Electronic Money Institution license in the Netherlands | EMI license in the Netherlands | E-money EMI / Electronic Money Institution in the Netherlands
Introduction
This article looks at obtaining an E-money EMI / Electronic Money Institution in the Netherlands. If you wish to become an E-money EMI / Electronic Money Institution in the Netherlands then you must prepare and submit an electronic money institution application to the Dutch regulator – the Dutch Central Bank, namely, the De Nederlandsche Bank NV (DNB), before you can offer such services, as an electronic money institution.
Definition of E-money EMI / Electronic Money Institution in the Netherlands
The Financial Supervision Act (Wet op het financieel toezicht) defines an EMI / Electronic Money Institution as a party, not being a bank, issue electronic money in exchange for funds with which payments can be made.
The Second Payment Service Directive (PSD2)
The second Payment Service Directive (PSD2) and its significance to payment services and electronic money firms in the Netherlands. PSD2, or the Payment Service Directive 2, is an EU Directive (Directive 2015/2366) that sets requirements for businesses that provide payment services or electronic money in the Netherlands. It applies to banks, building societies, payment institutions, e-money institutions and their customers.
The Dutch regulator for E-money EMI / Electronic Money Institutions
The Dutch central bank - De Nederlandsche Bank or DNB for short, is the Dutch regulator for electronic money and payment institutions. In order to provide E-money / electronic money or payment services, you must submit an application to DNB and obtain authorisation to offer such services.
Services you can offer with an E-money EMI / Electronic Money Institution in the Netherlands
As per Section 3:34 of the Financial Supervision Act (Wet op het financieel toezicht), an E-money EMI / Electronic Money Institution is able to perform the following:
1. Provide services relating to the issuance of electronic money;
2. Issue and manage other means of payments
3. Payment accounts. The user is able to place and withdraw cash on such accounts as well as use the account card to make a payment transaction, using the card to buy goods and services. Users are also able to set up direct debits standing orders as well as transferring funds.
4. Merchant services. Holders of the payment institution license are able to provide merchant services. This can include acting as a master merchant and offering merchants the ability to accept card payments.
5. Money remittance. Money remittance or transfer is another service payment institutions are able to offer. This service enables the payment service provider to enable users to make cross border payments, internationally.
6. Payment initiation services. Under this model, an initiator I.e. as a payment service provider under the payment institution license, subject to the user's consent, is able to initiate payment directly from the user's bank account and transfer the amount directly to the merchant retailer’s bank account, removing the Visa and Mastercard networks from the payment process.
7. Account information services. Under this permission, subject to the user's consent, a payment service provider is able to provide access to a user’s accounts and enable them to view consolidated account information in one place.
Preparing an E-money EMI / Electronic Money Institution license application in the Netherlands
As part of your E-money EMI / Electronic Money Institution license application in the Netherlands, 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. 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. You will also be required to demonstrate that you have an operational presence in the Netherlands e.g. physical office and locally-based people.
Apply to become an E-money EMI / Electronic Money Institution in the Netherlands
As part of your E-money EMI / Electronic Money Institution license application, you will be required to provide the following information as part of your application:
1. Company details
2. Programme of operations
3. Business plan and financial forecasts
4. A description of your business’s organisation structure
5. Evidence of your initial capital
6. Details of client fund safeguarding
7. Compliance & governance arrangements
8. Procedure for monitoring, handling, and following up on security incidents and security-related customer complaints
9. Processes for filing, monitoring, tracking and restricting access to sensitive payment data
10. Business continuity and recovery measures
11. Collection of statistical data regarding performance, transaction and fraud
12. Security policy
13. Risk assessment and mitigations measures including controls to manage your AML/CTF obligations
14. Shareholder information
15. Details of any outsourcing arrangements
Passporting with your Dutch E-money EMI / Electronic Money Institution license
If you are authorised as an E-money EMI / Electronic Money Institution in the Netherlands, you can provide your services, as an 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.
How long does it take to obtain the E-money EMI / Electronic Money Institution license in the Netherlands?
The Dutch regulator must make a decision within three months of receiving a complete application. In reality, it takes around 5-6 months to obtain the license.
Next steps
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 at www.buckinghamcapitalconsulting.com.