FCIS Requirements for Crypto license in Lithuania
Lithuania is now becoming one of the most crypto-friendly and attractive jurisdictions for starting your crypto-business in the European Union.
Lithuanian regulations can be viewed as more flexible in terms of the setup and come at lower on-going cost as there is no specific requirement for onsite personnel.
Is a license needed for your activity?
You need a license if you will offer either of the below services:
- Virtual Currency Exchange – Service where a client exchanges a virtual currency to fiat, fiat to virtual currency, or one virtual currency for another.
- Virtual Currency Wallet – Services that store encrypted keys for their customers, it can be used for storage or transfer of virtual currencies.
Virtual currency is a value represented in digital form that can be digitized, stored or sold and accepted as a means of payment by individuals or entities. The authority that controls the fulfilments of the regulations is called Financial Crime Investigation Service (FSIC)
Information that should be provided when applying for the license:
A person other than a person set forth in Article 9(1) of the Law, when applying for inclusion in the list of currency exchange operators, must submit to the supervisory authority the following:
- An application, in the form established by the supervisory authority (Annex to the Rules of Administration of the List of Currency Exchange Operators, approved by Resolution No 03-195 of the Board of the Authorities of 21 October 2014 on Approval of the Rules of Administration of the List of Currency Exchange Operators), to include in the List of Currency Exchange Operators, specifying in this List, inter alia, information about the person (name, address of registered office, code, if available).
- If the application is filed by a financial undertaking of a foreign state, a statement from the register in this this foreign undertaking is registered, providing information about the person.
- Information about the person’s participants with a qualifying holding in the authorised capital and/or voting rights, laid down in Article 4 of the Law, and documentary proof that a person’s participant with a qualifying holding in the authorised capital and/or voting rights meets the requirements laid down in Article 4 of the Law.
- Information about the person’s heads, specified in Article 3(4) of the Law, and documentary proof that the head (heads) meet the requirements laid down in Article 5(1) of the Law.
- A description of the internal control system that will be implemented in order to perform the duties related to money laundering and terrorist financing prevention under the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing.
The Head of a currency exchange operator shall be the Member of the Board and a person responsible for the activities of the currency exchange operator, if the currency exchange operator (Licensed Company), in addition to currency exchange, is concurrently engaged in other activities.
A person, found guilty of committing a crime or a criminal offence related to money laundering or terrorist financing cannot be the Head of a currency exchange operator (Licensed Company) (Article 5(1) of the Republic of Lithuania Law on Currency Exchange Operators).
A currency exchange operator shall notify the supervisory authority of the projected replacement of the currency exchange operator (Licensed Company) and concurrently submit information, established by the supervisory authority, necessary for assessing whether the new currency exchange operator meets the above-named requirements.
To obtain non-objection by the Authorities to a nominee for a currency exchange operator (Licensed Company), the following documents shall be submitted to the Authorities:
- A notification of the replacement of the Head.
- A questionnaire filled in by the person applying for the position of Currency Exchange Operator, completed according to the form established in the Annex to the Description of Procedures for the Submission of Information on the Managers of Currency Exchange Operators to the Authorities, approved by Resolution No 03-197 of the Authorities of 21 October 2014 on the Approval of the Description of Procedures for the Submission of Information on the Managers of Currency Exchange Operators to the Authorities.
- Documentary proof that the Head of a currency exchange operator meets the requirements laid down Article 5(1) of the Republic of Lithuania Law on Currency Exchange Operators.
- Document evidencing the person’s identity.
- A new Head of a currency exchange operator can only take up office if the supervisory authority does not object to the nominee for the Head of the currency exchange operator.
The supervisory authority shall examine the person’s application for inclusion in the List of Currency Exchange Operators, information and documents, and take a decision on the person’s inclusion or non-inclusion in the List of Currency Exchange Operators no later than within 30 calendar days of the receipt of the application and of all documents and information.
Where doubts arise during the examination of the application for inclusion in the List of Currency Exchange Operators, the supervisory authority shall have the right to request the person in writing to submit further information or documents, to correct or eliminate the deficiencies identified. In such a case, the supervisory authority shall take a decision on the inclusion or non-inclusion of the person in the List of Currency Exchange Operators no later than within 30 calendar days of the receipt of further information or documents.
By a motivated decision of the supervisory authority this time limit can be extended, but for no more than 30 calendar days.
How and when are the authorities informed?
Based on the Article 25 Part 4 of the Law on the Prevention of Money Laundering and Terrorist Financing a legal person that has commenced the activities of a virtual currency exchange operator or a custodian virtual currency wallet operator shall, not later than within five working days from the beginning of the activities, inform the data processor of the Register of Legal Entities about the activities of the service provider of the virtual currency exchange operator and the custodian virtual currency wallet operator of such activities. By providing this information, the virtual currency exchange operator and the custodian virtual currency wallet operator shall confirm that he or the members of his management or supervisory bodies and the beneficial owners are familiar with and meet the requirements of legal acts on the prevention of money laundering and terrorist financing.
Based on the Article 22 Part 1 of the Law on the Prevention of Money Laundering and Terrorist Financing the financial institutions and other obliged entities must designate senior employees for organizing the implementation of money laundering and/or terrorist financing prevention measures specified in this Law and for liaising with the Financial Crime Investigation Service. Where the financial institutions or other obliged entities are led by the board, the financial institutions and other obliged entities must designate a member of the board for organizing the implementation of money laundering and/or terrorist financing prevention measures specified in this Law and senior employees for liaising with the Financial Crime Investigation Service. The Financial Crime Investigation Service must be notified in writing of the designation as well as replacement of such employees and board members not later than within seven working days from the date of their designation or replacement.
Information has to be provided by the notification in written by email.
Moreover, virtual currency exchange operator and depository virtual currency wallet operator, or the beneficiary of such entities may not be a natural person who has been convicted of a serious crime against property, property rights and property interests, the economic and business order, the financial system, the civil service and the public interest, and has the criminal record that is in force and has not been annulled.
The requirements for the implementation of AMTF prevention measures are set out in the Law.
Instructions addressed to money operators of deposit virtual currencies and operators of virtual currency
exchange offices (Crypto).
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