Electronic money institution license in Lithuania | EMI license in Lithuania | E-money license in Lithuania
This article looks at obtaining an Electronic Money Institution (e-money) license in Lithuania. If you are planning upon offering payment services such as issuing debit cards, money transfer service, merchant services or electronic wallets and prepaid cards, you will need to apply with the Lithuanian regulator, the Bank of Lithuania, and obtain the electronic money institution license.
The Lithuanian regulator for electronic money institutions
The Bank of Lithuania regulates and issues the licence for electronic money institutions in Lithuania.
If you wish to issue electronic money services in Lithuania, such as prepaid cards or electronic wallets, you will require an Electronic Money Institution license from the Bank of Lithuania.
When seeking the electronic money institution license in Lithuania, planning is key. It is important that you match the financial service you intend to provide with the Bank of Lithuania’s list of regulated activities.
Another important thing you must do before making an application is to ensure you meet the regulator's conditions. For example, you will need to ensure that your management and people such as directors, must be located in Lithuania. You will need to demonstrate through your application that you have appropriate resources to operate your business. This includes having sufficient financial, management, staff, and systems to manage your business.
The Bank of Lithuania expects firms to meet a range of requirements before it allows them to provide regulated financial services. When an applicant firm submits an application seeking authorisation, the Bank of Lithuania reviews their business plans, risks, budget, resources, systems, controls and its people.
Definition of electronic money
As per Article 2(2) of Directive 2009/110/EC, “electronic money” means “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transaction, and which is accepted by a natural or legal person other than the electronic money issuer”. Prepaid cards and electronic wallets are examples of electronic money.
Electronic Money license application in Lithuania
As part of your e-money license application, you will be required to submit a number of documents, policies and procedures, including, a business plan, your safeguarding measures (how you will keep your client money separated and ring-fenced), your governance arrangements and risk management, your procedures for managing and handling security incidents and customer complaints, your security policy and your measures against financial crime, including AML. These policy and procedural documents must be specific to your firm and adequately address key aspects as set out by the regulator. Submitting templated documents will not be accepted and will cause delay, and potential rejection of your application. This is why it is important to prepare policies and procedures that are well thought-through and adequately address the regulator’s requirements and what it expects to see.
An important part of your e-money license application is to ensure you meet the regulator’s basic conditions. Think of the basic condition as the basic requirements you must have in place. For example, your employees must be located in the country of the license application. You will need to demonstrate through your application that you have appropriate resources to operate your business. This includes having sufficient financial, management, staff, and systems to manage your business. Your team should be suitable and competent in their roles.
As part of your electronic money institution license application, you will need to provide details of your IT systems, including both core systems and any support systems. The regulator will expect to see that you have these in place before it issues your electronic money institution license.
Applying to become an Electronic Money Institution in Lithuania
As part of your Authorised Electronic Money Institution license application, you will be required to provide the following information as part of your application:
company identification details
programme of operations
business plan and financial forecasts
a description of your business’s organisation structure
evidence of your initial capital
your measures to safeguard funds of your users
your compliance & governance arrangements and internal controls
your procedure for monitoring, handling, and following up on security incidents and security-related customer complaints
your processes for filing, monitoring, tracking and restricting access to sensitive payment data
your business continuity measures
the principles and definitions applicable to the collection of statistical data on performance, transaction and fraud
your internal control mechanisms to comply with obligations in relation to money laundering and terrorist financing (AML/CFT obligations)
details of your qualifying holdings (shareholders)
details of any outsourcing arrangements
How to prepare a strong electronic money institution license application for Lithuania
You will need to demonstrate that you have your mind and management as well as operational setup and presence in Lithuania. This means establishing a physical base, including a physical office.
Furthermore, you must have adequate resources in place. This includes financial resources, i.e. possessing sufficient funds to manage and operate the business. You will be required to demonstrate that you have suitable and experienced management and employees to manage the business. Firms must also demonstrate that they adequate IT systems and internal controls to ensure the safety of payments and manage fraud adequately and effectively.
You must ensure that their business plan describes your payment activities and market plan and its execution. Your firm’s financial statements must adequately address your business lines of income, calculations of initial and on-going capital requirements and provide financial forecasts for the first three years.
You must provide policies and procedural documents that clearly demonstrate that you understand your business risks. Firms should prepare a risk framework and address how they will mitigate their risks, including operational, security and money laundering risks.
Passporting with the electronic money institution in Lithuania
If you are authorised as a regulated financial service firm within a country inside the European Economic Area, you can provide your regulated services, as a payment service provider or electronic money provider across the rest of the countries within the European Economic Area without requiring additional licenses in those countries.
The EEA states are Austria, Belgium, Bulgaria, Croatia, Cyprus (Republic of), Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
Accordingly, if you were regulated in Lithuania, you would be able to provide regulated services within the above countries without requiring additional licenses in those countries. To achieve this, you would need to apply for a ‘passport’ to do so.
With passporting, you are able to set up a branch in an EEA state and/or provide cross-border services or advice.
Passporting is only available to authorised firms i.e. authorised payment institutions and electronic money institutions. It is not available to local-level or small firms such as small electronic money institutions or small payment institutions.
How long it takes to obtain the electronic money institution license in Lithuania
The Bank of Lithuania must make a decision within three months of receiving a complete application. In reality, it takes around 4-5 months to obtain the license.
Initial capital requirements for the electronic money institution license in Lithuania
The following will apply with regards to the initial capital.
Authorised Electronic Money Institution - €350,000
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 help you with licencing, compliance, operational setup and related services, including, obtaining banking facilities. For more information, visit our website on www.buckinghamcapitalconsulting.com
Call us today on 020 7866 2512 or 0800 689 0501. Alternatively, please send an email to email@example.com 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.
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