EMI License in Lithuania
Fintech is a rapidly evolving industry and attracts more and more entrepreneurs. Therefore, online banking has a promising potential. While traditional banking steps aside, businesses such as Wise, Revolut, N26, Paysera, Payoneer, Monese are growing on the market with every second.
Electronic money (e-money) institution (or EMI) is a licensed financial institution which may engage in e-money related services and payment services (as it would be described in details in the next paragraphs).
ELECTRONIC MONEY INSTITUTION
Areas of activity of an e-money institution:
- Money transfers
- Cash depositing and withdrawal
- Issuing of Electronic Money
- Issuing of payment instruments
- Payment Initiation Service (PSD2)
- Account Information Service (PSD2)
To establish a favourable environment for Lithuanian and foreign startups, a special project for an EMI licence to engage in restricted activities has been implemented with the aim of facilitating access of new market participants to the Lithuanian market and later, after being granted a licence to engage in usual activities, to also the European Economic Area market. The basic difference between an EMI engaged in restricted activities and a traditional EMI is that the EMI engaged in restricted activities is not subject to the minimum initial capital requirement; however, a licence of an electronic money institution to engage in restricted activities is valid solely in the Republic of Lithuania. In order to be granted an EMI licence, it is necessary to hold a capital of EUR 350,000; however, this licence entitles to the provision of the electronic money issuance and redemption, distribution and payment services in other EU Member States as well after carrying out a notification procedure.
The entire authorisation process for EMIs is done through the Authorities, an application for an authorisation is submitted directly to it. The planning process is discussed in regards well before starting the activity so that the planning process can be discussed in regards. The topics that are discussed are: authorisation process, requirements, expectations, and all other major aspects that may affect the licensing process.
Stages of application:
- submission of an application for an EMI licence to the Supervision Service of the Authorities – within 5 business days, reviews whether all necessary documents have been submitted and have no formal deficiencies;
- assessment of an application for an EMI License: where the documents submitted have no deficiencies, the licence is issued within the shortest possible 3 month-term.
- issuance of a licence: after finishing assessment of submitted documents, the Board of the Authorities analyses summary information submitted by the Supervision Service and takes a decision regarding the issuance of a licence.
Key requirements for an EMI being established or authorised
- The documents submitted must comply with the requirements of the legal acts regulating EMI activities and their supervision;
- compliance with the minimum capital requirement for EMIs: according to the provisions of the Republic of Lithuania Law on Electronic Money and Electronic Money Institutions, an EMI must possess a minimum initial capital of no less than EUR 350,000
- Entities with a qualifying holding in the EMI’s authorised capital must be able to ensure sound and prudent management of the EMI, have sufficiently high repute and be financially sound;
- The heads of an electronic money institution must be of good repute and possess the qualification and experience necessary to properly perform their duties.
- The operating plan must correspond to the possibilities of the EMI’s founders to implement it, while the prospective EMI must, at the time of authorisation, be prepared to provide financial services in a safe and sound manner.
Prior to applying for an EMI licence, it is necessary to pay into the account of the State Tax Inspectorate (STI) a state levy for the granting of the EMI licence. The EMI licence to engage in restricted activities is currently subject to a smaller levy.
The own funds requirement is calculated by the Supervision Service based on average outstanding electronic money. The own funds requirement of an EMI designated for issuance of electronic money must account for no less than 2% of average outstanding electronic money.
At this moment there are 192 EMI Licensed companies operating in Lithuania.