Electronic Money Institution (EMI) license is a license for issuing electronic money. This type of license will allow you to issue your own near money or quasi-currency. The e-currency can be used outside the site of the payment system. It can be withdrawn and converted into any other currencies. The Electronic Money Institution license also allows you to use your quasi-currency to service third-party payments. Typical example is PayPal. Electronic Money Institution (EMI) is practically a bank, but only without the right to issue loans. The license allows you to open sub-accounts to customers within your own bank account and create an “e-Wallet” or “e-Purse”.
Restrictions imposed on operations on client sub-accounts, as a rule, depend on the degree of identification of the client and differ depending on jurisdiction.
The EMI license allows you to bind existing payment bank cards to client sub-accounts. It is also possible to use cards of the major credit card issuers (VISA, MasterCard). In addition, by operating an EMI, it is possible to create your own card payment system.
The Electronic Money Institution (EMI) license is required when you plan to create a user's electronic wallet on the site with the possibility of withdrawing funds, or the wallet's currency is supposed to be used for conducting settlements on other sites (websites owned by third parties). In the case when the internal currency is created without the need to withdraw funds from the system, an EMI license is not required to create an electronic wallet.
The Electronic Money Institution (EMI) license includes all features provided by the Payment Institution (PI) license. A broader financial toolkit gives only a banking license.
Such thing as your own electronic money provides ample opportunities for fraudulent operations and money laundering. In connection with this peculiarity of the electronic money, the owners of the company applying for an EMI license are subject to strict scrutiny, which may take from 3 to 12 months.
Basic requirements for the EMI end beneficiary:
- The absence of tax arrears;
- The absence of unexpunged or unserved sentence;
- Personal account in the bank.
In order to control licensed activities, there is always a requirement to establish a financial company and its head office in the licensor’s jurisdiction, as well as to include several directors from among the citizens/subjects of this jurisdiction in the licensee’s management. The number of directors varies from two to five people. In addition, if not all, then most of the directors must necessarily be citizens/subjects of the licensor’s jurisdiction.
To provide additional financial guarantees of licensee’s subjection to law, after the approval of the owners and directors, to activate the license, it is necessary to capitalize the company’s account. The amount of capitalization may vary, however, within the European Union for licenses such as EMI license; it is fixed at – EUR 350,000. These funds must be in the account at the local bank for the entire period of the duration of the license.
PSD2 is adopted with the sole purpose of harmonizing the payment services market in the EU countries, so that a company licensed in the UK to carry out financial activities (by the way, 146 duly licensed electronic money institutions (EMIs) currently operate in the United Kingdom) could easily provide cross-border services or carry out its commercial activities on the territory of other members of the European Union and the countries of the European Economic Area (EEA) through the so-called “passporting” process that is carried out by the central financial authorities of European countries.
If you want to get an EMI license in England, or on the territory of another European Union member state, consult our lawyers who have an extensive experience working for the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
We are positive that specialists from IQ Decision UK will provide you with qualified assistance in the following matters related to prompt and seamless obtaining a PI, a SPI or an EMI licenses:
- Preparation of a “pass-through” set of documents;
- Consultation of the beneficiary for the interview;
- Submission of documents to the supervisory authority;
- Assistance with recruiting and hiring directors;
- Negotiations with the licensor;
- Assistance with preparation of a business plan;
- Support with preparation of financial forecasting for the first three years of your business.