EMI license

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Taras Miroshnychenko

Head of International Corporate Law and Fintech Practice

A specialist in the practice of migration and corporate law, he also specializes in legal support for business in EU countries.

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EMI license

In recent years, the European financial landscape has undergone a noticeable transformation due to the rapid increase in the number of financial institutions of a new type – EMI (electronic money institution).

This surge is driven by the growing demand for innovative and convenient digital payment solutions, exemplified by the success of companies such as Payoneer.

Hence, numerous entrepreneurs and companies are looking to tap into this lucrative market by obtaining an EMI license in Europe.

Let’s take a look at the main steps to successfully obtain an EMI license, covering European licensing requirements, choosing a jurisdiction, preparing a business plan, regulatory navigation, team building, compliance and risk management, applying, and maintaining and expanding your EMI license into the European market.

Understanding European licensing requirements.

When obtaining an EMI license in Europe, it is most important to fully understand the regulatory framework and licensing conditions set by the European Central Bank (ECB) and national authorities.

Familiarity with the Payment Services Directive (PSD2), which regulates payment services and the issuance of electronic money in the European Economic Area (EEA), is crucial.

In addition, guidance documents from regulatory authorities should be consulted to ensure compliance. Given the differences in regulations between EEA member states, careful research into local regulations and application procedures is essential.

Choosing the right jurisdiction for your EMI license.

An important decision for obtaining an EMI license is the selection of the appropriate jurisdiction. Each European country has its own regulatory framework, requirements, and preferences that require careful assessment.

Factors such as ease of doing business, tax rates, and the reputation of the regulatory body should be considered. We recommend consulting with legal and financial experts familiar with the country’s regulations at each stage.

Legal opinions and comparative tables can assist in choosing the most appropriate jurisdiction, recognizing its direct impact on EMI’s success and growth.

Preparation of a comprehensive business plan.

Developing a comprehensive business plan is key to acquiring an EMI license. It should articulate the company’s goals, target markets, and strategies for success in the competitive financial technology environment. A detailed financial forecast that demonstrates the viability and sustainability of the EMI is essential.

Key elements include a thorough risk assessment, identification of potential problems, and mitigation strategies.

A balance between caution and optimism is critical to a realistic and compelling business plan.

The operational structure, including the management team, organizational structure, and technology infrastructure, must be clearly defined to inspire confidence in regulators.

Navigating the European regulatory framework.

Understanding the intricacies of the European Electronic Money Institution (EMI) regulatory framework is essential to successfully obtaining an EMI license.

Building on the aforementioned Electronic Money Directive (EMD2) and Payment Services Directive (PSD2), these documents aim to create a level playing field for payment service providers and promote innovation in the financial sector.

While an EMI license in Europe provides access to a large market, strict regulatory requirements and high compliance standards can create operational challenges and increase the time to market for new services.

Building a strong management team and corporate structure.

Building a solid management team is vital to the success of an EMI license application.

This team is made up of experienced professionals with a proven track record of financial services delivery and regulatory experience, ensuring smooth operations and the confidence of regulators and investors.

An effective corporate structure that defines roles and responsibilities is equally important.

While this improves regulatory compliance and helps attract investment, creating and maintaining a complex structure can be challenging, especially for smaller organizations or startups.

Ensuring reliable compliance and risk management systems.

Implementing a robust compliance and risk management system is key to acquiring an EMI license. This involves establishing comprehensive policies and procedures, developing a thorough risk assessment, implementing internal controls, appointing a qualified compliance officer, and ensuring regular employee training.

Ongoing monitoring and auditing are necessary to assess the effectiveness of compliance and risk management systems, demonstrating commitment to regulatory compliance.

Submitting a successful application for an EMI license in Europe.

A smooth and efficient EMI application process requires thorough preparation, knowledge of regulations, and attention to detail.

Applicants must be well-versed in regulatory requirements and submit comprehensive documentation, including a robust business plan, organizational structure, and evidence of transparent capital sources and risk management measures.

Engaging experienced legal and financial advisors throughout the application process increases the likelihood of obtaining the desired EMI license.

Retention and extension of your EMI license in the European market.

Acquiring a post-EMI license, maintaining compliance, and expanding market presence is critical. Regular audits, reporting, and awareness of industry trends and regulatory changes ensure ongoing compliance and competitiveness.

A compliance checklist helps track progress. Extending the EMI license to other European countries requires an understanding of country-specific requirements, and the possible acquisition of additional licenses or partnerships with local financial institutions.

Investing in localized marketing strategies and tailoring services to target markets is key to building a strong presence and driving EMI business growth.

So, let’s summarize – the main advantages of obtaining an EMI license in Europe:

  • Simplified regulatory compliance throughout the European Economic Area (EEA).
  • Increasing trust, attracting more customers and partners.
  • Increased flexibility to offer a wider range of financial services.
  • Expanded market reach and profit potential.
  • The term for obtaining an EMI license is usually 6 to 12 months, depending on the jurisdiction and complexity of the business (working closely with legal and compliance experts speeds up and simplifies the process).
  • Estimated costs associated with an EMI license include application fees, regulatory capital requirements, professional services fees, and ongoing operating costs.
  • Careful evaluation and budgeting are essential for long-term success.
  • An EMI license obtained in one European country can be used to work in others through passporting.
  • Notification of relevant authorities and compliance with local requirements is required.
  • Regulatory compliance, competition, cyber security, and financial crime are key concerns.
  • Strong compliance and risk management systems, as well as adaptability to market trends, are critical to long-term success.

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Taras Miroshnychenko
Head of International Corporate Law and Fintech Practice

A specialist in the practice of migration and corporate law, he also specializes in legal support for business in EU countries.

Contact now
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