EMI LICENSE
Before you start operating as an authorised electronic money institution, it is important to understand the regulatory requirements. This article covers what you need to know about authorisation of e-money institutions and the process involved in becoming authorised as an EMI license. We have also included a short case study at the end of this blog post for your reference. You should read this article if you are thinking about starting or expanding your business as an EMI, or want to understand what these businesses need to do to get authorised in different countries. The regulation of EMIs varies from country to country. Some countries require EMIs to be authorised by their local regulator while others grant them self-regulatory status under certain conditions. No matter where you live and whether you operate as a stand-alone company or partner with another organisation, it is recommended that you check your local laws first before proceeding with the process outlined below.
What is an Authorised Electronic Money Institution?
The regulatory status of ‘authorised EMI’ is increasingly used to refer to all businesses that offer payment services such as issuing electronic money or issuing a card that can be used to withdraw money from ATMs. Previously, this term referred to financial institutions authorised to issue electronic money which could be used to pay for goods and services or be transferred from one account to another similar to paper money. In most European countries, electronic money is regulated in the same way as credit and debit cards. For example, in the UK and the rest of the European Economic Area (EEA), the Payment Services Regulations 2017 establish a common regulatory framework for payment services, including issuance of electronic money.
What are the Requirements for Becoming an EMI?
There are no universal requirements for becoming an EMI. However, in order to become authorised as an EMI, most businesses must meet the following minimum requirements:
– Have a clean track record – as an EMI, you will be asked to maintain high standards of financial soundness and business integrity. It is common for regulators to use the “fit and proper” test when assessing an applicant’s suitability to operate as an EMI.
– Have an adequate managing and risk-management system in place – an EMI must have an adequate system in place to manage its risks, including the risk of money laundering and terrorist financing. This requirement applies to both new and existing EMIs.
Process for Becoming an Authorised EMI
If you are starting a new business, or are expanding an existing business to become an EMI license, you will have to apply for authorisation from your local regulator. If you operate in more than one country, you should apply for authorisation in the country where your head office is located. Before applying for authorisation to offer payment services, it is important to do the following:
– Define your business model and the types of payment services that you intend to offer.
– Define the risk accompanying each service. You should also ensure that your business complies with the regulatory requirements in your operating jurisdiction.
You can do this by leveraging the Payment Service Test provided by the International Standards Organisation (ISO) by following these steps:
– Identify the type of payment services you intend to offer – such as issuing electronic money, issuing a credit card, or issuing a debit card.
– Assess the risks associated with each service – such as the risk of money laundering, the risk of reputation damage, and the risk of financial loss.
Important Takeaways
The regulatory status of ‘authorised EMI’ is increasingly used to refer to all businesses that offer payment services such as issuing electronic money or issuing a card that can be used to withdraw money from ATMs. Previously, this term referred to financial institutions authorised to issue electronic money which could be used to pay for goods and services or be transferred from one account to another similar to paper money. In most European countries, electronic money is regulated in the same way as credit and debit cards. For example, in the UK and the rest of the European Economic Area (EEA), the Payment Services Regulations 2017 establish a common regulatory framework for payment services, including issuance of electronic money.
If you are considering starting or expanding your business in the payments industry, you will have to apply for authorisation from your local regulator.
Before then, it is important to do the following:
– Define your business model and the types of payment services that you intend to offer.
– Define the risk accompanying each service. You should also ensure that your business complies with the regulatory requirements in your operating jurisdiction.
You can do this by leveraging the Payment Service Test provided by the International Standards Organisation (ISO) by following these steps:
– Identify the type of payment services you intend to offer – such as issuing electronic money, issuing a credit card, or issuing a debit card.
– Assess the risks associated with each service – such as the risk of money laundering, the risk of reputation damage, and the risk of financial loss.
If you fail to comply with the regulatory requirements, your business may be forced to close down. Hence, it is important to follow the regulatory requirements before starting or expanding your business in the payments industry.
Source:
https://adamsmith.lt/en/finance-and-blockchain/emi-in-lithuania/