accordingly, you must establish a physical office in the UK. Please note that a virtual or 'e-office' will not be sufficient. The physical does not need to be a specific or minimum size. You are not necessarily required to buy or lease an office. You may rent a serviced office instead, as this option is more flexible than a lease. We are able to advise you on all the options available and best suited to your business.

    - Hire people in the UK

    The Financial Conduct Authority has not specified a minimum number in terms of the number of people you should have for your UK e-money business. For an authorised EMI you should demonstrate that you have a sufficient number of suitable people to manage your key business functions, such as compliance, AML, operations, customer services and security. The Financial Conduct Authority would expect to see at least a small team in place to adequately manage the e-money business. We are able to able to manage your hiring in the UK and advise on hiring the best-suited employees based on your business model and requirements.

    You may outsource functions of your business either to a third-party service provider or to your overseas office or head office for example in Hong Kong, where this is applicable.

    - Buy or build IT systems

    You will be expected to show that you have adequate systems and control in place to manage your e-money business. As part of this, you will require systems and IT in place to manage key areas, such as a core system for customers to manage their account, money laundering compliance software, transaction monitoring, 2-factor authentication, a website and financial reporting. You can either build these systems internally yourself or purchase ready-made systems. We work with a number of vendors and can help you choose the right systems.

    - Form a company

    Other things you need to take care of include forming a company in the UK. This is a fairly straight forward process and companies can be formed in a matter of hours.

    Option 2 - Become a Small Electronic Money Institution

    Under this option, your business is able to apply and register as a small electronic money institution. This license registration enables your business to offer e-money and payment services in the UK only and not across the EEA.

    Initial Capital Requirement: Under the small EMI process you are not required or subjected to an initial capital requirement. The small EMI can represent a good option for some businesses who wish to start off with a single country and then expand internationally, or where the initial capital requirement of the authorised EMI is an issue.

    - Rent a physical office in the UK

    As above, you will be required to have in place a physical office in the UK. You may rent a serviced office instead and this option is more flexible than a lease. We are able to advise you on all the options available and best suited to your business.

    - Hire people in the UK

    The requirement is the same as above with the authorised EMI application. However, a smaller team or number of people will be required as a minimum in comparison to the authorised EMI application.

    You may outsource functions of your business either to a third-party service provider or to your overseas office or head office as above.

    - Buy or build IT systems

    As with an authorised EMI application, you will be expected to show that you have adequate systems and control in place to manage your e-money business. As part of this, you will require systems and IT in place to manage key areas, such as a core system for customers to manage their account, money laundering compliance software, transaction monitoring, 2-factor authentication, a website and financial reporting. You can either build these systems internally yourself or purchase ready-made systems. We work with most leading vendors and can help choose the right systems.

    - Form a company

    Other things you need to take care of include forming a company in the UK. This is a fairly straight forward process and companies can be formed in a matter of hours.

    2. Preparing your application

    In order to apply in become a small or authorised electronic money institution, you are required to prepare and submit an application to the regulator. The application consists of a core application form within which you must prepare your policies and procedures for areas including programme of operations, business plan, organisation structure, compliance and governance arrangement, business continuity arrangements, security, incident and complaint reporting, Anti-money laundering and countering terrorist financing policy, access to sensitive payment information and more. You are also required to complete additional forms for shareholders, directors and people with significant influence within the business. As part of the application, you will be required to submit financial forecasts for your business.

    After you have submitted your application you will be assigned a case officer from the Financial Conduct Authority. They will introduce themselves and will assess your application. As part of this assessment process, they are likely to ask you questions with regards to your business, policies, procedures, organisation and structure.

    You will need to show to the regulator that the policies and procedures have been carefully thought-though and are specific to your business. Generic or template-based documents will not suffice.

    As part of our application preparation service, we spend time with you to understand your business and the e-money and payment services you wish to offer. We spend time to ensure that you meet the above conditions such as suitable IT and team. We prepare all policy and procedural documents from the beginning, reflecting your actual business, its procedure and processes.

    We will manage the entire process on an end-to-end basis for a fixed fee to ensure that you have adequate support and expertise throughout the process.

    Buckingham Capital Consulting is a leading international consulting firm, specialising in payment services, electronic money, banking and investment services. We are able to advise you on the best course of action and strategy based upon your business plan and financial product or service. We can you with licencing, compliance, operational setup and related services, including, obtaining banking facilities. To find our more please visit our website www.buckinghamcapitalconsulting.com

    Call us today on 02078662512 or 442078662512 if you are calling from abroad. Alternatively, please send an email to info@buckinghamcapitalconsulting.co.uk to arrange a telephone call or to discuss your requirements and plan. We are also able to arrange calls or conference calls using Skype. Our Skype ID is BCC54321. If you wish, we can arrange a meeting at one of our offices.

    Popular Questions

    Q: Can we first obtain the license and then put in place IT systems?

    A: Unfortunately, the answer is no. The FCA expects to see your IT systems in place before it can issue you your licence approval.

    Q: Can we first obtain the license and then hire people and an office?

    A: Unfortunately, no. The FCA expects to see your team and office in place before it can issue you your licence.

    Q: Can you help us obtain banking facilities?

    A: Yes, we work with a number of credit institutions (banks) and can help you obtain banking facilities, including client fund safeguarding accounts.

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