Technical, Regulatory & Financial Requirements of becoming an Electronic Money License in the UK

Electronic Money License UK | Electronic Money Institution license in the UK | EMI license in the UK | E-money license the UK


In this article, we look at the technical, regulatory and financial requirements to set up and become an electronic money institution in the UK.


EMI License options


There are two options for becoming an electronic money institution (EMI) in the UK.


1. Small electronic money institution


Key features

  • No initial capital requirement

  • Less strenuous process e.g. slightly quicker to obtain the license

  • Unable to passport into Europe

  • Cannot issue more than €5m in e-money and €3m in payment services per month

  • The application fee is £1,000


2. Authorised electronic money institution


Key features

  • Able to passport into Europe (this will change as a result of Britain leaving the EU)

  • No restriction on the amount of -e-money or payment transactions volume

  • Slightly longer timeframe to obtain the license e.g. 5-6 months on average

  • An initial capital requirement of €350,000 is applicable

  • The application fee is £5,000



Initial capital requirement


Authorised EMIs: €350,000 initial capital applies to authorised electronic money institutions.

Small EMIs: No initial capital is applicable up to €500,000 in issued e-money. From €500,000—€5m the amount is 2% of the outstanding electronic money. For example, if you have issued €1m in e-money you will be required to hold €20,000.



EMI license timeframe


Authorised EMIs: 5-6 months

Small EMIs: 4-5 months



Technical requirements for an EMI license application


  1. Key people, such as the managing director, compliance officer, and MLRO, should have adequate knowledge and experience within this area.

  2. Safeguarding client funds – you must separate and keep secure client funds either by placing them in a separate segregated client funds account or obtain an insurance policy for indemnity purposes.

  3. You must have more directors in the UK than overseas.

  4. Your board meetings must be held in the UK.

  5. The day to day decision making must be made in the UK

  6. You may have an overseas director in your UK company

  7. Your CEO must reside in the UK

  8. Your MLRO (money laundering reporting officer) and ideally, your compliance officer must reside in the UK. You may wish to contract some services back to your group/overseas office as long as the day to day decision-making of the UK company is conducted in the UK and the company is genuinely being controlled here.

  9. If you outsource any functions, you must ensure that this is done so with executed contractual agreements in place.



5 important factors in preparing a strong EMI license application


  1. You must ensure that you meet any basic regulatory requirements such as the ones listed above

  2. Your business plan and other policy documents are prepared in the reflection of your actual business model and company as opposed to being generic.

  3. You must demonstrate that you have adequate resources and internal controls to adequately manage your business and do so in a compliant manner.

  4. You must demonstrate that you will be able to manage your risks particularly those relating to financial crime – money laundering and terrorist financing. You will be required to document how you intend to mitigate and minimise the identified risks.

  5. You must demonstrate how you will provide a safe and secure service to your users.



Cost calculation of setting up and operating an electronic money institution


  1. Consultant fee to prepare the license application - £20,000

  2. FCA application fee - £5,000

  3. Managing Director £75,000+

  4. Compliance officer (doubling as money laundering reporting officer) - £50,000+

  5. Commercial office space - £15-18,000 (based on a 3-person office in central London)

  6. Systems and software – price dependant on whether built inhouse, bought outright or rented (software-as-a-service)



How Buckingham Capital Consulting can help


Buckingham Capital Consulting is an international consulting firm, specialising in payment services, electronic money, banking and investment services. We can advise you on the best course of action and strategy based upon your business plan and financial product or service. We can 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 (44) 020 7866 2512. Alternatively, please send an email to info@buckinghamcapitalconsulting.co.uk. We are also able to arrange calls using Skype. Our Skype ID is BCC54321.



#EMI license #PSP license #Electronic Money License UK #Electronic Money Institution license in the UK #EMI license in the UK #E-money license the UK

 Contact Us
Email: info@buckinghamcapitalconsulting.co.uk
 
Telephone: 0207 866 2512 
International: 442078662512
Skype: BCC54321 
  • Facebook
  • Twitter
  • YouTube
  • Pinterest
  • Instagram

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