If you are keen to provide payments services in either fiat currency and/or cryptocurrency and cater to European clients, an EMI license would be an excellent choice, and most extensive one. EMI licenses have gained massive popularity with the emergence of numerous online banks and payment services providers. In fact, an EMI license is the most extensive license an online bank or payment services provider can obtain, excluding an actual bank license.
Porat Group’s legal and commercial team offers a one stop solution for our clients interested in obtaining these licenses.
EMI (E-Money Institution) licenses can be obtained in any country in the EU. After obtaining a license in one EU member state, the license can be easily passported throughout the EU without the need for any additional regulatory approval. The EMI’s regulatory framework is the EMD (E-Money Directive), available publicly here.
An EMI license enables the license holder to conduct the following activities:
1. Issuance and transmission of e-money
2. Money remittance
3. Safekeeping of funds
4. Crypto assets transmission and safekeeping
5. Issuance of payment cards (non-credit)
6. Providing segregated, individual IBANs (International bank account numbers)
for clients
7. Cash deposits and withdrawals
8. Currency (and cryptocurrency) exchange
The main limitations of EMIs come down to credit provision and loans, which they aren’t authorized to provide. Another important thing to understand is, that while an EMI can provide IBAN accounts for its clients, not always is the EMI the actual issuer of the IBANs. Only when the EMI is a direct SEPA member will it be able to directly issue IBANS. Otherwise it will have to rely on another bank or EMI which are SEPA members who will act as the issuers. This, of course, is less favorable since it is dependent on another institution’ priorities and policies. When an EMI is solvent, actively provides payments services and satisfies the capital and regulatory requirement, it’s recommended to invest a bit more effort into being accepted as a SEPA participant.
Many confuse between an IBAN and a bank account. Allow us to clarify- an IBAN isn’t a bank account. They are different mainly with respect to deposits: an IBAN (hence an EMI) cannot receive deposits and cannot offer deposit guarantees. An important decision for a future EMI license holder is which EU member state to choose for the setup of the company, and the EMI license application. Even though the license is fully passportable, the chosen jurisdiction has great significance since it will determine:
1. The spoken language
2. The regulatory environment in which the license application will be reviewed and approved- although all EU regulators operate under the same Pan-EU EMD / EMD2, each regulator has its own approach and method while assessing license applications. Beyond that, some regulators are more familiar and open towards innovative products and services, and some are less.
3. The costs of the local directors and employees’ salaries
4. The cost of the local office
5. The speed of the license application review and other communications with
the regulator later on.
Another important element to consider when choosing the jurisdiction is the banking environment, and how friendly are the local banks when it comes to working with EMIs. This is crucial when the EMI isn’t a SEPA member. Even when it is a SEPA member, an EMI would want to maintain corporate bank accounts for the company which is the license holder in order to deposit and maintain the capital in the bank account and/or in order to receive loans or credit when needed.
How Porat Group can help
– Application process and issuance of the license: Expert commercial and regulatory legal teams to manage the issuance of the licenses, as well as market research, connections, and strategy during the licensing process.
– Legal, regulatory and compliance support post licensing: Our commercial and regulations departments can assist with legal and regulatory issues for the company post licensing, on an ongoing basis.
– Project Management pre and post licensing: sourcing and managing local legal and accounting teams, local directors and other officers for the company, and other third parties required for the application and licensing stage as well as for the ongoing operations of the company post licensing.
– Connections and added values: Assistance with connections to liquidity providers, various required technologies, connections to acquiring banks needed for the ongoing operations of the EMI, as well as potential referrals of clients/merchants with high volumes to the EMI.
Interested?
In order to get the licensing process started, please contact us for a consultation today.