Electronic Money Institution license in the UK and Europe| EMI license in the UK and Europe| E-money EMI UK / Electronic Money Institution in the UK and Europe
This blog article looks at the E-money license / EMI license and looks at the 5 key requirements to obtain the Electronic Money Institution license in the UK or Europe (also called the EMI license UK or E-money license in the UK).
Regulatory Framework for E-money EMI / Electronic Money Institutions
PSD2, or the Payment Service Directive 2, which came into force on 13 January 2018, is an EU Directive (Directive 2015/2366) that sets requirements for businesses that provide payment services. It applies to Payment Institutions and E-money Electronic Money Institutions - Electronic Money Institution license in the UK (also called the EMI license UK or E-money license in the UK)
The Directive aims to promote innovation within the payments sector. Furthermore, it aims to improve protection for consumers and make payments both safer and more secure.
1. Meet operational requirements for the E-money EMI / Electronic Money Institution license in the UK or Europe
In order to obtain the E-money EMI / Electronic Money Institution license in the UK or Europe, the FCA or the European financial regulator of the country you are applying in will expect that you establish a local presence in its country. For countries such as the UK, your CEO and money laundering reporting officer (MLRO) must be based in the UK. Other countries, such as Lithuania, offer greater flexibility, in the sense that your CEO and MLRO do not need to be based physically in Lithuania. You will also be required to have a local physical office in place.
2. Meet the Initial capital requirements for the E-money EMI / Electronic Money Institution license
Depending on your license type and the underlying permissions you are applying for, you will be required to meet initial capital requirements. For the E-money EMI / Electronic Money Institution license in the UK or Europe, the initial capital requirement is EUR 350,000. For the Payment Institution license, the initial capital ranges from EUR 20,000 to 125,000 depending on the payment service you wish to provide. You will also be subject to ongoing capital requirements.
3. Protect your customer funds
Under both the Payment Institution and the Electronic Money Institution license (also called the EMI license or E-money license, you are required to protect client funds. You can do this by either placing the client funds into a separate ring-fenced client account or by obtaining an insurance policy. Insurance policy products are very rare and so you will most likely have to ring-fence the client funds into a separate client account.
4. Provide details of your IT systems in your E-money EMI / Electronic Money Institution license application
In your Electronic Money Institution license (also called the EMI license or E-money license, you will need to provide details of your IT systems. Similarly, it may well be the case that you are white-labelling your software. You do not need to have your IT systems in place at the time of submitting your E-money license application, but you will need to provide the details at some point during the application assessment.
5. Ensure your key people are experienced and knowledgeable to operate the E-money EMI / Electronic Money Institution business
Your key people, such as the CEO and the money laundering reporting officer (MLRO), must have suitable experience and knowledge to carry out their roles. They will be assessed on this requirement during the application assessment.
How we can help
Buckingham Capital Consulting is an 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 licensing, compliance, operational setup and related services, including, obtaining banking facilities. For more information, visit our website on www.buckinghamcapitalconsulting.com